FLORIDA HOLDING 4800 LLC v. LAUDERHILL LENDING, LLC ( 2021 )


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  •        DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
    FOURTH DISTRICT
    FLORIDA HOLDING 4800, LLC, a Florida Limited Liability Company,
    Appellant,
    v.
    LAUDERHILL MALL INVESTMENT, LLC, a Florida Limited Liability
    Company, et al.,
    Appellee.
    No. 4D20-174
    [April 7, 2021]
    Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
    Broward County; Raag Singhal, Judge; L.T. Case No. CACE 16-12986 (21).
    Robert J. Hauser of Pankauski Hauser Lazarus PLLC, West Palm
    Beach, for appellant.
    Glenn L. Widom of Glenn L. Widom, P.A., North Miami, for appellee.
    DAMOORGIAN, J.
    Florida Holding 4800, LLC (“Buyer”), the purchaser of a commercial
    building (“the property”), sued Lauderhill Mall Investment, LLC (“Seller”)
    alleging various causes of action relating to Seller’s alleged
    misrepresentation and/or active concealment of the property’s physical
    condition. The trial court entered final summary judgment in Seller’s
    favor, concluding that Buyer’s claims were adequately covered or expressly
    contradicted by the purchase and sale agreement (“PSA”) and thus not
    actionable. We agree with the trial court and affirm.
    As part of the real estate transaction, the parties executed a PSA which
    contained the following relevant “as is” clause:
    11. “AS IS” SALE. Subject only to the warranties and
    representations made herein, if any, the [p]roperty shall be
    conveyed in “AS IS” condition with all faults. Seller makes
    absolutely no warranties, representations or covenants to
    Buyer whatsoever regarding the [p]roperty or the condition or
    quality thereof, or the fitness thereof for the purposes
    intended by Buyer or for any other purpose or purposes
    whatsoever; (ii) Buyer acknowledges that Seller has not
    investigated and does not warrant or represent to Buyer that
    the [p]roperty is fit for the purpose intended by Buyer or for
    any other purpose or purposes whatsoever; (iii) Buyer
    represents that it is purchasing the [p]roperty in its “As Is”
    condition and based solely on Buyer’s own inspection,
    investigation and evaluation; (v) [sic] neither Seller nor any
    agent of Seller has made any representation or warranty,
    express or implied, oral or written, concerning the [p]roperty or
    which have induced Buyer to execute this Contract; and (vi) any
    other representations and warranties are expressly disclaimed
    by Seller.
    ....
    [BUYER] HAS NOT RELIED AND WILL NOT RELY ON, AND
    SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS
    OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS,
    REPRESENTATIONS, OR INFORMATION PERTAINING TO
    THE PROPERTY OR RELATING THERETO . . . MADE OR
    FURNISHED BY SELLER . . . . [BUYER], UPON CLOSING,
    SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED
    AND RELEASED SELLER . . . FROM AND AGAINST ANY AND
    ALL CLAIMS, DEMANDS, CAUSES OF ACTION, LOSSES,
    DAMAGES,    LIABILITIES,   COSTS   AND    EXPENSES
    (INCLUDING ATTORNEYS’ FEES AND COURT COSTS) OF
    ANY AND EVERY KIND OR CHARACTER, KNOWN OR
    UNKNOWN, WHICH [BUYER] MIGHT HAVE ASSERTED OR
    ALLEGED AGAINST SELLER . . . AT ANY TIME BY REASON
    OF OR ARISING OUT OF ANY LATENT OR PATENT
    CONSTRUCTION      DEFECTS     OR     PHYSICAL   OR
    ENVIRONMENTAL CONDITIONS . . . AND ANY AND ALL
    OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR
    MATTERS REGARDING THE PROPERTY.
    (emphasis added). In addition, the PSA permitted Buyer to inspect the
    property and, if Buyer was unsatisfied with the condition of the property
    following the inspection, to cancel the contract. Buyer took advantage of
    this provision and hired an engineer to inspect the property. 1
    1  Notably, Buyer brought a separate suit against the engineer it hired to
    conduct the inspection.
    2
    After the sale, Buyer discovered issues with the property’s physical
    condition, including roof leaks, HVAC failures, and mold growth. Buyer
    then sued Seller for damages, alleging causes of action for: (1) breach of
    implied covenant of good faith and fair dealing; (2) fraud in the
    inducement; (3) negligent misrepresentation; (4) negligence; and (5) unjust
    enrichment. 2 All the counts were premised on Buyer’s allegation that
    Seller misrepresented and/or actively concealed the property’s physical
    condition. Specifically, Buyer alleged Seller represented that the roof was
    well maintained and had no history of leaks and that the HVAC system
    never had any issues and was fully serviceable.
    Seller moved for summary judgment, arguing that not only did the PSA
    expressly state Seller made no representations concerning the property’s
    physical condition, but Buyer conducted its own inspection of the
    property. Buyer filed a response to the motion for summary judgment and
    attached thereto its manager’s affidavit. In the affidavit, the manager
    attested that Seller “under[took] efforts to actively conceal an old,
    decaying, damaged, and actively leaking roof by covering the damaged
    areas of the roof to hide the leaking condition.” Aside from relying on the
    language in the PSA, Seller presented no evidence to counter the
    assertions in the manager’s affidavit.
    The trial court ultimately entered final summary judgment in Seller’s
    favor, concluding that Buyer’s claims were adequately covered or expressly
    contradicted by the PSA and thus not actionable. The trial court also
    pointed out that per the PSA’s express terms, Buyer was to conduct its
    own inspection of the property and there was no evidence that Seller
    prevented those inspections. The trial court then cited to Transcapital
    Bank v. Shadowbrook at Vero, LLC, 
    226 So. 3d 856
     (Fla. 4th DCA 2017),
    for the proposition that “Florida law continues to follow the doctrine of
    caveat emptor with regard to commercial real estate transactions.” This
    appeal follows.
    We first address the trial court’s determination that Buyer’s claims,
    including the fraud claim, were adequately covered or expressly
    contradicted by the PSA. It is well established that “[a] party cannot
    2   Buyer’s complaint also originally included a rescission count. During the
    pendency of the action, however, the property was assigned to a third party and
    foreclosed on. Buyer later essentially conceded that its rescission count was no
    longer viable in light of the foreclosure. See Smith v. Chopman, 
    135 So. 2d 438
    ,
    440 (Fla. 2d DCA 1961) (“A party seeking to rescind an agreement must offer to
    place the other party in statu[s] quo, and if such restoration is impossible the
    contract cannot be rescinded.”).
    3
    recover in fraud for alleged oral misrepresentations that are adequately
    covered or expressly contradicted in a later written contract.” Mac-Gray
    Servs., Inc. v. DeGeorge, 
    913 So. 2d 630
    , 634 (Fla. 4th DCA 2005).
    Our holding in Mac-Gray is instructive. In that case, the buyers entered
    into a contract with the seller for the purchase of laundry equipment.
    
