Sparks v. Charles Wayne Group

• Decision Date: 19 October 1990
• Docket Number: No. 90-609,90-609
• Citation: 568 So.2d 512
• Parties: 15 Fla. L. Weekly D2653 Donald SPARKS and Jacqueline Sparks, Petitioners, v. The CHARLES WAYNE GROUP, et al., Respondents.
• Court: Florida District Court of Appeals

Page 512

568 So.2d 512

15 Fla. L. Weekly D2653

Donald SPARKS and Jacqueline Sparks, Petitioners, v. The CHARLES WAYNE GROUP, et al., Respondents.

No. 90-609.

District Court of Appeal of Florida,

Fifth District.

Oct. 19, 1990.

Stephen E. Hilker, Palatka, for petitioners.

J. Lester Kaney, of Cobb, Cole & Bell, Daytona Beach, for respondents.

W. SHARP, Judge.

Donald and Jacqueline Sparks seek certiorari review by this court of the trial court's order discharging a lis pendens they filed against a house and lot located in Flagler County, Florida. The trial court apparently granted the discharge because the record and pleadings did not establish that the Sparkses were entitled to claim and enforce an equitable lien against the property. We disagree and reverse.

Respondents, The Charles Wayne Group Ltd., J. Wayne Beighle, and The Charles Wayne Group, Inc., initially argue the district court of appeal lacks certiorari jurisdiction to review the order discharging the lis pendens. We are bound by Baghaffar v. Story, 515 So.2d 1373 (Fla. 5th DCA 1987) which holds otherwise. ¹ If the record established that the petitioners had grounds to assert an equitable lien against real property, the trial court departed from the essential requirements of the law by failing to continue the lis pendens, conditioned upon the filing of a bond by petitioners in an amount sufficient to protect respondents against any damages resulting from its wrongful continuance.

The pleadings and record below establish that the Sparkses sued the respondents for damages, the return of purchase money deposits plus interest, and the establishment of an equitable lien against the property for the sums paid under an executory real estate contract to the seller, The Charles Wayne Group, Ltd. The Sparkses had entered into a contract with the Group (the seller and owner) to purchase a home to be built on a lot for them by Beighle, the general contractor. The total purchase price was $126,055.00.

The Sparkses alleged they paid respondent Group $1,000.00 when the contract was signed. They paid an additional $37,528.00 when construction commenced. An additional $37,527.00 was due at dry-in of the windows and exterior doors, and the balance at closing. Respondents agreed and promised to build an above-average quality house like the model shown to the Sparkses, and it was to meet the specifications called for in the plans attached to the contract.

As construction of the house got underway, the Sparkses noted with increasing alarm various material defects and deficiencies in the construction of the house, and the builder's failure to follow the plans in material respects. They retained a building inspector to advise them, and the results of his ongoing inspections were sent to respondents. The Sparkses alleged that despite these efforts, the respondents did not correct the material discrepancies and deficiencies.

Respondents demanded that the Sparkses pay the balance owed on the contract. When they refused, respondents declared the Sparkses in default, and they took the position that the total sum of $38,528.00 previously paid by the Sparkses had been forfeited. This lawsuit was then filed by the Sparkses, claiming breach of contract, misrepresentation, failure of consideration, and the establishment of an equitable lien to secure return of the deposits paid on the contract. In addition, they filed a lis pendens against the property in Flagler County.

Pursuant to section 48.23(3), Florida Statutes (1989), when the pleading in a law suit shows the cause of action is not founded on a duly recorded instrument or on a mechanic's lien, "the court may control and discharge the notice of lis pendens as the court may grant and dissolve injunctions." The Sparkses' suit admittedly was not founded on a recorded instrument, nor on a mechanic's lien. The respondents moved to dissolve the notice of lis pendens, but offered no evidence or proof of irreparable injury. The issue in this case is whether the record establishes a prima facie basis to declare and enforce an equitable lien against the property for the sums paid under the contract by the Sparkses to the respondents.

At the hearing on the motion to dissolve, only the petitioners' pleadings, affidavits and exhibits were in the record. Respondents had filed no pleadings other than motions to discharge the notice of lis pendens. Significantly, respondents had not moved to dismiss the Sparkses' count for an equitable lien on the property. At the hearing, no testimony or evidence was presented by either party. The transcript contains only unsworn argument of counsel.

