Pretka et al v. Kolter City Plaza II, Inc.
Filing
165
OPINION AND ORDER granting 131 Motion for Summary Judgment. This case is CLOSED. Signed by Judge Kenneth A. Marra on 3/22/2013. (ir)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 09-80706-CIV-MARRA
ANDREW PRETKA et al.,
Plaintiffs,
vs.
KOLTER CITY PLAZA II INC.,
Defendant.
_____________________________________/
OPINION AND ORDER
This cause is before the Court upon Defendant Kolter City Plaza II Inc.’s Motion for
Summary Judgment (DE 131). The motion is fully briefed and ripe for review. The Court held
oral argument on the motion. (DE 164.) The Court has carefully considered the Motion and the
arguments of the parties and is otherwise fully advised in the premises.
I. Background
The facts, as culled from affidavits, exhibits, depositions, answers, answers to
interrogatories and reasonably inferred therefrom in a light most favorable to the non-moving
party, for the purpose of this motion, are as follows:
In 2004 and 2005, Plaintiffs entered into agreements (the “Purchase Agreements”) to
purchase condominiums in a West Palm Beach high-rise condominium, developed by Defendant
Kolter City Plaza II, Inc. (“Defendant”), named Two City Plaza. (Third Am. Compl. ¶ ¶ 20-28,
DE 67.) Before signing the Agreements, Plaintiffs received a Property Report providing:
Construction related activities are anticipated to commence around October 2004
and it is estimated that construction will be completed by July 31, 2007. Although this is an
estimated full completion date, there are no firmly established dates for completing the
construction and, therefore, there are no provisions for penalties relative to missed
construction dates.
(Edwin F. Jahn III Decl. ¶ 5, DE 132-1; Property Report, Ex. 1-A, DE 132-1.) The Agreement
provided for an estimated completed date for the units of July 31, 2007:
The estimated date of completion of construction of Condominium is July 31, 2007. The
Developer agrees that it will use commercially reasonable efforts to complete construction
by this date, but actual completion as of this date is not guaranteed. Under no circumstances
shall the Developer be liable for any damages, costs, expenses and liabilities or
inconvenience incurred by Buyers of the Units because of the failure to complete
construction by July 31, 2007 regardless of the cause of the delay.
(Property Agreements ¶ 3A, Ex. A-I, DE 67.)
In May and August 2006, after several hurricanes, Defendant sent Plaintiffs letters
that the estimated completion date for Two City Plaza had been changed to late summer 2008.
(Jahn Decl. ¶¶ 6-8, Exs. 1-B, 1-C,1-D; Harriet Dinari Dep. 55, DE 132-2; Bruce Fisher Dep. 56-57,
DE 132-3; Daniel D’Loughy Dep. 73-74, DE 132-4; Peter O’Connell Dep. 84-85, DE 132-5.) Next,
in September 2006, Defendant sent Plaintiffs a notice formally amending the Purchase Agreement
and condominium documents (the “September 2006 Amendment”). (Jahn Decl. ¶ 10, Ex. 1-D;
O’Connell Dep. at 94; Andrew Pretka Dep. 75-76, DE 132-6.)
The September 2006 Amendment stated that the new “Estimated Completion
Date” was July 31, 2008 (the “Amended Estimated Completion Date”), but that completion was
not guaranteed by that date. The September 2006 Amendment also provided the “State Required
Notification” that a purchaser “shall have 15 days to notify the developer of the buyer’s intention to
cancel the purchase contract after the date of receipt of any amendment which materially alters or
modifies the offering in a manner which is adverse to the purchaser.” (Sept. 2006 Amendment,
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attached to Jahn Decl. at Ex. 1-D.) Plaintiff O’Connell sent a letter purporting to rescind the
contract, but the letter was qualified by several conditions, and, after sending the letter, he continued
to perform under his Purchase Agreement. (O’Connell Dep. at 96-97, 99-100, 113-114, 115-116.)
Also, Plaintiffs never notified Defendant in writing, before this lawsuit was filed, that it was
in breach of the Purchase Agreements,1 nor did Plaintiffs demand that Defendant complete
construction by some earlier date. (Dinari Dep. 66-67; Fisher Dep. 57, 58, 66; D’Loughy Dep. 76,
79, 83-84; Pretka Dep. 71-73, 76-78, 85; Michele Litvak Dep. 75-76, DE 132-7; Paul Litvak Dep.
