IN THE SUPREME COURT OF THE STATE OF FLORIDA CASE NO. Court of Appeal s Case No.: 4D06-2266 JAN KRZYNOWEK, Petitioner, -vs- TZVI SCHACHTER Respondent. ON PETITION FOR DISCRETIONARY REVIEW FROM THE FOURTH DISTRICT COURT OF APPEAL PETITIONER S BRIEF ON JURISDICTION Bruce Botsford, Esq. Florida Bar No. 31127 BOTSFORD & WHITE, LLC 3595 Sheridan Street, Suite 208 Hollywood, Florida 33021 Telephone: (954) 374-1420 Facsimile: (954) 374-1422
TABLE OF CONTENTS Page I. TABLE OF AUTHORITIES.............................. 3 II. STATEMENT OF THE CASE AND FACTS............... 4 III. SUMMARY OF ARGUMENT.............................. 6 IV. ARGUMENT The Decision of the District Court of Appeal Expressly and Directly Conflicts with Prior Holdings of the Florida Supreme Court and other District Courts of Appeal.................... 7 V. CONCLUSION......................................... 9 VI. CERTIFICATE OF COMPLIANCE......................... 10 VII. CERTIFICATE OF SERVICE.............................. 10-2 -
TABLE OF AUTHORITIES Cases Page De Huy v. Osborne, 96 Fla. 435, 118 So. 161 (Fla. 1928)............... 6, 8 Shirley v. Lake Butler Corp., 123 So.2d 267 (Fla. 2d DCA 1960)..... 6, 8 Siegel v. Gillman, 365 So.2d 1041 (Fla. 3d DCA 1978)............... 7, 8-3 -
STATEMENT OF THE CASE AND FACTS Respondent Tzvi Schachter sued Petitioner Jan Krzynowek for breach of a real estate sales contract and for the equitable relief of specific performance. Schachter was the buyer and Krzynowek was the seller. On June 23, 2003, the parties entered into the contract for the sale and purchase of the property for $800,000. On July 20, 2003, Krzynowek entered into a backup contract to sell the property to a third party for $895,000. Krzynowek s attorney gave written notice of terminating the contract on August 6, 2003. The contract scheduled the closing for August 10, 2003. Despite the written notice of termination, Schachter s agents continued to proceed with the expectation of closing. This occurred even though Schachter had direct notice that Krzynowek was not cooperating with their actions. On August 26, 2003, Schachter s attorney wrote to Krzynowek s attorney stating: (1) that it appeared that Krzynowek was acting in bad faith to get out of his contract so that he can sell the subject property to a third party for a higher price ; (2) that Schachter was ready, willing and able to close, but Krzynowek was preventing the closing from taking place, and (3) that if Krzynowek continued to frustrate the closing, Schachter would exercise his right to seek specific performance. - 4 -
Following August 26, 2003, there were no further communications between the parties or efforts to move toward closing. Despite having actual knowledge that Krzynowek intended to sell the property to a third party, Schachter s attorney failed to file a lis pendens. On September 30, 2003, Krzynowek sold the property to the third party for $895,000. Two weeks later, Schachter filed suit for breach of contract and specific performance. The case proceeded to summary judgment based upon a selection of remedies clause. Paragraph 32 of the contract provided, in pertinent part: 32. DEFAULT: If either party defaults, the rights of the nondefaulting party and the Broker(s) shall be as provided herein and such rights shall be deemed to be the sole and exclusive rights in such event. ---- 32.2 SELLER DEFAULT: If Seller fails to perform any of the covenants of this Contract, all money paid or deposited by Buyer pursuant to this Contract shall be returned to Buyer upon demand, or Buyer shall have the right of specific performance. (Emphasis added). As such, under the contract Schachter was entitled to a return of his deposit or to seek specific performance. With respect to the grant of summary judgment, the Fourth District Court of Appeal properly summarized the trial court s reasoning as follows: As to the specific performance count, the court reasoned that (1) the buyer knew that the seller was attempting to sell to a third party, (2) - 5 -
(App. 3). the buyer never filed a lis pendens, (3) had a lis pendens been filed, the seller could not have sole the property, and (4) because the property had been sold, the buyer could not receive specific performance. As to the breach of contract count, the court ruled that paragraph 32.2 was a valid limitation of remedies clause that allowed the buyer to seek specific performance or a return of the deposit, but not damages for breach of contract. The Fourth District Court of Appeal reversed the trial s court grant of summary judgment. In doing so, the Court determined that a buyer has no duty to act with reasonable promptness when seeking specific performance. SUMMARY OF ARGUMENT The Court of Appeal s ruling specifically rejects the well-accepted principle that a buyer has an affirmative duty to protect his equitable right to specific performance. Here, Schachter had actual knowledge that Krzynowek did not intend to close and otherwise knew of his need to file a lis pendens to protect his right to the property. Despite same, Schachter did nothing and instead let the property be sold to a third party. The Court of Appeal s ruling excusing Schachter s inaction is in direct and express conflict with the Florida Supreme Court s decision in De Huy v. Osborne, 96 Fla. 435 (Fla. 1928), the Second District Court of Appeal s decision in Shirley v. Lake Butler Corp., 123 So.2d 267 (Fla. 2d DCA 1960), and the Third District - 6 -
