Sarfati v. Wood Holly Associates

• Decision Date: 13 June 1989
• Docket Number: No. 88-5057,88-5057
• Citation: 874 F.2d 1523
• Parties: Alberto SARFATI, Plaintiff-Appellant, v. WOOD HOLLY ASSOCIATES, a Florida General Partnership and L.E.D. Development Corp., S.R.L. Development Corp. and Azalea, Inc., co-partners, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1523

874 F.2d 1523

Alberto SARFATI, Plaintiff-Appellant, v. WOOD HOLLY ASSOCIATES, a Florida General Partnership and L.E.D. Development Corp., S.R.L. Development Corp. and Azalea, Inc., co-partners,

Defendants-Appellees.

No. 88-5057.

United States Court of Appeals, Eleventh Circuit.

June 13, 1989.

William S. Weisman, Ft. Lauderdale, Fla., for plaintiff-appellant.

Maurice M. Garcia, Hollywood, Fla., for defendants-appellees.

Appeal From the United States District Court For the Southern District of Florida.

Before KRAVITCH and EDMONDSON, Circuit Judges, and HOFFMAN ^*, Senior District Judge.

WALTER E. HOFFMAN, Senior District Judge:

Alberto Sarfati filed suit in the United States District Court for the Southern District of Florida against Wood Holly Associates ("Wood Holly"), a Florida General Partnership, and its general partners, L.E.D. Development Corp., S.R.L. Development Corp., and Azalea, Inc. Sarfati sought damages and rescission of a Purchase Agreement he entered into with Wood Holly for the purchase of a condominium. The district court granted summary judgment in favor of Wood Holly. We affirm.

FACTS

The following facts are uncontroverted. On April 27, 1980, Wood Holly and Samuel and Esther Herrera entered into a Purchase Agreement for the sale of a condominium, Condominium Parcel Unit No. 604, in Tower One of "The Summit," a condominium complex. On that same date, the Herreras assigned the Purchase Agreement to Alberto and Alegrina Sarfati. The assignment was executed in January, 1982. On March 23, 1982, Wood Holly conveyed the condominium to the Sarfatis. That same day, the Sarfatis executed a mortgage on the condominium in favor of Stockton, Whatley, Davin & Co. ("Stockton"), securing the repayment to Stockton of $122,250.00.

On November 15, 1982, Sarfati filed suit pursuant to the Interstate Land Sales Full Disclosure Act ("The Act"), 15 U.S.C. Sec. 1709(a)-(b) (1982). ¹ Sarfati claimed that Wood Holly violated section 1703(a)(1)(B) of The Act because it did not provide a property report in advance of the signing of the sales contract. ² Sarfati further claimed that Wood Holly violated section 1703(c) of The Act because the contract for sale did not contain a provision stating that the purchaser had a right to revoke the contract if no property report had been furnished. ³

Sarfati's cause of action accrued on April 27, 1980, the date the Herreras entered into the Purchase Agreement and assigned it to Mr. and Mrs. Sarfati. At the time Sarfati's cause of action accrued, section 1711 of The Act provided for a two-year statute of limitations period on Sarfati's claims. ⁴ Sarfati's complaint filed on November 15, 1982 was more than two years after the accrual of his cause of action in April, 1980. However, on June 1, 1980, approximately one month after Sarfati's cause of action accrued, Congress amended section 1711, extending the limitations period to three years. ⁵ Thus, the amendment extended the limitations period before the prior two-year limitations period had run on Sarfati's claims.

Wood Holly, in response to Sarfati's complaint, raised as an affirmative defense that Sarfati's claims were time-barred because the November 15, 1982 filing of his complaint was beyond the two-year statute of limitations in effect at the time Sarfati's cause of action accrued. Sarfati opposed the summary judgment, arguing that the amended three-year limitations period should apply because his claims were not time-barred when the amendment became effective. The district court granted summary judgment in favor of Wood Holly.

The sole issue before this Court, therefore, is whether Sarfati's claim should be governed by the two-year limitations period in effect at the time his cause of action accrued or the three-year period enacted by amendment during the time Sarfati's claims were viable.

I.

The standard of review for a motion of summary judgment is whether a genuine issue exists as to any material fact and whether the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. A district court's order of summary judgment is independently reviewable by this Court. Mayo v. Engel, 733 F.2d 807, 808 (11th Cir.1984). An appellate court, therefore, must apply the same standard employed by the trial court. BAW Mfg. Co. v. Slaks Fifth Ave., Ltd., 547 F.2d 928, 929-30 (5th Cir.1977). ⁶ Because the facts are not in dispute, this Court must determine whether the district court erred as a matter of law in granting summary judgment for Wood Holly, the Appellee.

II.

There are two instances when an amended statute of limitations may be applied retroactively to a cause of action that accrued prior to the amendment and which is still in existence at the effective date of the amendment. First, if a limitations statute is remedial or procedural in nature and not a substantive limitation on a statutory right, it may be applied to existing causes of action. Second, the legislature may clearly manifest an intent to have an amended limitations statute apply to existing causes of action.

