Sterling Crest, Ltd. v. Blue Rock Partners Realty Grp., LLC

• Decision Date: 12 June 2015
• Docket Number: No. 5D14–4629.,5D14–4629.
• Citation: 164 So.3d 1273
• Court: Florida District Court of Appeals
• Parties: STERLING CREST, LTD., etc., et al., Appellants, v. BLUE ROCK PARTNERS REALTY GROUP, LLC, Appellee.

164 So.3d 1273

STERLING CREST, LTD., etc., et al., Appellants

v.BLUE ROCK PARTNERS REALTY GROUP, LLC, Appellee.

No. 5D14–4629.

District Court of Appeal of Florida, Fifth District.

June 12, 2015.

D. Andrew Byrne, of Andrew Byrne & Associates, P.A., Miami, and Ryan B. Hobbs, of Brooks, Leboeuf, Bennett, Foster Gwartney, P.A., Tallahassee, for Appellants.

Dorothy F. Easley, of Easley Appellate Practice PLLC, Miami, for Appellee.

Opinion

ORFINGER, J.

Sterling Crest, Ltd. (“Sterling”), a limited partnership, and Royal American Development, Inc. (“Royal American” or “the General Partner”), collectively Appellants, appeal the trial court's partial summary judgment granting specific performance and compelling the sale of the Sterling Crest Apartments, a 360–unit apartment complex in Orange County, Florida (“the Property”), to Blue Rock Partners Realty Group, LLC (“Blue Rock”). Sterling contends that the trial court erred in granting partial summary judgment because disputed factual issues exist concerning its limited partners' consent to the sale and whether Blue Rock was ready, willing, and able to close the transaction as of the closing date. We agree and reverse.¹

Joseph Chapman, IV serves as President of Royal American, Sterling's only general partner. Royal American owns a fifty percent interest in Sterling, while Vita Via, Inc. and Lishil Enterprises, L.P., Sterling's two limited partners (“the Limited Partners”), collectively own the remaining fifty percent. Dr. Hilary Reich serves as the Limited Partners' representative for all matters concerning the proposed sale of the Property, Sterling's sole asset. The limited partnership is governed by a limited partnership agreement, which states that the limited partnership was formed

(i) to acquire and own a parcel of land in Orlando, Orange County, Florida (the “Property”), (ii) to obtain financing to develop and construct apartment buildings thereon, including all improvements related thereto, (iii) to carry on any and all activities related to the Property, including, without limitation of the foregoing, the development and construction of apartment buildings including all improvements related thereto, (iv) to manage, operate, and rent the apartment buildings constructed on the Property in accordance with any and all applicable rules and regulations of any and all governmental agencies, and (v) to carry on any and all business and investment activities incident to the foregoing.

The limited partnership agreement gives the General Partner the authority to enter into negotiations and contracts on behalf of the limited partnership, but the consent of all Limited Partners is required to sell or transfer the Property.² Consent is defined in the limited partnership agreement as

the written consent of a Partner, or the affirmative vote of such Partner at a meeting duly called and held pursuant to this [a]greement, as the case may be, to do the act or thing for which the consent is required or solicited, or the act of granting such consent, as the context may require.

According to Mr. Chapman, he discussed his interest in selling the Property with Dr. Reich in 2012, but Dr. Reich maintains that Mr. Chapman did not discuss the price at that time. In November 2012, Sterling listed the Property for sale. On January 25, 2013, Mr. Chapman forwarded Dr. Reich two e-mails from a broker, summarizing the best and final offers received on the Property. Several days later, Dr. Reich expressed her concerns about the tax implications of the sale via email as well as in a telephone conversation with Mr. Chapman. From January 28, 2013, to February 21, 2013, Dr. Reich exchanged e-mails with Mr. Chapman, seeking a tax analysis and a proposal regarding the distribution of the sale proceeds. She also sought assurance that he would not attempt to sell the Property without the consent of all of the Limited Partners, which Mr. Chapman refused to do.

Still, according to Mr. Chapman, he had the consent of the Limited Partners to sell the Property when the contract (“the Agreement”) for the sale of the Property to Blue Rock for $27,250,000 was executed on February 11, 2013.³ In the Agreement, Sterling represented that it had full power and authority to enter into the Agreement, the Agreement did not conflict with the limited partnership agreement, and its partners had authorized and unanimously approved the Agreement. Sterling was also required to “promptly disclose in writing” to Blue Rock any material changes or breaches relating to its representations and warranties.

