Court Opinion

ID: 180587
Source: CourtListenerOpinion
Date Created: 2010-12-08 14:56:51+00
Date Added: 2024-06-11T17:25:52.346899
License: Public Domain

[DO NOT PUBLISH]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.

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