We hold that the district court did not err as a matter of law in granting summary judgment in favor of Wood Holly. The two-year limitations period is applicable to Sarfati's claims because it addresses the statutorily-created right supporting his claims, and because the legislature did not manifest an intent to have the amended three-year period apply to existing causes of action.

A. The Statute of Limitations as a Substantive Limit on the Right

A statute of limitations that restricts a right created by statute rather than a right at common law generally is deemed to be a substantive limit on the right as opposed to a mere procedural limit on the remedy. See United States ex rel. Texas Portland Cement Co. v. McCord, 233 U.S. 157, 162, 34 S.Ct. 550, 552, 58 L.Ed. 893 (1914); Davis v. Mills, 194 U.S. 451, 454, 24 S.Ct. 692, 693, 48 L.Ed. 1067 (1904); Kozan v. Comstock, 270 F.2d 839, 841 (5th Cir.1959); Bell v. Wabash Ry., 58 F.2d 569, 571 (8th Cir.1932); Bauer v. Johns-Manville Corp., 599 F.Supp. 33, 35 (D.Conn.1984); Wisbey v. American Community Stores Corp., 288 F.Supp. 728, 732 (D.Neb.1968); Orpheus Inv., S.A. v. Ryegon Inv., Inc., 447 So.2d 257, 259-60 (Fla.Dist.Ct.App.1983). In other words, the limitations period is an integral part of the right itself and is a condition on whether the right may be exercised. The Fifth Circuit, in an opinion adopted as binding precedent on the Eleventh Circuit, ⁷ has stated that an amendment to a limitations period that is an integral part of the right will not be retroactively applied to cover causes of action already in existence, unless the legislature manifests such an intent. See McCloskey & Co. v. Eckart, 164 F.2d 257, 260 (5th Cir.1947) (citing United States v. St. Louis, S.F. & Tex. Ry. Co., 270 U.S. 1, 3, 46 S.Ct. 182, 183, 70 L.Ed. 435 (1926) and Sohn v. Waterson, 84 U.S. (17 Wall.) 596, 599, 21 L.Ed. 737 (1873)); see also Orpheus, 447 So.2d at 260; Callahan v. Chesapeake & O. Ry. Co., 40 F.Supp. 353, 354 (E.D.Ky.1941).

All limitations periods that govern rights created by statute, however, are not necessarily substantive limits on the right itself. The limitations period must be contained in the same statute or act in order to be deemed a substantive limit on the right. See Davis, 194 U.S. at 454, 24 S.Ct. at 693; Wisbey, 288 F.Supp. at 732; Callahan, 40 F.Supp. at 353-54, Orpheus, 447 So.2d at 260. Thus, if a right created by statute is in one act and the limitations period is in another act, then the limitations period is presumed not to be an integral part of the right itself. See supra. The limitations period is said to be only a procedural limit on the remedy, and not a substantive limit on the right. In these instances, courts have held that an enactment of or amendment to such a limitations period generally would be applied to causes of action that previously accrued but were still viable. See, e.g., Friel v. Cessna Aircraft Co., 751 F.2d 1037, 1039 (9th Cir.1985); Fust v. Arnar-Stone Labs, Inc., 736 F.2d 1098, 1100 (5th Cir.1984); Bauer, 599 F.Supp. at 35; Wisbey, 288 F.Supp. at 734-35; Gahling v. Colabee S.S. Co., 37 F.Supp. 759, 760 (E.D.Pa.1941); Chisholm v. Cherokee-Seminole S.S. Corp., 36 F.Supp. 967, 967-68 (S.D.N.Y.1940); Orpheus, 447 So.2d at 259-60.

There is no dispute that Sarfati's causes of action under The Act are based in congressionally created rights, rather than rights at common law. Sarfati contends, however, that the limitations period affects only the remedy because it is contained in a different section--section 1711--from the rights of action, which are contained in sections 1703(a)(1)(B), (c) and 1709(a)-(b). Accordingly, he claims that the amended three-year limitations period should be applied to his claim.

In Orpheus, the Florida District Court of Appeals specifically addressed the issue of whether the amended three-year limitations period in section 1711 of The Act should be applied to a cause of action which accrued prior to the amendment, but was not barred under the prior limitations period. Orpheus, 447 So.2d at 257. The court first noted that The Act created a new right of action not known at common law. Id. at 259. The court held that because the limitations period was contained within the statute which created the right, it addressed the right of action itself, and not merely the remedy. Id. at 260. The court refused, therefore, to apply the amended limitations period to an existing cause of action that accrued prior to the amendment. Id.

Sarfati asserts that Orpheus is "bad law" because the court misapplied precedent. He has interpreted several district court cases as supporting his position that section 1711 should be considered a limitation on the remedy. Sarfati primarily relies on the case of Wisbey v. American Community Stores Corp., 288 F.Supp. 728 (D.Neb.1968). In Wisbey, the plaintiff alleged a violation of the ...