60-61, 67, 84, DE 132-8; Clarence Elder Dep. 99, 115, DE 132-9; Renee Pfefferbaum Dep. 70-73,
75-76, DE 132-10; Helene Bednowitz Dep. 59, DE 132-11; Mindy Bednowitz Dep. 46-47, DE 13212.) Moreover, after Plaintiffs received notice of the change of the completion date and of their
option to rescind within fifteen (15) days, they took the following actions consistent with the
expression of an intention to continue to perform under the contracts. For example, Ms. Dinari made
additional deposit payments and agreed to enter a “flip program,” under which Defendant would
attempt to re-sell her unit. (Dinari Dep. 54, 59.) Mr. Elder negotiated a new deposit payment
schedule, made additional deposit payments and listed the units he contracted to purchase for resale.
(Elder Dep. 106-108, 116-118, 121.) Mr. Fisher and the Bednowitz sisters selected carpet, tile and
cabinet finishes for their units, and delivered checks to Defendant to pay for upgrades. (Fisher Dep.
61-62; H. Bednowitz Dep. 52-53; M. Bednowitz Dep. 46-47.) Mr. O’Connell obtained an appraisal
on his unit and proceeded with his mortgage application. (O’Connell Dep. 99, 113-16.) Ms.
Pfefferbaum chose upgraded finishes, requested a specific parking spot, and asked Defendant to
1
Paragraph 15 of the purchase agreement states that Plaintiffs must notify Defendant
within 20 days of any purported default to allow Seller to cure the purported default. (Purchase
Agreement ¶ 15.)
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delay closing so that she could attend to matters in New York. (Pfefferbaum Dep. 62, 71-73, 75.)
On August 8, 2008, Plaintiffs’ units were finished and had been issued a conditional
certificate of occupancy. (Certificate of Occupancy, Ex. 1-E, attached to Jahn Decl.) In December
of 2008, Mr. D’Loughy renegotiated his agreement, purchasing a larger unit, with a second parking
space and an upgraded storage unit, at a lower price. As part of that transaction, Mr. D’Loughy
entered a termination agreement, which transferred his existing deposit to a new unit and signed a
release. (D’Loughy Dep. 90, 98-99, 104, 108, 199-120; Release, Ex. 54-56, attached to D’Loughy
Dep.)
Plaintiffs filed suit against Defendant on April 9, 2009, when the housing market was in
decline. (April 9, 2009 Compl., DE 1; Fisher Dep. 81, D’Loughy Dep. 79; Pretka Dep. 93-94; M.
Litvak Dep. 93; P. Litvak Dep. 86; Elder Dep. 147; H. Bednowitz Dep. 64; M. Bednowitz Dep. 50.)
In moving for summary judgment, Defendant contends that Plaintiffs cannot prevail on their
breach of contract claim because they: (1) failed to give notice of an intent to rescind when they
were notified of a change in the estimated completion date; (2) failed to demand completion or give
notice of default and an opportunity to cure and (3) unreasonably delayed filing suit and continued
to act in furtherance of their purchase agreements.
Plaintiffs respond that because Defendant breached the contracts in 2005, they were
discharged of their obligation to perform under the contracts. Additionally, Plaintiffs assert that they
did not unreasonably delay bringing the instant suit.
II. Summary Judgment Standard
The Court may grant summary judgment “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
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Civ. P. 56(a). The stringent burden of establishing the absence of a genuine issue of material fact
lies with the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The Court should
not grant summary judgment unless it is clear that a trial is unnecessary, Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986), and any doubts in this regard should be resolved against the moving
party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970).
The movant “bears the initial responsibility of informing the district court of the basis for its
motion, and identifying those portions of [the record] which it believes demonstrate the absence of
a genuine issue of material fact.” Celotex Corp., 477 U.S. at 323. To discharge this burden, the
movant must point out to the Court that there is an absence of evidence to support the nonmoving
party’s case. Id. at 325.
After the movant has met its burden under Rule 56(a), the burden of production shifts and
the nonmoving party “must do more than simply show that there is some metaphysical doubt as to
the material facts.” Matsushita Electronic Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986). “A party asserting that a fact cannot be or is genuinely disputed must support the assertion
by citing to particular parts of materials in the record . . . or showing that the materials cited do not
establish the absence or presence of a genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact.” Fed. R. Civ. P. 56(c)(1)(A) and (B).
Essentially, so long as the non-moving party has had an ample opportunity to conduct
discovery, it must come forward with affirmative evidence to support its claim. Anderson, 477 U.S.
at 257. “A mere ‘scintilla’ of evidence supporting the opposing party’s position will not suffice;
there must be enough of a showing that the jury could reasonably find for that party.” Walker v.
Darby, 911 F.2d 1573, 1577 (11th Cir. 1990). If the evidence advanced by the non-moving party “is
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merely colorable, or is not significantly probative, then summary judgment may be granted.”
Anderson, 477 U.S. 242, 249-50.
III. Discussion
The Court begins its analysis by highlighting the various statutory and administrative bases
underpinning this case.
