Princeton Homes Inc v. Virone

• Decision Date: 30 July 2010
• Docket Number: No. 09-15089.,09-15089.
• Citation: 612 F.3d 1324
• Parties: PRINCETON HOMES, INC., a Florida corporation, Plaintiff-Appellant-Counter Defendant,v.Joseph A. VIRONE, Mary Ann Virone, as Husband and Wife, Defendants-Appellees-Counter Claimants.
• Court: U.S. Court of Appeals — Eleventh Circuit

612 F.3d 1324

PRINCETON HOMES, INC., a Florida corporation, Plaintiff-Appellant-Counter Defendant,v.Joseph A. VIRONE, Mary Ann Virone, as Husband and Wife, Defendants-Appellees-Counter Claimants.

No. 09-15089.

United States Court of Appeals,

Eleventh Circuit.

July 30, 2010.

Lorin Louis Mrachek, Alan B. Rose, Page, Mrachek, Fitzgerald & Rose, P.A., West Palm Beach, FL, for Plaintiff-Appellant-Counter Defendant.

Owen Schultz, McCarthy Summers Bobko Wood & Sawyer, P.A., Stuart, FL, for Defendants-Appellees Counter Claimants.

Appeal from the United States District Court for the Southern District of Florida.

Before BLACK, WILSON and COX, Circuit Judges.

WILSON, Circuit Judge:

Princeton Homes, Inc. (“Princeton”), the seller of a pre-construction town home at the Townhomes at St. Andrews Park Phase I, a community in Port St. Lucie, Florida, appeals the district court's grant of summary judgment to Joseph A. Virone and Mary Ann Virone (the “Virones”), the buyers who permanently reside in New Jersey. The district court granted the Virones' motions for summary judgment substantially for the reason that the Virones did not receive a disclosure summary, which they were entitled to receive pursuant to Florida Statute § 720.401, or a printed property report pursuant to the Interstate Land Sales Full Disclosure Act (“ILSFDA”), 15 U.S.C. § 1701 et seq. The district court ordered the cancellation of the purchase agreement with Princeton, the return of the Virones' $50,000.00 deposit, and attorneys' fees and costs. We affirm.

I. BACKGROUND

On January 23, 2006, Princeton and the Virones executed a purchase agreement obligating Princeton to sell and build a town home in St. Andrews Park. As prospective parcel owners in a community subject to a homeowners' association membership requirement, the Virones were entitled to receive a “disclosure summary” before executing the contract of sale pursuant to Florida Statute § 720.401(1)(a), in a form that is substantially similar to the one provided in the statute as follows:

DISCLOSURE SUMMARY

FOR

(NAME OF COMMUNITY)

1. AS A PURCHASER OF PROPERTY IN THIS COMMUNITY, YOU WILL BE OBLIGATED TO BE A MEMBER OF A HOMEOWNERS' ASSOCIATION.

2. THERE HAVE BEEN OR WILL BE RECORDED RESTRICTIVE COVENANTS GOVERNING THE USE AND OCCUPANCY OF PROPERTIES IN THIS COMMUNITY.

3. YOU WILL BE OBLIGATED TO PAY ASSESSMENTS TO THE ASSOCIATION. ASSESSMENTS MAY BE SUBJECT TO PERIODIC CHANGE. IF APPLICABLE, THE CURRENT AMOUNT IS PER ___. YOU WILL ALSO BE OBLIGATED TO PAY ANY SPECIAL ASSESSMENTS IMPOSED BY THE ASSOCIATION. SUCH SPECIAL ASSESSMENTS MAY BE SUBJECT TO CHANGE. IF APPLICABLE, THE CURRENT AMOUNT IS PER ___.

4. YOU MAY BE OBLIGATED TO PAY SPECIAL ASSESSMENTS TO THE RESPECTIVE MUNICIPALITY, COUNTY, OR SPECIAL DISTRICT. ALL ASSESSMENTS ARE SUBJECT TO PERIODIC CHANGE.

5. YOUR FAILURE TO PAY SPECIAL ASSESSMENTS OR ASSESSMENTS LEVIED BY A MANDATORY HOMEOWNERS' ASSOCIATION COULD RESULT IN A LIEN ON YOUR PROPERTY.

6. THERE MAY BE AN OBLIGATION TO PAY RENT OR LAND USE FEES FOR RECREATIONAL OR OTHER COMMONLY USED FACILITIES AS AN OBLIGATION OF MEMBERSHIP IN THE HOMEOWNERS' ASSOCIATION. IF APPLICABLE, THE CURRENT AMOUNT IS PER ___.

7. THE DEVELOPER MAY HAVE THE RIGHT TO AMEND THE RESTRICTIVE COVENANTS WITHOUT THE APPROVAL OF THE ASSOCIATION MEMBERSHIP OR THE APPROVAL OF THE PARCEL OWNERS.

8. THE STATEMENTS CONTAINED IN THIS DISCLOSURE

FORM ARE ONLY SUMMARY IN NATURE, AND, AS A PROSPECTIVE PURCHASER, YOU SHOULD REFER TO THE COVENANTS AND THE ASSOCIATION GOVERNING DOCUMENTS BEFORE PURCHASING PROPERTY.

9. THESE DOCUMENTS ARE EITHER MATTERS OF PUBLIC RECORD AND CAN BE OBTAINED FROM THE RECORD OFFICE IN THE COUNTY WHERE THE PROPERTY IS LOCATED, OR ARE NOT RECORDED AND CAN BE OBTAINED FROM THE DEVELOPER.

