Filed: Dec. 08, 2010
Latest Update: Feb. 21, 2020
Summary: [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT FILED _ U.S. COURT OF APPEALS ELEVENTH CIRCUIT DECEMBER 8, 2010 No. 09-14725 _ JOHN LEY CLERK D.C. Docket Nos. 08-00790-CV-ORL-35-GJK, 08-01263-CV-ORL-35-GJK CARLOS RODRIGUEZ, MIGUEL RODRIGUEZ, ISABEL ANGEL, Plaintiffs-Counter- Defendants-Appellees, versus BA EOLA, LLC, Defendant-Counter- Claimant-Appellant. _ Appeal from the United States District Court for the Middle District of Florida _ (December 8, 2010) Before
Summary: [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT FILED _ U.S. COURT OF APPEALS ELEVENTH CIRCUIT DECEMBER 8, 2010 No. 09-14725 _ JOHN LEY CLERK D.C. Docket Nos. 08-00790-CV-ORL-35-GJK, 08-01263-CV-ORL-35-GJK CARLOS RODRIGUEZ, MIGUEL RODRIGUEZ, ISABEL ANGEL, Plaintiffs-Counter- Defendants-Appellees, versus BA EOLA, LLC, Defendant-Counter- Claimant-Appellant. _ Appeal from the United States District Court for the Middle District of Florida _ (December 8, 2010) Before E..
More
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
DECEMBER 8, 2010
No. 09-14725
________________________ JOHN LEY
CLERK
D.C. Docket Nos. 08-00790-CV-ORL-35-GJK,
08-01263-CV-ORL-35-GJK
CARLOS RODRIGUEZ,
MIGUEL RODRIGUEZ,
ISABEL ANGEL,
Plaintiffs-Counter-
Defendants-Appellees,
versus
BA EOLA, LLC,
Defendant-Counter-
Claimant-Appellant.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(December 8, 2010)
Before EDMONDSON, HILL and ALARCON,* Circuit Judges.
___________________
* Honorable Arthur L. Alarcon, United States Circuit Judge for the Ninth Circuit, sitting
by designation.
HILL, Circuit Judge:
The issue in this appeal is whether or not a condominium purchase
agreement between the buyers, Carlos Rodriguez, Miquel Rodriguez, and Isabel
Angel (Buyers), and the seller, BA Eola, LLC (Developer), is exempt from the
requirements of the Interstate Land Sales Full Disclosure Act (ILSFDA), 15
U.S.C. § 1701 et seq. The district court found that it was not. It granted summary
judgment in favor of the Buyers, the return of their $40,850.00 deposit, plus
interest, reasonable attorneys’ fees, and costs.
Twenty-seven days after judgment issued in this case, and, fifteen days after
notice of appeal was filed, a panel of this court decided Stein v. Paradigm Mirasol,
LLC, 586 F.3d 849 (11th Cir. 2009), cert. denied, — U.S. —,
130 S. Ct. 1903,
176
L. Ed. 2d 366 (2010). As the undisputed facts of this case are controlled by Stein,
we reverse the judgment of the district court, and remand for further proceedings
consistent with this opinion.
I.
On May 1, 2007, the Buyers signed a contract with the Developer to buy a
preconstruction condominium unit (Unit) at 101 Eola Condominiums in Orlando,
Florida, for $408,500.00. The Buyers put down a 10% deposit, $40,850.00, on the
Unit. Paragraph 5(a) of the contract specified that the Unit would be built within
2
two years.1 The contract also included Paragraph 20, a force-majeure provision,
that allowed for delays in certain circumstances.2
The Unit was completed well within the two-year period. A certificate of
occupancy was issued, filed and recorded for the condominium development on
March 12, 2008. On February 11, 2008, the Developer notified the Buyers that the
Unit was scheduled to be closed on March 18, 2008, at 1:00 p.m. Buyers failed to
appear at closing.
