Court Opinion

ID: 9466074
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:05:12.234568+00
Date Added: 2024-06-11T17:39:32.125494
License: Public Domain

GODBOLD, Circuit Judge,
dissenting:
I would reverse.
The majority read the district court opinion as holding: (1) Prior to execution of the original contract and execution of the “addenda,” the possibility of condemnation of the land was so speculative and uncertain that failure by the sellers to disclose this possibility was not concealment of a material fact; (2) It was not until two months after execution of the addenda, when the sellers learned that the flood control district “definitely planned to condemn the property,” that the possibility of condemnation was anything more than “pure speculation.”
As the majority opinion notes, in Florida matter is material when,' if the representee had been told of it, he would not have entered into the contract. Morris v. Ingraffia, 18 So.2d 1, 3 (Fla.1944).
In considering materiality, the majority opinion looks first at generalized information about the district and its history of condemnation, and second at particular information obtained by the sellers between May 3 and May 17. Each prong, they conclude, does not rise to the level of materiality. The original contract was signed May 18, 1973. The district court found:
From the evidence presented, the Harmon brothers knew prior to executing the May 18, 1973, contract that a substantial portion of their property was within the Green Swamp Detention Area and subject to possible future condemnation.
Obviously a seller is not required to call the buyer’s attention to the existence of a general governmental power of eminent domain. I agree with the majority that the location of land in a water district that has power to condemn did not alone move this case high enough up the scale to reach the *927level of materiality, nor did the history of condemnation activities in the area over the past three decades. But somewhere up the scale the possibility of condemnation becomes sufficiently high that, if known to the seller, he must reveal it, because it is a fact that, in all good sense, would cause the putative buyer to decline to enter into the transaction. There is no magic in the fact that the unrevealed subject matter relates to the governmental power to condemn. No court would hesitate over a case where, for example, before a contract for the sale of land is signed today, the seller knows that suit papers to condemn the land have been prepared and signed and will be filed tomorrow. The ordinary buyer does not intend to buy a condemnation suit which brings with it frustrations, delays, expense, attorney fees, the risk of not receiving a fair award, and the possibility that plans for use or development must be changed because of alterations in size, contour or accessibility of the land.1
What moves this case up the scale and satisfies materiality is not the generalized kind of information that the district court and the majority describe but the activities of the sellers during May 1973, which demonstrate that' they considered the possibility of condemnation highly material. The district court was inexplicably gentle, and this court inexplicably silent, about what occurred. The district court found that the sellers, the Harmons, visited the office of the flood district on May 3. They did not go to talk about football or because they were interested in condemnation as an abstract subject of intellectual interest. They were not in pursuit of information about land in general, or overall condemnation policies, or of any other irrelevant information. They went to get information about the extent to which the particular land here involved was below the mean annual flood elevation and was therefore subject to condemnation by the district. Let us look at the record.
Clayton Harmon testified that before May 18 he had no knowledge that the land was subject to possible condemnation suit,2 had no contact with the flood control district3 and in fact had never heard of the district.4 He testified that he “disclaim[ed] any knowledge [prior to May 18] about the District and about thé fact that the District might be interested in acquiring this property.” (A.43). He placed his first and only trip to the district office as occurring after the contract with plaintiff was signed (A.85). The nature of the conversation that occurred was “To see exactly where they planned on putting this flood control area.” (A.87). The person with whom they [the Harmons] talked showed them a map that included some of the property involved in this litigation and showed them a curve on it (A.87).
*928Q. And showing you that curve on the map meant that they were contemplating condemning it?
A. Right.
A.87. Clayton Harmon asked why the land was being condemned, and the person with whom they talked explained (A.87-88).
Robert Harmon testified that, before May 18, he had no knowledge of possible condemnation,5 knew nothing about possible flood control6 and made no trip to the district office.7 He testified that his only visit to the district office was after May 18 (A.93).
Plaintiff introduced the following memo from the files of the district:
May 7, 1973
MEMORANDUM
TO: ROBERT WATSON, DIRECTOR, REAL ESTATE DIVISION
THROUGH: DONALD R. FEASTER, ACTING EXECUTIVE DIRECTOR
FROM: JAMES A. MANN, ACTING DIRECTOR, WATER RESOURCES DIVISION
SUBJECT: THE HARMON BROTHERS/ GREEN SWAMP FDA
Robert and Clayton Harmon were in the office Thursday, May 3rd to discuss their acreage (see attached map) which is partially within the Green Swamp FDA. Would you kindly get-in-touch with them to discuss our land acquisition intentions for their property within the FDA. They wish to develop (residential) their property or sell to development interests.
They have asked for a determination of the mean annual flood on their holdings. Malcolm Johnson will be determining this and it will be forwarded by letter about two weeks hence.
JAM:lr
Attachment
Attached to the memo was a sketch map of the Harmons’ property including that in question in this case.
In oral testimony, James A. Mann, the director of the district, explained that the mean annual flood elevation is the physical limit to the jurisdiction of the district’s development authority. With his recollection refreshed by the May 7 memorandum, Mann testified (A.51):
Q. And does the memorandum refresh your memory as to the subject matter of the conversation that you and the Harmons had on that occasion?
A. Yes. The memorandum talks about property which they discussed with me at that time which was partially in the Green Swamp Flood Detention Area, part of the Four River Basins Florida Flood Control Project which the District is active in construction along with the Corps of Engineers. And I’m requesting of Mr. Watson that he get in touch with the Harmon brothers to discuss our land acquisition intentions of their property, which I indicated was partially within the Flood Detention Area. And also I indicated that they wished to develop paren residential close-paren their properties to sell or to sell to development interests; and that they had asked my office and the men who had been working for me to make a determination of the mean annual flood elevation on their properties.
And I indicated that we would be forwarding that information on the *929flood elevations to them within about two weeks’ time.
* * * * * *
And later he testified further (A.53):
Q. And in discussing what was land acquisition intentions, was the possibility of the District acquiring the land discussed with the two Mr. Harmons?
A. Yes, I believe that there was in connection with our flood detention area land acquisition for water storage purposes.
A letter from Mann to Clayton Harmon dated May 22 sheds additional light on events that occurred before the signing of the contract. It said:
An analysis of the data of the U.S. Geological Survey Gaging Station on the Withlacoochee River near Eva shows that the mean annual flood state at State Road 33 is approximately 110 feet mean sea level. The mean annual flood occurs on the average of every 2.33 years. Records have been collected at this station since 1958. From this analysis it appears that about 90% of the property as outlined on the attached map would be under water during the mean annual flood. As indicated to you by phone, Mr. Robert Watson of the Southwest Florida Water Management District, Real Estate Division, will be in contact with you in the near future.
Telephone company records disclosed that there had been a long-distance call from the Harmons’ office in Winter Haven, Florida, to the district’s office in Brooksville, Florida, on May 17, one day before the contract was signed.8 Mann testified that, in such a telephone call on May 17, Harmon would have understood that Watson would be in touch with him (Harmon) “to discuss the possibility of the District acquiring all or parts of the land holdings which he originally discussed with me in the office on May 3rd.”
In view of the documentary evidence and the oral testimony I have described, the district court could hardly accept as credible the Harmons’ testimony. And it did not. It rejected their testimony and found that they did visit the district office on May 3. But it found that what they learned then, and learned later before the addenda was signed, was not sufficiently “definitive” to cause the information to be material. This focus upon the uncertain nature of what the Harmons ¡earned before May 18 ignores the probative force of what they did before May 18. It is obvious that they considered the risk of condemnation to be significant. The matter can be pointed up this way. Assume that on May 18 the Harmons had said to plaintiff: “This land is partially within a flood control district that has the power to condemn land up to the mean flood elevation. The location of the mean flood elevation and thus the scope of possible condemnation is of sufficient concern to us that since we began negotiating with you we have visited the district office to inquire about both the possibility of condemnation and the possible scope of condemnation and were in telephone contact yesterday to learn when the information will be forthcoming. We have been shown a map of our land describing the parts contemplated for condemnation. We should hear from the district in a few days with more precise description of it.”9 I think the buyer would have said: “If it’s that important to the sellers, I think that I will wait and see what the district says.” If there is any doubt of the significance of what the Harmons learned before May 18, it is dispelled by the fact that at trial they denied learning anything and denied the events that gave rise to knowledge on their part. Concealment of the possibility of condemnation, the pursuit of more firm information concerning that possibility, and the concealment of that pursuit, all illuminated by the incredible and non-credible efforts to *930conceal it at trial, add up to materiality before May 18.
Events after May 22 are further evidence of the significance of the possibility of the condemnation and of the Harmons’ activities and of what they learned before May 18. On September 12, 1973, after the contract was signed and before the addenda was signed (November 18), a broker purporting to represent the Harmons called the district and protested that he was losing a deal to sell property of the Harmons (to persons other than plaintiff) because a representative of the district (Watson or another person) had told his clients that the district intended to acquire the property. He threatened to sue the district for loss of a $50,000 commission. The district checked and found that preliminary drawing had been completed showing that approximately 65% of the Harmons’ land would be taken. The broker was informed of this and told that the acquisition depended upon legislative appropriations in the next year. The broker became angry and threatened to get an injunction against interference with his sale. The attorney for the Harmons called the district and was told that 70% to 75% of the Harmons’ property would be needed, that the district would negotiate for purchase and failing that might file condemnation proceedings around March 1974. The district suggested that the Harmons might be willing to state a purchase price.
On October 5 the attorney for the Harmons wrote the district asking exactly what part of the Harmons’ land the district was planning on acquiring, and when. None of these events were revealed to plaintiff, although obviously the facts had moved even further up the scale of materiality. On November 18 plaintiff signed the addenda. In December the district replied to the attorney’s letter, sending legal descriptions and stating that it hoped to have the appraisals received and completed shortly. In January 1974 the district wrote the Harmons that it was approving the property for condemnation. None of this was revealed to the plaintiff. Formal motion of condemnation was given to the Harmons in July 1974, and a few days later plaintiff notified the Harmons that he rescinded. For reasons not stated in the record the condemnation suit was dismissed in September 1974.
I find no Florida case on failure to reveal the known possibility of condemnation. In Hermes v. Anton, 300 So.2d 46 (3d D.C.A. Fla., 1976), the owner negotiated with plaintiffs to lease property to them, telling them that the state , planned to condemn it in a year or a year and a half. Actually a condemnation suit already had been filed. Plaintiffs leased for a year at $400 per month, moved in and made repairs, and after two months had to move out when notified the property now belonged to the state. Plaintiffs sued for fraud in the inducement. The trial judge granted summary judgment for the owner on the ground plaintiffs had actual notice of the state's intent to condemn. The Court of Civil Appeals reversed because there was a genuine issue of material fact whether the owner, at the time the lease was signed, had notice of the date of taking. Id. at 47.10 Thus, the critical issue was not whether suit had been instituted but whether the owner misrepresented a fact known to her that was material to the leasee’s reasonable expectancy of enjoying the use and occupancy of the property. Here there was concealment of similar, though different, information material to the plaintiff’s reasonable expectancy concerning this property.
In Musgrave v. Lucas, 238 P.2d 780 (Or. 1951), the seller of a sand and gravel operation on land next to a river received a warning from the War Department to discontinue removing sand and gravel because it might alter the course of the river. The seller sold without revealing the warning. The Oregon Supreme Court held the nondisclosure a sufficient basis for relief based upon fraud, saying:
*931Manifestly, the mere giving of such notice to defendants is, of itself, a highly important and material fact. Whether, in truth, the conduct of their business would actually change the channel of the river, or otherwise be in violation of law, is not the material consideration as respects the matter now under discussion. The pertinent thing is that defendants had been threatened with litigation of a serious nature, by a responsible official of the federal government. Obviously, in selling the business to plaintiffs, good faith demanded, and it was the positive duty of defendants to make, a full disclosure of these facts.
Id. at 785-86.
I would reyerse the district court. The most critical point is that neither the district court nor this court has given effect to what the Harmons did, as circumstantial evidence of materiality. In the end, what they did speaks much louder than what other people said to them.

