Court Opinion

ID: 2744924
Source: CourtListenerOpinion
Date Created: 2014-10-23 14:05:11.262067+00
Date Added: 2024-06-11T10:11:46.988818
License: Public Domain

IN THE DISTRICT COURT OF APPEAL
                                      FIRST DISTRICT, STATE OF FLORIDA

SOUTHERN NATIONAL                     NOT FINAL UNTIL TIME EXPIRES TO
TRACK SERVICES, INC.,                 FILE MOTION FOR REHEARING AND
                                      DISPOSITION THEREOF IF FILED
      Appellant,
                                      CASE NO. 1D13-5412
v.

DJ GILLEY,

     Appellee.
___________________________/

Opinion filed October 23, 2014.

An appeal from the Circuit Court for Hamilton County.
Sonny Scaff, Acting Circuit Judge.

Richard W. Glenn, Jupiter, for Appellant.

Stephen C. Bullock of Brannon Brown Haley & Bullock, P.A., Lake City, for
Appellee.

THOMAS, J.

      Appellant appeals a final summary judgment with respect to its claims

against Appellee for breach of warranty by failure to disclose and for damages

based on fraudulent misrepresentation. Appellant also appeals the trial court’s

final judgment for attorney’s fees and costs predicated on Appellee having

prevailed in this matter.   As explained below, we reverse the final summary

judgment and remand the fee judgment.
                                Factual Background

        This matter arises out of a real estate transaction. Appellant contracted to

purchase from Appellee a piece of property that included a number of small

cottages and one larger “modular” structure. It is this latter structure that formed

the basis of the dispute below. Through its representative, Mr. Plezia, Appellant

purchased this property for the purpose of housing Appellant’s employees,

including Mr. Plezia, when they were in the vicinity performing work on behalf of

Appellant. According to Appellant’s complaint, the structure in question was

advertised as a two-bedroom residence complete with fountain and swimming

pool.

        Undisputed is that Mr. Plezia did a brief walk-through of the buildings on

the property, including the modular structure, before signing a contract which gave

Appellant the right to obtain an inspection of the property within 20 days of

acceptance. The contract also provided an express warranty by Appellee that, as of

the time of closing, there existed no violations of “land use plans, zoning,

restrictions, prohibitions and other requirements imposed by governmental

authority . . . .”

        Mr. Plezia testified that by all appearances, the structure was a two-bedroom

residence. Mr. Plezia’s unrebutted testimony is that, after signing the contract, but

before the transaction was closed, Mr. Plezia walked through the modular structure

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with Appellee and her daughter and discussed how, at various times, Appellee, her

daughter, and her parents resided in the structure and other aspects of the building

that Mr. Plezia testified were all typical of a residence. Also undisputed is that,

other than these walk-throughs, Appellant took no steps to have the property

inspected or to confirm that the building was built as a residence.

         Some months later, Mr. Plezia testified, he noticed water leakage problems

that worsened as the rainy season progressed, and he discovered what appeared to

be patches of black mold on some of the walls that had been painted over. He also

testified that later inspection revealed that the structure was not a modular

residence at all, but a large storage shed that had been converted into a residence

without conforming to the applicable building codes, permitting regulations, and

zoning laws.

         Appellant then filed a three count complaint for 1) breach of contractual

warranty by failure to disclose; 2) fraudulent misrepresentation; and 3) rescission.

The first count was based on the disclosure obligations mandated by Johnson v

Davis, 480 So. 2d 625 (Fla. 1985). On Appellee’s motion to dismiss, the trial court

dismissed that count based on its finding that the property in question was

commercial, not residential; therefore, the Johnson disclosure obligations were

inapplicable. 1

1
    Appellant also ultimately dropped its rescission claim.
                                            3
      By the time the court heard the motion for summary judgment leading to the

judgment on appeal, the relevant pending claims were for breach of the warranty as

to the property’s compliance with applicable codes and regulations, the attendant

failure to disclose that the structure in question was not a residential building, and

the claim for damages flowing from those misrepresentations about the true nature

of the property.