Court of Appeal s decision in Siegel v. Gillman, 365 So.2d 1041(Fla. 3d DCA 1978). In these cases, the Florida Supreme Court and the Court of Appeals specifically held a buyer has an affirmative duty to pursue his claim for specific performance with reasonable promptness. The Fourth District Court of Appeal erred in not holding same. ARGUMENT The Decision of the District Court of Appeal Expressly and Directly Conflicts with Prior Holdings of the Florida Supreme Court and other District Courts of Appeal. The Court of Appeal held that a buyer is not required to act with reasonable promptness to protect its right to specific performance. In this light, the Court: (1) reject[ed] the contention that the law placed an obligation on the buyer to file a lis pendens to prevent the seller from transferring the property to another and thereby frustrating the buyer s remedy (App. 3); and (2) held that a buyer victimized by a seller s breach does not have the legal duty to take steps blocking a sale of the property to protect the right of specific performance (App. 4). In holding same, the Court of Appeals failed to recognize that specific performance is an equitable remedy and that the common law places a specific duty upon the buyer to protect his rights. - 7 -
In De Huy, the Florida Supreme Court held: [I]t is the duty of a purchaser who is not in possession, if he would invoke the aid of a court of equity, when he is put upon notice that the vendor cannot or will not deliver a good title as he contracted to do, to elect with reasonable promptness whether he will seek by suit for specific performance the conveyance of such title as the latter can convey, with abatement in the purchase price where appropriate, or whether he will resort to an action at law for his damages for breach of the contract, or whether, on the other hand, he will exercise his right to consider the contract abandoned. - - - - - - - When such party fails to take action to enforce his equitable rights within a reasonable time under all the circumstances after he is on notice that the other party will not perform, such failure would ordinarily indicate that the dilatory party is thereafter in fact exercising his option to consider the contract abandoned by reason of the default or rescission of the other party. 118 So. at 163-64. The Second District Court of Appeals applied De Huy in holding that a party under a real estate sales contract must act with reasonable promptness if it desires to seek specific performance. Shirley, 123 So.2d at 270-71. Likewise, the Third District Court of Appeal held that an unreasonable delay by the purchasers, after the closing date, was sound basis for the trial court s denial of their claim for specific performance. Siegel, 365 So.2d 1041, 1042 (Fla. 3d DCA 1979). The issue of whether a buyer has a duty to act with reasonable promptness in seeking specific performance is not only material to the outcome of this case, but also to the Florida real estate market. Limitation of remedies clauses as set forth in - 8 -
the subject contract are commonplace throughout the Florida real estate market. The decision effectively allows a buyer to do nothing on his contractual right to seek specific performance and, consequently, invalidate the otherwise enforceable clause by waiting patiently for the seller to sell to another party and create a new remedy (one not negotiated by the parties) for breach of contract damages. In summary, the Fourth District Court of Appeal has held that a buyer has no affirmative duty to act with reasonable promptness to protect its right to specific performance. The case law from this Court and the Second and Third District Courts of Appeal have held to the contrary. This constitutes direct and express conflict as contemplated by the Florida Rules of Appellate Procedure. CONCLUSION Pursuant to the argument and legal authorities cited herein, the Petitioner respectfully requests that the Court review the decision of the Court of Appeal in this action. - 9 -
CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been forwarded by U.S. Mail this 9th day of August 2007, to Randall Gilbert, Esq., 15700 N.W. 7th Avenue, Miami, Florida 33169. Botsford & White, LLC 3595 Sheridan Street, Suite 208 Hollywood, FL 33021 Telephone: (954) 374-1420 Facsimile: (954) 374-1422 By: BRUCE BOTSFORD Fla. Bar No. 31127 CERTIFICATE OF COMPLIANCE I HEREBY CERTIFY that the Petitioner s Brief on Jurisdiction utilizes Times New Roman 14-point font and otherwise comports with the requirements of Fla.R.App.P. 9.210(a)(2). By: BRUCE BOTSFORD Florida Bar No. 31127-10 -