Florida Statute § 718.504 provides in relevant part:
Every developer of a residential condominium which contains more than 20 residential units,
or which is part of a group of residential condominiums which will be served by property to
be used in common by unit owners of more than 20 residential units, shall prepare a
prospectus or offering circular and file it with the Division of Florida Condominiums,
Timeshares, and Mobile Homes prior to entering into an enforceable contract of purchase and
sale of any unit or lease of a unit for more than 5 years and shall furnish a copy of the
prospectus or offering circular to each buyer. . . . The prospectus or offering circular must
contain the following information:
...
4) Beginning on the first page of the text (not including the summary and index), a
description of the condominium, including, but not limited to, the following information:
...
(b) A description of the condominium property, including, without limitation:
...
3. The estimated latest date of completion of constructing, finishing, and equipping. In lieu
of a date, the description shall include a statement that the estimated date of completion of
the condominium is in the purchase agreement and a reference to the article or paragraph
containing that information.
Florida Statute § 718.504. (emphasis added)
Florida Statute § 718.503 provides in relevant part:
(1) Developer disclosure.-(a) Contents of contracts.--Any contract for the sale of a residential unit or a lease thereof for
an unexpired term of more than 5 years shall:
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1. Contain the following legend in conspicuous type: THIS AGREEMENT IS VOIDABLE
BY BUYER BY DELIVERING WRITTEN NOTICE OF THE BUYER'S INTENTION TO
CANCEL WITHIN 15 DAYS AFTER THE DATE OF EXECUTION OF THIS
AGREEMENT BY THE BUYER, AND RECEIPT BY BUYER OF ALL OF THE ITEMS
REQUIRED TO BE DELIVERED TO HIM OR HER BY THE DEVELOPER UNDER
SECTION 718.503, FLORIDA STATUTES. THIS AGREEMENT IS ALSO VOIDABLE BY
BUYER BY DELIVERING WRITTEN NOTICE OF THE BUYER'S INTENTION TO
CANCEL WITHIN 15 DAYS AFTER THE DATE OF RECEIPT FROM THE DEVELOPER
OF ANY AMENDMENT WHICH MATERIALLY ALTERS OR MODIFIES THE OFFERING
IN A MANNER THAT IS ADVERSE TO THE BUYER. ANY PURPORTED WAIVER OF
THESE VOIDABILITY RIGHTS SHALL BE OF NO EFFECT. BUYER MAY EXTEND
THE TIME FOR CLOSING FOR A PERIOD OF NOT MORE THAN 15 DAYS AFTER
THE BUYER HAS RECEIVED ALL OF THE ITEMS REQUIRED. BUYER'S RIGHT TO
VOID THIS AGREEMENT SHALL TERMINATE AT CLOSING. FIGURES
CONTAINED IN ANY BUDGET DELIVERED TO THE BUYER PREPARED IN
ACCORDANCE WITH THE CONDOMINIUM ACT ARE ESTIMATES ONLY AND
REPRESENT AN APPROXIMATION OF FUTURE EXPENSES BASED ON FACTS
AND CIRCUMSTANCES EXISTING AT THE TIME OF THE PREPARATION OF THE
BUDGET BY THE DEVELOPER. ACTUAL COSTS OF SUCH ITEMS MAY EXCEED
THE ESTIMATED COSTS. SUCH CHANGES IN COST DO NOT CONSTITUTE
MATERIAL ADVERSE CHANGES IN THE OFFERING.
Florida Statute § 718.503. (emphasis added)
The Florida Administrative Code Rule 61B-18.001 states in part:
(3) At the time amendments are delivered to purchasers or lessees, pursuant to Rule
61B-17.006, F.A.C., the developer shall provide to those who have not closed a written
statement that if any of the above-referenced amendments materially alter or modify the
offering in a manner which is adverse to the purchaser, the purchaser or lessee shall have a
15-day voidability period.
Florida Administrative Code Rule 61B-18.001. (emphasis added)
Under section 718.504(4)(b)(3), a developer must include the estimated latest date of
completion in the prospectus or offering circular. As an alternative to providing the estimated
closing date in the offering documents, the developer may provide the information in the contract,
so long as in the offering material reference is made to its location in the contract. Hence, contrary
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to Plaintiffs’ assertions, the estimated closing date is part of the prospectus or offering circular, either
expressly or by reference.
It is also clear that the condominium statute gives the developer the ability to amend or
modify the offering in a materially adverse way to the purchaser. Since the developer has the ability
to modify or change the offering, and since the estimated closing date is part of the prospectus or
offering circular, it necessarily follows that the developer can materially modify or change the
estimated closing, subject to the buyer’s right to rescind within fifteen days after the buyer receives
notice of the change. It is also clear that the developer has the right to amend or modify the offering
to buyers with executed contracts, since only a contractually bound purchaser would need a right
to rescind. See Florida Administrative Code Rule 61B-18.001 (adverse amendments are to be
delivered to “purchasers .