      Appellee asserted she was entitled to summary judgment, because there were

no genuine issues of material fact regarding whether Appellant failed to have the

property inspected until after signing the contract; Appellant performed little or no

due diligence; and all of the defects would have been readily discovered, had

Appellant “done its due diligence under the contract and pursuant to Florida law”

before purchasing and closing on the property. Appellee cited to portions of

Mr. Plezia’s deposition and her own affidavit in which she denied any “knowledge

of any Building Code compliance issues, any roof leaks, mold infestation or any

other alleged defects” of the property.

      In its final summary judgment, the court found that “[c]ertain material facts

to Plaintiff’s cause of action have not been established . . . in this record” and that

there was “no admissible evidence in the record to support any” claim that

Appellee breached the contract.      The court also noted the contract provision

affording Appellant 20 days to have the property professionally inspected and

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provide Appellee written notice of any defects. The court found it was undisputed

that Appellant did not conduct an inspection and did not provide Appellee with any

notice of defects, resulting in a waiver “as a matter of law” of any such defects.

The court also reiterated its prior judgment that, because this case involved a

contract for commercial property, Appellee had no duty to disclose, and also found

that, even if such a duty did exist, “the record supports the undisputed facts that

Defendant did not fail to disclose any known defects regarding the property.” The

court also found “from the record” that the contract, “along with the Seller’s duties,

merged with the Deed at the time of closing.” The court further found that the

record did “not support any material facts that Defendant committed any fraud or

misrepresentation regarding any alleged defects in this commercial transaction”

and demonstrated that Appellant’s representative, Mr. Plezia, “did not have any

verbal communication with the Defendant prior to negotiating and signing the

Contract and, therefore, any statements made by Defendant thenceforth would be

irrelevant.”

                                Substantive Analysis

      The standard of review of a final summary judgment is de novo. Le v.

Lighthouse Assocs., Inc., 57 So. 3d 283, 284 (Fla. 4th DCA 2011). “Summary

judgment is proper only if (1) no genuine issue of material fact exists, viewing

every possible inference in favor of the party against whom summary judgment has

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been entered, and (2) the moving party is entitled to a judgment as a matter of

law.” Armiger v. Associated Outdoor Clubs, Inc., 48 So. 3d 864, 869 (Fla. 2d

DCA 2010) (citations omitted). “If the record reflects the existence of any genuine

issue of material fact or the possibility of any issue, or if the record raises even the

slightest doubt that an issue might exist, summary judgment is improper.” Holland

v. Verheul, 583 So. 2d 788, 789 (Fla. 2d DCA 1991).

      A party seeking summary judgment faces a significant burden, and based

upon our review of the record, Appellee failed to overcome this burden. The trial

court did not view the facts through the appropriate lens, because it did not

acknowledge the different inferences that could be drawn from the facts,

particularly those inferences reasonably drawn in Appellant’s favor.

      We hold that there are genuine issues of material fact concerning whether

Appellee, either directly or through her agents, misrepresented: 1) the very nature

of the structure in question (i.e., a genuine residence built to those standards

applying to residences, as opposed to a storage shed converted to a “residence” and

not complying with such standards); and 2) whether the structure complied with

various governmental laws and regulations. The fact that Appellee’s affidavit

denied any knowledge of building codes or other violations only highlights the

existence of a conflict in the facts, which generally precludes summary judgment

rather than proves that no conflict exists.

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        The trial court attached great significance to the fact that any statements

Appellee may have made to Appellant occurred after the contract was signed, but

before closing. The court found that any such statements made during this period

would be “irrelevant,” and cited Wasser v. Sasoni, 652 So. 2d 411 (Fla. 3d DCA

1995). But Wasser does not address the timing of any alleged misrepresentations

(i.e., after a contract was signed but before closing); rather, it holds that “an

intentional nondisclosure of known facts materially affecting the value of

commercial property, is not actionable under Florida law,” and that “a

misrepresentation is not actionable where its truth might have been discovered by

the exercise of ordinary diligence.” Id. 412.