In a February 21, 2013, telephone call, Dr. Reich informed Mr. Chapman that she did not consent to the sale of the Property. Four days later, she reiterated her lack of consent in two e-mails to Mr. Chapman.⁴ In a reply email sent that same day, Mr. Chapman indicated that Dr. Reich had “already made it clear that [she] did not consent to the sale [of the Property].” Dr. Reich perceived this exchange of e-mails as confirmation that Mr. Chapman understood, and was previously aware, that she did not consent to the sale of the Property. She claimed that Royal American never requested the Limited Partners' consent and that there was no partnership meeting at which unanimous consent was given to sell the Property. According to Dr. Reich, it was not until February 27, 2013, that she discovered that Mr. Chapman had executed the Agreement with Blue Rock on behalf of Sterling.

When Blue Rock learned of the intra-partnership conflict embroiling Sterling, it filed a five-count lawsuit against Appellants, including a claim for specific performance. Ultimately, Blue Rock filed a motion for partial summary judgment on its claim for specific performance, asserting that there were no material issues of fact in dispute. The trial court granted partial summary judgment in Blue Rock's favor, finding that the Limited Partners objected only after they permitted the General Partner to enter into the Agreement with Blue Rock. The court reasoned that it was inequitable for Sterling to prevent Blue Rock from completing the purchase of the Property due to its own actions. As a result, the trial court entered a mandatory injunction, requiring Sterling to close on the sale of the Property within ninety days. This appeal follows.

Summary judgment is proper when “there is no genuine issue of material fact and if the moving party is entitled to a judgment as a matter of law.” Volusia Cnty. v. Aberdeen at Ormond Beach, L.P., 760 So.2d 126, 130 (Fla.2000). As such, a trial court's ruling on a motion for summary judgment is subject to de novo review. See Aberdeen at Ormond Beach, 760 So.2d at 132–33 ; Scheibe v. Bank of Am., N.A., 822 So.2d 575, 575 (Fla. 5th DCA 2002). The legal interpretation of a contract is also reviewed de novo. Whitley v. Royal Trails Prop. Owners' Ass'n, 910 So.2d 381, 383 (Fla. 5th DCA 2005). The intent of the parties governs the contract interpretation and that intent is to be determined from the plain language of the agreement and the everyday meaning of the words used. Id. Because real property is considered unique, money damages to a contract purchaser of real property is an inadequate remedy at law. Henry v. Ecker, 415 So.2d 137, 140 (Fla. 5th DCA 1982).

Sterling asserts that under Florida law and the limited partnership agreement, the Limited Partners' consent was required in order to sell the Property, and whether it had such approval is a disputed issue of fact precluding the partial summary judgment in favor of Blue Rock. In contrast, Blue Rock contends that Royal American had actual, statutory, and apparent authority to execute the Agreement on Sterling's behalf.

Actual Authority Under the Limited Partnership Agreement

Under the limited partnership agreement, the General Partner could sell the Property only with the consent of all the Limited Partners, represented by Dr. Reich. The Limited Partners could express their approval through written consent, an affirmative vote at a partnership meeting, or by “the act of granting such consent, as the context may require.” In this case, there is no record evidence showing that the Limited Partners gave consent in writing or at a partnership meeting. Whether consent was given by act or through a course of dealing with partnership affairs is far from clear.

In granting the partial summary judgment in favor of Blue Rock, the trial court held that since the Limited Partners had knowledge of the offers and were aware of the ongoing negotiations between Sterling and Blue Rock to effectuate a sale, they consented to the sale by acquiescence or waived their right to consent. We disagree. The sale of the Property is conditioned upon the Limited Partners' affirmative consent, not the failure to object. “[T]he intent to waive a right must be unmistakably manifested, and is not to be inferred from a doubtful or equivocal act.” Orange Steel Erectors, Inc. v. Newburgh Steel Prods., Inc., 225 A.D.2d 1010, 640 N.Y.S.2d 283, 285 (N.Y.1996).

Statutory Authority

Whether a limited partnership is bound by a general partner's act depends on if the act is one that occurs in the ordinary course of the limited partnership's activities. See § 620.1402, Fla. Stat. (2013). Here, there is no evidence suggesting that the sale of the Property, the limited partnership's sole asset, was an act in the ordinary course of the limited partnership's activities. For that reason, we distinguish RNR Investments Ltd. Partnership v. Peoples First Community Bank, 812 So.2d 561 (Fla. 1st DCA 2002), which held that third parties have no duty to inspect the partnership agreement or inquire otherwise to ascertain the extent of a partner's actual authority in a transaction occurring in the ordinary course of business. Id. at 566. The limited partnership here was created for the purpose of developing, constructing, and leasing an apartment complex. While Royal American believed that the Property would eventually be sold, the limited partnership was not...