Roschman Partners v. S.K. Partners I, Ltd.

• Decision Date: 29 September 1993
• Docket Number: No. 91-2871,91-2871
• Citation: Roschman Partners v. S.K. Partners I, Ltd., 627 So.2d 2 (Fla. App. 1993)
• Parties: 18 Fla. L. Weekly D2135 ROSCHMAN PARTNERS, a Florida general partnership, and John A. Roschman, individually and as General Partner of Roschman Partners, Appellants/Cross-Appellees, v. S.K. PARTNERS I., LIMITED, a Florida limited partnership, Sunbelt Partners, a Florida general partnership and its General Partners, Coojo Investment Co., Nebhart, Inc., individually and as General Partner of Sunbelt Partners, J. Michael Stetson, as Trustee and as General Partner of S.K. Partners I., Limited, and S.K. Partners II., Limited, Appellees/Cross-Appellants.
• Court: Florida District Court of Appeals

Page 2

627 So.2d 2

18 Fla. L. Weekly D2135

ROSCHMAN PARTNERS, a Florida general partnership, and John A. Roschman, individually and as GeneralPartner of Roschman Partners, Appellants/Cross-Appellees, v.S.K. PARTNERS I., LIMITED, a Florida limited partnershipSunbelt Partners, a Florida general partnership and its General Partners, Coojo Investment Co., Nebhart, Inc individually and as GeneralPartner of Sunbelt Partners, J Michael Stetson, as Trustee and as GeneralPartner of S.K Partners I., Limited, and S.K. Partners II., Limited, Appellees/Cross-Appellants.

No. 91-2871.

District Court of Appeal of Florida, Fourth District.

Sept. 29, 1993.

Rehearing, Rehearing En Banc and Certification Denied Dec. 30, 1993.

John Beranek of Aurell, Radey, Hinkle & Thomas, Tallahassee, James L.S. Bowdish of Crary, Buchanan, Bowdish & Bovie Chartered, Stuart, and John R. Young of Boose, Casey, Ciklin, Lubitz, Martens, McBane & O'Connell, P.A., West Palm Beach, for appellants/cross-appellees.

Stephen C. Page and David R. Atkinson of Gunster, Yoakley & Stewart, P.A., Stuart, for appellees/cross-appellants.

POLEN, Judge.

Roschman Partners(Roschman) appeals from an Amended Final Judgment that granted S.K. Partners' (S.K.) prayer for specific performance of an option to buy real property and ordered conveyance of same.S.K. raises two points on cross-appeal, one of which merits discussion.

This case has been pending for over five years and was previously before this court as an appeal from a partial summary judgment entered in S.K.'s favor.SeeRoschman Properties, Inc. v. S.K. Partners I, 545 So.2d 316(Fla. 4th DCA1989).We reversed that summary judgment and remanded for an evidentiary hearing to determine the intent of the parties with respect to a non-recordation clause at the time they executed two agreements.Id. at 317.

S.K., the purchaser, sued Roschman, the seller, for specific performance to compel it to convey certain real property pursuant to an option agreement and sale and purchase agreement that the parties executed in 1981.Roschman defended on the ground that S.K. had materially breached their agreement(s) when it recorded the option agreement in January 1986, in violation of a non-recordation clause contained in the sale and purchase agreement.That clause provided that neither that agreement nor any memorandum thereof could be recorded in any public records and, if so recorded, such recordation would constitute a default by S.K.The option agreement incorporated by reference the non-recordation clause in the sale and purchase agreement and further provided that "[i]n the event of a default by [S.K.] under this Agreement, [Roschman] shall have, solely, the right to terminate this Agreement (and the Option Agreement to which this is attached as an exhibit) ..."

Upon remand from this court's reversal of the partial summary judgment, the trial court conducted an evidentiary hearing on the parties' intent regarding the non-recordation clause and specifically found that the original parties to the Agreement ¹ intended that an unauthorized recording of the Option Agreement would constitute a default and that the default would entitle Roschman to terminate the Option Agreement.The court found that the agreement had in fact been violated, but that S.K.'s breach of the agreement was not material, notwithstanding its finding regarding the parties' intent.While we might be troubled by the internal inconsistency of this reasoning, we are mindful that as an appellate court, we must affirm a trial court's order consistent with any theory the record reveals, regardless of the reasons stated in the order under review.SeeE.G. Green v. First American Bank & Trust, 511 So.2d 569(Fla. 4th DCA1987).We hold that there is competent, substantial evidence in the record to support the trial court's conclusion that "[t]ermination of the Option Agreement under the circumstances existing in this case, would constitute an inequitable forfeiture."The trial court ordered specific performance of the Option Agreement on the authority of August Tobler, Inc. v. Goolsby, 67 So.2d 537(Fla.1953), and the principle of inequitable forfeiture.While the Tobler Court concluded that under its particular facts, ² equity would not be served by providing flexibility to the otherwise harsh and rigid principles of the common law of options, ³seeid. at 539, it recognized that the principle of inequitable forfeiture was alive and well and applicable if the facts so required.At bar, unlike Tobler, if the trial court had not compelled specific performance or other equitable relief, Roschman would be unjustly enriched.

