Source: https://lawandequity.com/2009/10/22/irreconcilable-differences-the-stein-v-paradigm-court-divorces-itself-from-precedent-on-the-interstate-land-sales-full-disclosure-act/
Timestamp: 2019-04-19 17:05:06+00:00

Document:
Seneca the Elder, Controversiae , Bk. 1, ch. 1, sect. 14; translation from Norman T. Pratt Seneca’s Drama (Chapel Hill: University of North Carolina Press, 1983) p. 140.
William Shakespeare, Measure for Measure (c. 1604), Act II, scene i.
Now that your eyes have glazed over, and I have burned my reader attention credits: let me get to the point. There have been four cases, as mentioned above that defined the two-year completion exemption (15 U.S.C. Sec. 1702(a)(2)) for the State of Florida. For starters, let’s examine the case of Kamel v. Kenco/The Oaks At Boca Raton LP, 2008 U.S. App. LEXIS 21762 (11th Cir. Oct. 16, 2008). The purchaser lost in the Kamel case, but the opinion yielded a very important guideline for the interpretation of the two-year completion exemption.
Because the ILSA is a federal statute, federal law governs its interpretation. Sola Electric Co. v. Jefferson Electric Co., 317 U.S. 173, 176, 63 S.Ct. 172, 174, 87 L.Ed. 165 (1942). State contract law, however, is the ultimate arbiter of whether a contract actually “obligates” a seller to erect a building within two years. See Markowitz v. Northeast Land Co., 906 F.2d 100, 105 (3d Cir.1990); see also Guidelines for Exemptions Available Under the Interstate Land Sales Full Disclosure Act, 61 Fed.Reg. 13596, 13603 (Mar. 27, 1996) [hereinafter, Guidelines].
If the Stein court reviews the “obligation” under Sec. 1702(a)(2) then as a federal court they must follow state contract law.
If a federal court must follow state contract law, then the Plaza Court and Home Devco opinions are controlling.
Therefore, if the Stein court reviews the “obligation” under Sec. 1702(a)(2), then the Plaza Court and Home Devco opinions are controlling.
What is perhaps most incredible in this situation is that not one, but two intermediate state appellate courts specifically agreed with the lower court’s reasoning on the 1702(a)(2) “obligation” in Stein v. Paradigm Mirasol. Both of these decisions of the intermediate appellate courts were issued prior to the Eleventh Circuit’s opinion in Stein. This is really just a long-winded way of saying that the Stein opinion defies logic. However, just as with any logical proof, the conclusion is not as important as the methodology employed to reach that conclusion.
Judge Hurley discussed the competing points of view and concluded, in line with a series of opinions FN3 by Judge Steele, in the Middle District of Florida, that the test is impossibility of performance under Florida law. Jankus, 619 F.Supp.2d at 1339-41. We agree with Judges Steele and Hurley that the question is whether Plaza’s contractual provisions are recognized within Florida’s doctrine of impossibility.
FN3. Disimone v. LDG South II, LLC, 2009 WL 210711 (M.D.Fla. Jan.28, 2009); Van Hook v. The Residences at Coconut Point, LLC, 2008 WL 2740331 (M.D.Fla. July 10, 2008); Stein v. Paradigm Mirsol, LLC, 551 F.Supp.2d 1323 (M.D.Fla.2008).
The provision in the Agreement provides that the two year period is extended “for any delay caused by acts of God, weather conditions, restrictions imposed by any governmental agency, labor strikes, material shortages or other delays beyond the control of the Seller….” * * * The other exclusions, however, are broad enough to seriously undermine the obligation to complete the condominium within two years. This provision does not limit the permissible delays to those justifiable under an impossibility of performance, but allows exclusions for far less compelling reasons, culminating in the catchall “other delays beyond the control of the Seller.” In the Agreement in this case, none of the exclusions are required to satisfy impossibility standards, and the catchall “other delays beyond the control of the Seller” is certainly broad enough to allow the Seller to excuse completion on a wide variety of events. The Court concludes that the provision in the Agreement extending the completion period for delays not qualifying under Florida’s impossibility of performance principles renders the obligation to complete the condominium within two years illusory. Therefore the Agreement is not exempt from the ILSFDA because it does not “obligate” completion of the condominium within two years.
When you read Stein v. Paradigm Mirasol, LLC, __ F.3d __, 2009 WL 3110819 (11th Cir. Sept. 30, 2009), you will notice that the Court does not address whether or not the Supreme Court of Florida would agree with two of the Florida intermediate appellate courts. In fact, you won’t see a mention of either the Plaza Court case or the Home Devco case anywhere in the Eleventh Circuit’s opinion in Stein v. Paradigm Mirasol, LLC. It seems rather odd that the Kamel court tells us that we must look to state law, and yet the Stein court fails to mention two cases that are directly on point. Perhaps there is some unwritten law at work here. A law where “what goes up, must come down” and buyer’s remorse, constitute a complete defense to federal statutes. This “unwritten” law seems to be prevalent in the recent Federal decisions on ILSA. Seneca would be proud. To the state courts of Florida: The only thing you are the arbiter of is a dry husk erected in a barren field. A place where the passager hawks take their rest on the migration south, to where the prey is now both plentiful and easy.
Tim, I really liked your earlier post on the issue of Plaza Court being definitive as to Florida state law and thus binding on the federal courts. Thus, I was especially disappointed with the new Stein decision. My recollection is that not only did the 11th Cir. panel in Stein fail to reference the Plaza Court or the Home Devco opinions, it never even mentioned the Kamel v. Kenco-Oaks opinion either. Thus, it either simply ignored the Kamel court’s implicit decision (if not perfectly explicit) to require an impossibility standard for force majeure clauses or it wasn’t briefed about Kamel. I haven’t read the underlying briefing in the Stein appeal but if the Kamel opinion was not presented to the Stein panel, that would help explain the Stein panel’s failure to address Kamel. If that’s the case, I can’t help but wonder what would have happened if it had been aware of Kamel v. Kenco-Oaks.
At a minimum I doubt it would have taken such a flippant tone. I, for one, certainly don’t appreciate the court taking such a disrespectful approach to the buyers’ case. They have every right to vigorously defend their legal rights and the last thing we need is a judge who editorializes from the bench.
Hopefully, Joe Stern and the Steins will have better luck with the entire panel on his motion for rehearing en banc.
I have not read the undelrying briefs, but the individuals running the Eleventh Circuit are the best and the brightest the country has to offer. Much smarter than me.
That being said, I would find it a virtual impossibility that they were not aware of Kamel and Plaza Court. Although the Home Devco opinion came out seven days prior, I would bet they were aware of that as well. Why did they not cite them? I can only speculate. It does seem that they don’t favor these cases, and don’t want to see any more of them. But that is only speculation.

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