.
.
who have not closed”).
Thus, the Court rejects Plaintiffs’
contention that a change in the completion date cannot apply to executed contracts.2
Here, there is no dispute that Plaintiffs received the September 2006 Amendment, that the
Amendment notified them of a material change to the estimated completion date, and that they never
gave any notice of an intent to rescind. Thus, summary judgment can be granted for Defendant on
this basis alone. However, there are additional grounds to grant summary judgment for Defendant.
2
The cases cited by Plaintiffs in support (Resp. at 11 n.4) do not state that this statutory
provision only applies to changes to the offering circular, and not to the purchase agreements.
See McGuinness v. Prospect Aragon, LLC, 981 So. 2d 496, 499 (Fla. Dist. Ct. App. 2008)
(contract executed for benefit of buyers did not start anew the 15 day right to cancel period
because the change benefitted purchaser and there was a specific agreement that it would not
restart the rescission period). Furthermore, the Court rejects Plaintiffs’ assertion that the
question of whether they were required and failed to rescind their purchase agreements is a
factual question that cannot be resolved on summary judgment. While the Court was not able to
resolve that question at the motion to dismiss stage (DE 76), the fully developed record now
allows the Court to make this determination as a matter of law.
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There is no dispute that Plaintiffs never put Defendant on notice that they considered
Defendant to be in breach either when Defendant changed the estimated date of completion or when
the estimated date of completion passed.3 Plaintiffs claim that Defendant breached the purchase
agreement as far back as 2005 by failing to use commercially reasonable efforts to complete
construction. Hence, Plaintiffs assert they were excused from further contractual performance.
Even assuming Defendant failed to use commercially reasonable efforts to complete the project
timely, the purchase agreement required Plaintiffs to notify Defendant within 20 days of any
purported default to allow Seller to cure the purported default. It is undisputed Plaintiffs failed to
do so. (Purchase Agreement ¶ 15.) See Henry v. Ecker, 415 So. 2d 137, 140 (Fla. Dist. Ct. App.
1982) (“When a contract for the sale and purchase of land does not make time of the essence as it
relates to closing, a party can breach that contract only by refusing to perform after demand that a
closing take place at a reasonable time and place.”)
Likewise, it is undisputed that Plaintiffs’ actions (i.e., selecting finishes for their units,
negotiating new deposit payment schedules, and making additional deposit payments) demonstrated
that they expected Defendant to perform its end of the bargain. See Acosta v. District Bd. of
Trustees of Miami-Dad Comm. College, 905 So. 2d 226, 229 (“Where a party fails to declare a
breach of contract, and continues to perform under the contract after learning of the breach, it may
be deemed to have acquiesced in an alteration of the terms of the contract, thereby barring its
enforcement.”); see also De Huy v. Osborne, 118 So. 161, 163 (1928) (purchasers have the duty to
“act without unreasonable delay . . . particularly if while the purchaser delays there ensures a
3
Thus, Plaintiffs’ argument that its demand would have been futile is unpersuasive since,
at the very least, Plaintiffs could have put Defendant on notice once the original estimated date of
completion passed.
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substantial change in the status or value of the property.”) Plaintiffs cannot fail to notify Defendant
of a material breach of the contract, induce Defendant to continue to perform under the contract,
have Defendant compete its performance under the contract and then assert the prior breach as a
basis to excuse their own performance.
Finally, the Court concludes, as a matter of law, that Defendant substantially complied with
the purchase agreement when it obtained the temporary certificate of occupancy eight days after the
new estimated completion date.4 An eight day delay in competing the project, as a matter of law, is
not a material breach of the contract.
IV. Conclusion
Accordingly, it is hereby ORDERED AND ADJUDGED as follows:
1)
Defendant’s Motion for Summary Judgment (DE 131) is GRANTED.
2)
The Court will separately issue judgment for Defendant.
3)
The Clerk shall close this case.
4)
All pending motions are denied as moot.
DONE AND ORDERED in Chambers at West Palm Beach, Palm Beach County, Florida,
this 22nd day of March, 2013.
______________________________________
KENNETH A. MARRA
United States District Judge
4
To the extent Plaintiffs suggest that the Court should look to when Defendant obtained
the final certificate of occupancy, and not the temporary certificate, the Court rejects that
argument. See Rosenstein v. Edge Investors, L.P., No. 07–80903, 2009 WL 903806, at * 8 (S.D.
Fla. Mar. 30, 2009).
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