On April 4, 2008, Developer’s counsel notified Buyers of their failure to
attend the scheduled closing, and offered to reschedule. On April 23, 2008,
1
In pertinent part, paragraph 5(a) states: “Notwithstanding anything to the contrary
herein, [the Developer] shall have the right from time to time by notice to [the Buyers] to extend
the closing . . . , provided however, in no event shall the Closing occur any later than that date
which is two years from the date of this Agreement.” (emphasis added).
2
A force-majeure clause is defined as “a contractual provision allocating the risk of loss
if performance becomes impossible or impracticable, especially as a result of an event or effect
that the parties could not have anticipated or controlled. Black’s Law Dictionary, 718 (9th ed.
2009).
Paragraph 20 of the Agreement reads in its entirety:
20. Force majeure. Either party hereto shall be excused for the period of any
delay in the performance of any obligations hereunder when such delay is
occasioned by cause or causes beyond the control of the party whose performance
is so delayed and the time for performance shall be automatically extended for a
like period. Such causes shall include, without limitation, all labor disputes, civil
commotion, war, warlike operations, invasion, rebellion, hostilities, military or
usurped power, sabotage, government regulations or controls, fire or other
casualty, inability to obtain any necessary materials or services, or acts of God.
(emphasis added).
3
Buyers sent a written demand letter to the Developer to rescind the contract and
return their deposit, claiming Developer had failed to provide them with a property
report required by the ILSFDA. See 15 U.S.C. § 1703(c). While acknowledging
that it had not provided a property report to the Buyers, the Developer claimed that
the Unit was exempt from ILSFDA requirements. See Section 1702(a)(2).3 It
refused to rescind the contract, declared the Buyers in default, and exercised its
right to retain the deposit under the contract.
On May 1, 2008, Buyers filed a complaint in district court alleging that the
Developer had violated the ILSFDA, Florida state law, and breached the contract.
They sought to recover the deposit, other damages, attorneys’ fees, prejudgement
interest, and costs.
The material facts were undisputed. Both the Buyers and the Developer
filed cross-motions for summary judgment. The district court, adopting the report
and recommendation of the magistrate judge, granted summary judgment in favor
of the Buyers, and against the Developer, for the $40,850.00 deposit amount, plus
interest, reasonable attorneys’ fees and costs. The district court held that
3
Section 1702(a)(2) reads in pertinent part: “Exemptions. Sale . . . of lots generally.
Unless the method of disposition is adopted for the purpose of evasion of this chapter, the
provisions of this chapter shall not apply to . . . the sale . . . of any improved land on which there
is a residential . . . building, or the sale . . . of land under a contract obligating the seller . . . to
erect such a building thereon within a period of two years.”
4
paragraph 20 of the contract, the force-majeure clause, fatally undermined the
Developer’s obligation to complete construction of the Unit within two years,
rendering the contract illusory.4 The Developer appeals.
II.
The question is whether or not the district court erred in granting summary
judgment to the Buyers, and denying the Developer’s cross-motion for summary
judgment, on the basis that the force-majeure clause rendered the two-year
commitment for closing illusory. In so doing, the district court held that the
contract was not exempt under Section 1702(a)(2) of the ILSFDA. Shortly after
4
The district court stated:
The only way to read [Paragraph 5(a) and Paragraph 20] in concert is to accept
that Paragraph 5(a) set the date for closing at two years from contract, and
Paragraph 20 permitted [the Developer] to exceed that obligation under the
contract for the reasons provided under the paragraph. In fact, by its plain
meaning, it is difficult to discern a reason for delay that would not be excused
under Paragraph 20. Consequently, the Magistrate Judge was correct that the
expanse of Paragraph 20 rendered the two-year commitment for closing illusory.