        Notably, the Wasser court recognized that “exceptions to the general rule

could    exist   under certain   circumstances, for     example, where       specific

misrepresentations regarding a latent defect are made to a negligent purchaser.”

Id. at 412-13. Here, as discussed below, there were facts from which one could

reasonably infer intentional non-disclosure or possible misrepresentations about

latent defects (e.g., the non-residential nature of the structure). Furthermore, even

“ordinary diligence” would not have revealed the truth regarding these possible

scenarios. The Wasser court explained that “a negligent purchaser is not justified

in relying upon a misrepresentation which is obviously false, and ‘which would be

patent to him if he had utilized his opportunity to make a cursory examination or

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investigation.’”    Id. at 413 (quoting Besett v. Basnett, 389 So. 2d 995, 997

(Fla.1980) (emphasis added)). But again, as discussed below, there was conflicting

evidence as to whether any representation that the structure in question was a

residence was “obviously false.”

      Attached to both Mr. Plezia’s deposition and affidavit was a copy of the real

estate advertisement concerning the property, including the structure in question,

from which it could readily and reasonably be inferred that it was a two-bedroom

home complete with swimming pool and other accoutrements typical of residences,

not storage sheds. Mr. Plezia testified that he walked through the structure with

the real estate agent before signing the contract and saw nothing to indicate that the

structure was anything other than a modular residence. He did another walk-

through with Appellee herself before closing, during which, according to

Mr. Plezia, Appellee made various representations which could reasonably be

inferred to represent the structure was a purpose-built home, and not a converted

storage shed.      We also note that the very contractual provision allowing for

inspection, upon which Appellee and the court rely so heavily, referred to

Appellant’s right to retain an entity for a person “specializing in home

inspections.” Thus, the contractual language itself perpetuated the notion that the

structure in question was a “home,” as commonly understood.

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        From all of this, it is reasonable to infer that these facts as alleged persuaded

Mr. Plezia that it was not necessary to hire an expert in “home inspections” or

perform some other “due diligence” in order to ascertain whether the structure was

a home. He testified that he had purchased homes in the past and never did either

of these things. This is important because there are facts in the record to support

the inference that, because the structure was actually a converted storage shed and

not a purpose-built home, all of the other defects complained of flowed from this

fact.

        Furthermore, Mr. Plezia testified that he found what looked like black mold

that had been painted over. Considering his testimony that Appellee told him she

personally had lived in the “home,” one could reasonably infer that she had

knowledge of this and, therefore, acquiesced in concealing this defect. Nor is it

clear how the court concluded from this record that an inspection would have

revealed this alleged mold, as the mold did not reveal itself until after the alleged

leaks began, leaks that may not have occurred had the roof been built according to

residential standards, as opposed to storage shed standards. Of course, we express

no opinion on whether Appellant will successfully prove these inferences are

credible, which must be defined in a trial on the merits of the allegations.

        We last address the trial court’s summary conclusion that the contractual

warranty at issue merged with the deed at the time of closing, thus, presumably,

                                            9
precluding Appellant’s claim.     The court cited as support for its conclusion

Stephan v. Brown, 233 So. 2d 140 (Fla. 2d DCA 1970). That case stands for the

proposition that a real estate contract becomes merged with the deed and that,

absent the existence of a warranty in the deed, the seller is “under no duty or

obligation with respect to any warranty against encumbrances on the property after

the deed had been accepted by the purchaser.” Id. at 141.

      In Sager v. Turner, however, the real estate sale contract for a mobile home

park included a contractual provision similar to the one here: “Seller warrants that

at the time of closing there are no violations of licenses, permits, planning or

zoning ordinances, easements land or deed restrictions.” 402 So. 2d 1282 (Fla. 4th

DCA 1981). In Turner, after the deal closed, the buyer went to the city in which

the property was located to obtain a license. The city “issued a conditional license,

contingent upon [buyer’s] repair of all mechanical, electrical and plumbing

violations which existed. [Buyer] made the required repairs and brought this

action to recover its expenditures in so doing.” Id. The purchaser succeeded in

obtaining a summary judgment, and the seller appealed, arguing reversal was

warranted based on the merger doctrine pursuant to Fraser v. Schoenfeld, 364
So. 2d 533 (Fla. 3d DCA 1978). Id.