In the instant case, the court found that the substantial increase in the subject property's value (from approximately $5 million in 1981 to approximately $18 million at the time of trial) was realized in large part because of S.K.'s successful rezoning of the property, as well as S.K.'s improvements thereon, all while it paid the obligatory property taxes and special assessments.S.K. accomplished this through its hiring of experts and their companies; it also hired attorneys to accomplish the rezoning from residential to commercial.Our supreme court has held that where the optionor stands to receive a windfall if not compelled to perform, and the optionee stands to lose a great deal, equity is served by compelling performance under the contract.SeeBlackhawk Heating & Plumbing Co., Inc. v. Data Lease Financial Corp., 302 So.2d 404, 410(Fla.1974).Accordingly, the trial court's order of specific performance is affirmed.

On cross-appeal S.K. argues that the trial court erred when it ordered S.K. to reimburse Roschman in the amount of $876,833.64 for property taxes that accrued during the first four years of this litigation, after S.K. exercised the option but Roschman refused to close.During that period of time, Roschman held title to the subject property, had exclusive possession of the property and received rents and profits related to activities thereon.This court wrote in Walker v. Benton, 407 So.2d 305(Fla. 4th DCA1981):

The general rule, where specific performance is granted of a contract to sell realty, is that the vendor must account to the purchaser for any deprivation of the use of the property from the date when possession should have been transferred, and for any detriment to the property caused by his failure to preserve it properly; as against which the vendor is entitled to credit for any expenses properly incurred by him for improvement or preservation of the property, and for any loss of the use of the purchase money or other consideration from that date....Obviously, in some instances the purchaser would elect not to seek 'rents and profits' since the interest on the purchase price would exceed the value of the 'rents and profits'.

Id. at 307(citation omitted).Thus, a purchaser who seeks specific performance may also seek as damages the rents and profits that accrued to the property during the litigation; and if the purchaser elects to seek such rents and profits, the vendor will then be entitled to offset any monies he expended on the property (e.g., property taxes) against the award of rents and profits.S.K. elected not to pray for damages because the rents and profits generated by the property were relatively small compared to the tax obligations.⁴Furthermore, the actual damages suffered by S.K. would be difficult to quantify and were likely unrecoverable.⁵Apparently, the trial court relied on Palm Beach Estates v. Croker, 106 Fla. 617, 143 So. 792(1932).Croker, however, is distinguishable; it holds that an order against a vendor for specific performance which orders that the vendor be reimbursed for taxes paid is not an abuse of discretion, where persons exercising the option to purchase were in possession for purpose of sale, where no rents, issues, and profits were realized and the contract apparently contemplated such reimbursement to the vendor.Id. at 801.At bar, quite the opposite is true.However, in light of our affirmance of the trial court's final judgment ordering specific performance of the Option Agreement, equity would not be served by permitting appellees, who upon conveyance will receive the benefit of the property's enhanced value, to avoid payment of the property taxes accrued during this litigation.We therefore affirm.

ANSTEAD, J., concurs specially with opinion.

FARMER, J., dissents with opinion.

ANSTEAD, Judge, concurring specially.

I agree with the majority opinion that there is competent, substantial evidence in the record to support the trial court's judgment.The court cited August Tobler, Inc. v. Goolsby, 67 So.2d 537(Fla.1953), and although the Tobler court reached a different result on different facts, it nonetheless recognized that equitable considerations can serve as a basis for ordering specific performance in spite of a default:

It is plain that as a matter of law the option fell with the default.But are there special equities in this case which render this result so unconscionable that the chancellor was in error in reaching it?To support the contention that this question should be answered in the affirmative, Tobler points out that it contemplated using the entire tract for a housing project, that it spent money in arranging for financing, and that it attempted to commence construction.But the "construction" consisted of depositing a small amount of old lumber on the land, which was done long after the default, with the property already in litigation.And it is worth noting that no benefit from this activity ever accrued to the property to make it inequitable for the Goolsbys to retain it.

Id. at 539.

There are two other circumstances which I believe support the trial court's equitable resolution.Roschman contends the reason the agreements contained a non-recordation provision was because Roschman did not want to give the...