Court Opinion

ID: 55825
Source: CourtListenerOpinion
Date Created: 2010-04-26 01:51:44+00
Date Added: 2024-06-11T17:19:32.104398
License: Public Domain

[DO NOT PUBLISH]

                IN THE UNITED STATES COURT OF APPEALS
                                                                      FILED
                         FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
                           ________________________ ELEVENTH CIRCUIT
                                                             SEPTEMBER 12, 2007
                                 No. 07-11486                 THOMAS K. KAHN
                             Non-Argument Calendar                CLERK
                           ________________________

                    D. C. Docket No. 06-00431-CV-T-24-TBM

USA FLEA MARKET, LLC,
a Florida limited liability company,

                                                         Plaintiff-Appellant,

                                       versus

EVMC REAL ESTATE CONSULTANTS, INC.,
a California corporation,

                                                         Defendant-Appellee,

EMERALD TITLE INSURANCE AGENCY, INC.,
a Michigan corporation,

                                                         Defendant.

                           ________________________

                    Appeal from the United States District Court
                        for the Middle District of Florida
                         _________________________

                               (September 12, 2007)
Before ANDERSON, BIRCH and PRYOR, Circuit Judges.

PER CURIAM:

      USA Flea Market, LLC appeals the summary judgment on its breach of

contract claim against EVMC Real Estate Consultants, Inc., and the decision of the

district court to vacate the entry of default against EVMC. Because a genuine issue

of material fact exists regarding whether the contract terminated, we reverse the

summary judgment. We affirm the decision of the district court to vacate the entry

of default.

                                I. BACKGROUND

      On August 11, 2005, USA Flea Market and EVMC entered a written

contract for the sale of real property. The contract specified a $12,325,000

purchase price and required EVMC, the buyer, to tender $500,000 as earnest

money for deposit with an escrow agent, Emerald Title Insurance Agency, Inc.

      On November 14, 2005, EVMC failed to appear at the scheduled closing.

On that date, USA Flea Market sent a notice of default to EVMC and a copy of the

notice to Emerald Title. When EVMC did not cure the default within the time

period specified in the contract, USA Flea Market served both Emerald Title and

EVMC with a demand for payment of the earnest money deposit.

      When the earnest money was not tendered, USA Flea Market commenced

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this action against EVMC and Emerald Title. USA Flea Market alleged EVMC

breached the contract by failing to tender the escrow deposit or order Emerald Title

to release the deposit. USA Flea Market alleged that Emerald Title breached its

fiduciary duty to USA Flea Market and falsely represented to USA Flea Market

that it had received the escrow deposit. After service of the complaint, EVMC

moved the district court for an extension of time to answer to “[c]omplete

reorganization and to [r]etain [l]ocal [c]ounsel.” The motion was denied.

      USA Flea Market filed an amended complaint. More than a month passed

without an answer by EVMC and upon USA Flea Market’s motion, the clerk

entered a default. More than two months later, EVMC moved to set aside the

default. Over an objection by USA Flea Market, the district court vacated the entry

of default.

      EVMC moved to dismiss the complaint for failure to state a claim or, in the

alternative, for summary judgment. EVMC argued that, because USA Flea Market

failed to comply with its contractual agreement to mediate disagreements before

commencing litigation, the breach of contract claim failed as a matter of law.

EVMC relied on paragraph 13 of the contract, which required the parties first to

mediate disputes:

      13. RESOLUTION OF DISPUTES. All claims, disputes or
      controversies arising out of, or in connection with, or in relation to

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      this Contract, shall initially be submitted to mediation in Pinellas
      County, Florida. . . . If a dispute has not been resolved within forty-
      five (45) days after the selection or designation of the mediator . . . the
      parties shall have the right to pursue resolution of the claim, dispute or
      controversy by any available legal proceedings in the County of
      Pinellas, State of Florida.