      In Fraser, which relied on the same cases as Brown, the Third District found

the buyer’s claim for damages based on breach of a similar warranty, with respect

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to municipal code compliance, was barred by merger, holding: “‘where, as here,

the purchaser has knowledge of claimed violations and, thereafter, closes the deal,

he is precluded by the doctrine of merger from a subsequent suit on a covenant

contained in the contract of sale.’” Turner, 402 So. 2d at 1283 (quoting Fraser, 364
So. 2d at 534). The Turner court reversed the trial court’s summary judgment

because, unlike in Fraser, the buyer in Turner did not have any prior knowledge of

the claimed code violations. Id. at 1283.

                  It is a general rule that preliminary agreements and
            understandings relative to the sale of property usually
            merge in the deed executed pursuant thereto. However,
            there are exceptions to the merger rule. The rule that
            acceptance of a deed tendered in performance of a
            contract to convey land merges or extinguishes the
            covenants and stipulations contained in the contract does
            not apply to those provisions of the antecedent contract
            which the parties do not intend to be incorporated in the
            deed, or which are not necessarily performed or satisfied
            by the execution and delivery of the stipulated
            conveyance.

Id. (quoting Milu, Inc. v. Duke, 204 So. 2d 31, 33 (Fla. 3d DCA 1967) (citation

omitted; emphasis added). In affirming the summary judgment, the Turner court

found that the evidence was uncontradicted that “the city license could not be

obtained because of violations which existed at closing.” Id.

      Here, there is no evidence that the parties intended for the warranty at issue

to merge with the deed. Also, Appellant could not use the structure in question as

a result of zoning and building code violations that existed at the time of closing,
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and its ability to use the structure as a residence was not “necessarily performed or

satisfied by the execution and delivery of the stipulated conveyance.” Thus, the

trial court erred in granting summary judgment based on the merger doctrine.

                      Judgment for Attorney’s Fees and Costs

      The trial court entered a judgment for attorney’s fees and costs in favor of

Appellee, and Appellant duly included with its notice of appeal this judgment as

one of the orders it was challenging. As Appellee correctly points out, however,

Appellant did not address this fee judgment in its initial brief; thus, Appellee filed

a motion to dismiss Appellant’s appeal of this judgment. Appellant responds that

the judgment is entirely predicated on Appellee having obtained the summary

judgment on appeal, thus, if the summary judgment is reversed, this court must

vacate the fee judgment.

      As a general rule, failure to address an issue raised on appeal results in

waiver, but Appellant is correct that “[o]nce a final judgment is reversed and

remanded by an appellate court, there can be no prevailing party for purposes of an

award of prevailing party attorney’s fees. Consequently, an award of attorney’s

fees and costs predicated on a reversed or vacated final judgment also must be

reversed.” Marty v. Bainter, 727 So. 2d 1124, 1125 (Fla. 1st DCA 1999). Rather

than relying on this principle, however, the proper and preferred practice for a

party appealing a fee judgment, which is predicated on the underlying substantive

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judgment on appeal, is to make some argument in the appropriate brief(s) as to

why the fee judgment should also be reversed, citing appropriate authority.

      Due to Appellant’s failure to raise any argument challenging the attorney’s

fee award, we grant Appellee’s motion to dismiss Appellant’s appeal of the

judgment for attorney’s fees and costs. Our dismissal is without prejudice, in the

event Appellant prevails on the merits below, and Appellant timely challenges the

judgment for attorney’s fees and costs under Bainter.

                                    Conclusion

      We reverse the final summary judgment and remand for further proceedings

consistent with this opinion.

      REVERSED and REMANDED.

PADOVANO and CLARK, JJ., CONCUR.

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