Compare Harvey v. Lake Buena Vista Resort, LLC, 568 F. Supp. 2d 1354, 1359
(M.D. Fla. 2008), aff’d, 306 F. App’x 471 (11th Cir. 2009), (sic) (finding an
obligation illusory when it conditioned performance on “any ground cognizable in
contract law as impossibility or frustration of performance, including, without
limitation, wind, rain, lightning and storm”), with Kamel v. Kenco/The Oaks at
Boca Raton LP, 321 F. App’x 807, 810 (11th Cir. 2008) (finding the one-year and
eleventh month commitment was not rendered illusory when it conditioned
performance on “delays cause (sic) by Buyer or acts of God, the unavailability of
materials, strikes, other labor problems, governmental orders, or other events
which would support a defense based upon impossibility of performance for
reasons beyond the Seller’s control.”).
Kamel, an unpublished case cited by the district court, is in accord with Stein.
5
judgment issued in this case, this court issued Stein. Stein, 586 F.3d at 849.
The facts of Stein are eerily similar to this appeal. As here, the
condominium purchasers in Stein made a down payment with the developer. The
contract specified that the condominium would be built within two years. Id. at
852. As here, the contract included a similarly-worded force-majeure provision
that allowed for delays under certain circumstances.
Id. As here, if the Stein
developer breached the contract, the Steins could get back their deposit, with
interest and any actual damages.
Id. After the housing bubble in Florida burst, the
Steins had second thoughts and wanted out of their contract. As here, they gave
written notice to the developer that they were terminating their contract, as the
developer had failed to provide them with a property report under the ILSFDA.
Id. As here, the developer refused to return the Steins’s deposit, contending that
the contract between the parties fit the exemption set out in ILSFDA for “the sale
or lease of any improved land on which there is a residential, commercial,
condominium, or industrial building, or the sale or lease of land under a contract
obligating the seller or lessor to erect such a building thereon within a period of
two years.”
Id. citing 15 U.S.C. § 1702(a)(2).
As here, the Stein developer completed construction of the condominium
within two years, as it had contracted to do so, and provided the Steins with a
6
notice of issuance of the Certificate of Occupancy. Id. at 852-53. As here, the
Steins filed suit in district court alleging violations of the ILSFDA and state law.
Id. at 852-53. As here, the parties filed cross-motions for summary judgment and
the district court granted summary judgment in favor of the buyers, allowing the
Steins to terminate the contract and requiring the developer to return the deposit.
Id. at 853. As here, the district court held that the force-majeure clause fatally
undermined the developer’s obligation to complete construction within two years,
as the scope of that clause extended beyond events the law would recognize as
establishing impossibility of performance.
Id. As here, the Stein district court
held that the developer could not claim the two-year completion exemption under
the ILSFDA because the contract rendered the developer’s obligation to construct
the condominium “illusory.”
Id.
In a thoughtful, well-reasoned opinion, the Stein panel of this court reversed
and remanded the judgment of the district court, finding that “[e]ven though the
contract excuses delays beyond the [Developer’s] control, it is still one
‘obligating’ [the Developer] to complete construction of the condominium within
two years for purposes of § 1702(a)(2) of the [ILSFDA].”
Id. at 858.5 The same is
5
The Stein panel takes a dim view of claims brought under the ILSFDA, describing it as
“a federal statute that has become an increasingly popular means of channeling buyer’s remorse
into a legal defense to a beach of contract claim.” Stein, 586 F.3d at 852.
7
true here.6
III.
Our purpose is not to reinvent the wheel. We conclude that Stein is
controlling precedent in this case. On that basis we reverse the judgment of the
district court and remand for further proceedings consistent with this opinion.
REVERSED AND REMANDED.
6
On page 20, note 6, of the Buyer’s brief, an attempt is made to distinguish Stein on the
basis that it was wrongly decided, that it “essentially eviscerate[s] ILSFDA and create[s] a huge
loophole for any developer who wishes to dispense with ILSFDA’s disclosure requirements.”
We find this argument to be without merit.
8