      USA Flea Market did not dispute that it failed to attempt mediation first but

argued, among other things, that paragraph 27.1 of the contract controlled the

dispute. Paragraph 27.1 governs “Buyer’s Default” and provides that

      A.    If Buyer shall be in breach or default of any of the terms or
      conditions of this Agreement, then Seller shall give Buyer and Escrow
      Agent written notice specifying the nature of the default.

      B.     Buyer shall have ten (10) days from receipt of Seller’s notice of
      default within which to cure the specified default. If Buyer does not
      cure such default within said ten (10) day period or if such default is
      not waived in writing by Seller, then the Earnest Money Deposit shall
      be paid over to Seller[,] this Agreement shall automatically
      terminate[,] and Seller and Buyer shall have no further rights, duties
      or obligations hereunder except as expressly survive the termination
      hereof . . .

(emphasis added). Paragraph 27.3 specifies that “[t]he provisions of this Section

27 shall survive the termination of this Agreement.” The contract does not state

that the mediation provision survives termination of the contract. The district court

determined that mediation was a condition precedent to filing a lawsuit and granted

summary judgment to EVMC. This appeal ensued.

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                         II. STANDARDS OF REVIEW

      Two standards of review govern this appeal. First, we review a summary

judgment de novo, applying the same legal standard used by the district court.

Dadeland Depot, Inc. v. St. Paul Fire & Marine Ins. Co., 483 F.3d 1265, 1268

(11th Cir. 2007). Summary judgment is appropriate where “there is no genuine

issue as to any material fact and [] the moving party is entitled to a judgment as a

matter of law.” Fed. R. Civ. P. 56(c). Second, we review a decision to vacate an

entry of default for an abuse of discretion. Gibbs v. Air Canada, 810 F.2d 1529,

1537 (11th Cir. 1987).

                                 III. DISCUSSION

      USA Flea Market presents two issues on appeal. The first issue is whether

the district court erred when it granted summary judgment in favor of EVMC. The

second issue is whether the district court abused its discretion when it vacated the

entry of default against EVMC. We address each issue in turn.

    A. Because a Genuine Issue of Material Fact Exists Regarding Whether the
        Mediation Provision Abated, Summary Judgment Was Erroneous.

      The district court concluded that EVMC was entitled to summary judgment

because USA Flea Market admittedly did not attempt mediation before filing suit

and failed to comply with what EVMC contends was a condition precedent to

commencing a lawsuit for breach of contract. We disagree. The district court

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overlooked a genuine issue of material fact.

      USA Flea Market contends that, under paragraph 27.1, the contract

terminated after EVMC defaulted, EVMC received notice of the default, and the

default was not cured. USA Flea Market persuasively explains that, under the

express terms of the default provision, the mediation provision does not survive

termination of the contract. If the allegations of USA Flea Market, that EVMC

defaulted, received notice of the default, and failed to cure the default, are true, the

mediation provision abated upon the termination of the contract.

      An issue of fact remains. EVMC disputes that it breached the contract and

was in default. Because a genuine issue of material fact exists regarding whether

EVMC was in default and the contract terminated, summary judgment was

erroneous.

             B. The District Court Did Not Abuse Its Discretion When It
                            Vacated the Entry of Default.

      A district court can set aside an entry of default “[f]or good cause shown.”

Fed. R. Civ. P. 55(c). The district court determined that the failure of EVMC to

respond in a timely manner to the complaint was not willful, EVMC acted

promptly to vacate the default once counsel was obtained, a meritorious defense

was asserted, and USA Flea Market would suffer no prejudice if the default was

vacated. The district court did not abuse its discretion when it concluded that

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“good cause” existed and vacated the entry of default.

                                  IV. CONCLUSION

       We affirm the order of the district court vacating the entry of default against

EVMC and reverse the summary judgment in favor of EVMC. We are without

jurisdiction to consider the request of USA Flea Market, in the conclusion of its

brief, that a later award of attorney’s fees be set aside, because USA Flea Maket

failed to file a notice of appeal of that order.

       AFFIRMED IN PART; REVERSED IN PART.

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