. Persons with inside information or expertise may buy in anticipation of profiting from condemnation, but there is no evidence that the plaintiff was such a buyer.

. A.42:
Q. All right sir. At the time that you and your brother executed that contract, did you have any knowledge that the land was subject to a possible condemnation suit? A. None whatsoever.
# * * * * *
A.84-85:
Q. Forgive me if it’s repetitive, but on the date of May 18, 1973, when you entered into the contract with Mr. Hauben, you didn’t have any notice that this property would possibly be condemned by SFWMD?
A. No.
Q. You didn’t have any notice or knowledge that SFWMD might be in any way interested in the property?
A. No.
To the same effect, see A.90-91.

. A.43:
Q. Had you had any contact with the Southwest Florida Water Management District on or prior to May 18th, 1973?
A. No, none to my knowledge.
A.83:
Q. In other words, at no time before May 18, 1973, had you had any discussions with anybody connected with the SFWMD that this land might possibly be condemned?
A. No.

. A.43:
Q. All right. Had you heard of that entity— we’ll call it the District or SFWMD, if we might — on May 18th, 1973?
A. No.

. A.46:
Q. ... At the time of the sale of this land to Mr. Hauben, you did not tell him about any possible condemnation of this property, did you?
A. I didn’t know anything about it.

. A.46 — 47:
Q. And did you tell him [plaintiff] anything about possible flood control?
A. No sir, I didn’t know anything about it.

. A.47:
Q. It’s your testimony that you did not make this trip to Brooksville before this contract was signed on May 18, 1973?
A. No sir.
Q. That’s your testimony?
A. Yes sir.

. Robert Harmon denied making the call shown by the records and attempted to explain it on the basis there were “a lot of people” in his office who could have made it and other people that come in his office and make phone calls. (A.46).

. Or, assume a third person had conveyed the same information to plaintiff.

. On remand a jury awarded $20,000 punitive damages for fraud and the trial judge remitted down to $1,800. On appeal the court reinstated the award. 346 So.2d 1205 (3d D.C.A. Fla., 1977).