It appears from reading the transcript of the hearing that specific language used in the contract calling the sums paid by the Sparkses "deposits" and a further contractual provision limiting the Sparkses' remedy, if the respondents breached, to recovery of the deposits, were the sole basis for the trial court's conclusion that the Sparkses were limited to obtaining a money judgment. In paragraph 3 of the contract, the Sparkses' payments are called "deposits." In paragraph 13 of the contract, the buyer (the Sparkses) authorized respondents (the Group) "to place the Deposit paid this date and all other payments made pursuant to this Agreement, in Seller's account." And Paragraph 12 limited the Sparkses' remedies against the Group, if the seller defaulted, to a return of the deposits.

At the hearing, counsel for respondents argued that the deposits were held by the Group in escrow or trust accounts. But nothing in the contract supports that view. ² Later in the hearing, counsel for respondents candidly admitted he did not know how the deposits were actually held after being put into the Group's general account.

Equitable liens in property, both personal and real, may arise under a variety of different circumstances. In some, the parties are shown to have intended to grant an interest in the nature of a lien; and in others, the court devises an equitable lien without regard to the parties' intent, based on the facts and circumstances. Hullum v. Bre-Lew Corp., 93 So.2d 727 (Fla.1957). ³

Whatever category a purchaser under an executory contract to buy real estate may be in, the great weight of authority holds that such a purchaser (who is not in default) is entitled upon default by the seller to rescind the contract, recover all purchase monies paid and interest, plus other expenses, and to claim and enforce an equitable lien against the property to secure the purchase payments made. See Fry v. J.E. Jones Construction Co., 567 So.2d 901 (Fla. 5th DCA 1990). The only requirement is that the buyer must establish his right to recover the money paid on the contract. ⁴ The rationale for recognizing a purchaser's lien is partly premised on the doctrine of equitable conversion. 77 Am.Jur.2d Vendor and Purchaser §§ 513; 514 (1975).

Thus, as a vendee makes payments on a land contract the vendor becomes trustee for him of the legal estate, and he becomes in equity the owner of the land to the extent of payments made.

77 Am.Jur.2d Vendor and Purchaser § 317 (1975). Other authorities identify the vendee's lien as the remedy corresponding to that afforded the unpaid vendor who has conveyed title to the vendee. ⁵

The vendee's lien is one remedy afforded a purchaser under an executory real estate contract to secure repayment of the sums paid to the seller. It no longer matters (with the merger of law and equity) whether the cause of action is for rescission or damages. Nor does it matter whether or not an improvement has been built on the realty using the purchaser's funds. 77 Am.Jur.2d Vendor and Purchaser § 492 (1975). Compare Wagner v. Roberts, 320 So.2d 408 (Fla. 2d DCA 1975), cert. denied, 330 So.2d 20 (Fla.1976). Further, the vendee's lien does not arise as the result of any express contract. It is a right which may be said to have been invented for the purpose of doing justice. Annotation, Right of Vendee Under an Executory Land Contract to a Lien for Amount Paid on Purchase Price, 45 A.L.R. 352, 356 (1926).

Florida cases have long recognized a vendee's equitable lien for nondefaulting purchasers under real estate contracts. In Wolfe v. Daugherty, 103 Fla. 432, 137 So. 717 (1931), the Florida Supreme Court held that a vendee under an executory real estate contract has an equitable lien in the subject real estate to the extent of the purchase price paid, if the vendee is not in default. ⁶ Significantly in Wolfe, as in the instant case, the purchaser was limited under the contract to the return of his purchase money deposits. When the vendor defaulted and did not return the deposits, the court ruled the vendee was entitled to claim an equitable vendee's lien for the amount of the monies paid.

In John Ringling Estates v. White, 105 Fla. 581, 141 So. 884 (1932), the court denied a purchaser an equitable lien because he had only an "option," rather than a contract. However, the court discussed the equitable lien remedy as but one of several which a vendee may pursue:

Upon breach of the contract, if it was breached, by the vendor, complainants had the right to affirm the contract and sue the vendor for damages or to disaffirm the contract, and bring an action at law to recover back the payment that had been made, but they were not confined to those remedies. They had the right, at their election, to ask for a rescission and cancellation of the contract, and to adjudication of a lien against the property described in the contract for the amount of the initial payment made thereunder,....

Id., 141 So. at 885.

More modern Florida cases recognize a non-defaulting vendee's lien against the subject property, for the purchase monies paid. In Resnick v. Goldman, 133 So.2d 770 (Fla. 3d DCA 1961), the buyer rescinded the contract and sought to recover his deposits. The court upheld his vendee's lien against the property.

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