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                |          |DATE:|PURCHASER:|
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                |PURCHASER:|     |          |
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Fla. Stat. § 720.401(1)(a). The Virones never received a disclosure summary. On January 30, 2008, more than two years after signing the purchase agreement, but before closing, the Virones gave Princeton written notice of their intention to void the purchase agreement pursuant to Florida Statute § 720.401(1)(c), which permits a buyer to void the contract of sale if a disclosure summary is not provided prior to closing. On May 12, 2008, the Virones sent a letter to Princeton declaring their election to revoke the purchase agreement due to Princeton's failure to provide the Virones a printed property report pursuant to the ILSFDA. Princeton failed to acknowledge both letters, and never cancelled or revoked the purchase agreement. Princeton and the Virones never closed on the town home.

On May 19, 2008, Princeton filed a complaint in Florida state court seeking specific performance for the Virones' failure to close on the town home and damages for breach of the purchase agreement. On June 23, 2008, the Virones removed the case to the United States District Court for the Southern District of Florida, answered Princeton's complaint, and filed a counterclaim with four counts. The counts in the counterclaim were for: (I) Violation of the ILSFDA, (II) Violation of the Florida Deceptive and Unfair Trade Practices Act, (III) Cancellation pursuant to Florida Statute § 720.401, and (IV) Cancellation based on availability of financing. Only Counts I and III are pertinent to this appeal, as the remaining two counts became moot and are not argued on appeal.

On January 31, 2009, the Virones filed their first motion for summary judgment on Counts III and IV of their counterclaim, arguing inter alia, that Princeton was the “developer” and “parcel owner” of the lot on which their town home was to be constructed, and therefore, Princeton was obligated to provide the Virones with a disclosure summary substantially similar to the one provided in Florida Statute § 720.401, but failed to do so. The district court granted the Virones' motion for summary judgment on Count III, finding that Princeton violated § 720.401, and rendered Count IV and Princeton's complaint moot. Thus, the Virones were permitted to void the purchase agreement and recover their deposit. The district court then ordered the parties to submit a stipulated motion as to the remaining issues. The district court granted the stipulated motion, leaving only Count I of the Virones' counterclaim on the violation of the ILSFDA at issue.

On April 27, 2009, the Virones filed their second motion for summary judgment on Count I of their counterclaim, arguing that Princeton violated the ILSFDA because it was not exempt from providing the Virones a property report or disclosing the right to a property report in the purchase agreement. On April 30, 2009, Princeton filed a motion for summary judgment on Count I of the Virones' counterclaim, arguing that it was exempt from the ILSFDA under 15 U.S.C. § 1702(a)(2) and (b)(2) because it obligated itself to build the town home within two years and because it did not sell more than twelve town homes in St. Andrews Park within one year from the date of the first sale. The district court granted the Virones' motion for summary judgment and denied Princeton's, finding that Princeton was not exempt from providing the Virones with a property report under the ILSFDA. Although the Virones sought rescission of the purchase agreement, the district court found that the two-year statute of limitations had run, and consequently, it awarded damages in the amount of the Virones' deposit.¹ The district court directed the Virones to file a motion for final judgment, and the district court granted the motion, as well as attorneys' fees and costs. Princeton timely appealed.

II. STANDARD OF REVIEW

We review a district court's grant of summary judgment de novo and apply the same legal standards that governed the district court's analysis. Capone v. Aetna Life Ins. Co., 592 F.3d 1189, 1194 (11th Cir.2010) (citation omitted). Because the district court's finding that Princeton violated Florida Statute § 720.401 was based on statutory construction, we review the district court's determination de novo. Tug Allie-B, Inc. v. United States, 273 F.3d 936, 941 (11th Cir.2001) (citation omitted). Because the district court's finding that Princeton was not exempt under the ILSFDA was based on its interpretation of the purchase agreement, we review its interpretation de novo. See World Rentals & Sales, LLC v. Volvo Constr. Equip. Rents, Inc., 517 F.3d 1240, 1244 (11th Cir.2008).

III. DISCUSSION

A. Violation of Florida Statute § 720.401

The parties do not dispute that St. Andrews Park is governed by St. Andrews Park Property Owners' Association, and that Florida Statute § 720.401 applies. Section 720.401(1)(a) requires that the “developer” or “parcel owner” provide the buyer of a lot governed by a community association with a disclosure summary identical to or substantially similar to the disclosure summary provided in the statute. Further, if the buyer does not receive a disclosure summary before executing the contract of sale,

the purchaser may void the contract by delivering to the seller or the seller's agent or representative written notice canceling the contract within 3 days after receipt of the disclosure summary or prior to closing, whichever occurs first. This right may not be waived by the purchaser but terminates at closing.

Fla. Stat. § 720.401(1)(c). It is undisputed that the Virones were never presented a disclosure summary by anyone, either before or after the purchase agreement was executed.

In finding that Princeton violated § 720.401, the district court focused its analysis principally on whether Princeton qualified as the “developer” or “parcel owner,” the entities identified by the statute that must provide the disclosures. The district court conclusively found Princeton to be the “parcel owner” and stated that Princeton's relationship to the development was sufficient to meet the definition of “developer” under § 720.301(6). On appeal, Princeton argues that it is...