    Id. at 632
    . Prior to entering into the contract, the seller’s agent allegedly
    told the buyers “that they were ‘pretty much guaranteed’ to make money
    as soon as the business opened.” 
    Id.
     The contract contained provisions
    that the seller did not guarantee any income or profits and that the buyers
    were not relying on the seller’s expertise or representations. 
    Id.
     After a
    delayed opening, the buyers quickly sold what had become an unprofitable
    business and sued the seller for fraud in the inducement of the contract.
    
    Id. at 633
    . The buyers based their claim on the fact that the seller’s agent
    did not tell them they could lose money in the startup period and did not
    tell them that the seller had been involved in failed laundromats.
    
    Id. at 634
    . This Court held that the trial court erred in not granting the
    seller’s motion for a directed verdict because the contract “negate[d] the
    fraudulent inducement claim” and did not guarantee profitability. 
    Id.
     In
    so holding, we recognized the general rule that “when a contract is entered
    into through fraudulent inducement, the entire contract is unenforceable,”
    but pointed out that the buyers in that case were suing for damages and
    were not seeking rescission of the contract. 
    Id.
     (distinguishing the holding
    in D & M Jupiter, Inc. v. Friedopfer, 
    853 So. 2d 485
     (Fla. 4th DCA 2003)).
    Here, consistent with the holding in Mac-Gray, even if Seller made oral
    representations to Buyer regarding the property’s physical condition, the
    PSA contradicted those representations. Specifically, the PSA’s “as is”
    clause expressly states that: (1) “Seller makes absolutely no warranties,
    representations or covenants to Buyer whatsoever regarding the [p]roperty
    or the condition or quality thereof;” (2) “Buyer represents that it is
    purchasing the [p]roperty in its ‘As Is’ condition and based solely on
    Buyer’s own inspection, investigation and evaluation;” (3) “neither Seller
    nor any agent of Seller has made any representation or warranty, express
    or implied, oral or written, concerning the [p]roperty or which have induced
    Buyer to execute this Contract;” and (4) upon closing, Buyer “shall be
    deemed to have waived, relinquished and released Seller . . . from and
    against any and all claims.” These provisions clearly negate Buyer’s claims
    for damages, including the fraud claim. See Mac-Gray, 
    913 So. 2d at 634
    ;
    Giallo v. New Piper Aircraft, Inc., 
    855 So. 2d 1273
    , 1275 (Fla. 4th DCA
    2003) (“Assuming for purposes of argument that the oral statement is
    fraudulent, a party cannot recover for fraudulent oral representations
    which are covered in or contradicted by a later written agreement.”);
    Hillcrest Pac. Corp. v. Yamamura, 
    727 So. 2d 1053
    , 1058 (Fla. 4th DCA
    1999) (dismissal of fraud count affirmed where the agreement’s express
    4
    language demonstrated that the buyer did not reasonably rely on any
    misrepresentation and granted buyer the right to inspect such that there
    was no actionable fraud). But cf. Mantilla v. Fabian, 
    284 So. 3d 575
    , 575
    (Fla. 4th DCA 2019) (per curiam) (“[O]ur supreme court has spoken clearly
    that no contract provision can preclude rescission on the basis of fraud in
    the inducement unless the contract provision explicitly states that fraud
    is not a ground for rescission.” (alteration in original) (quoting Lower Fees,
    Inc. v. Bankrate, Inc., 
    74 So. 3d 517
    , 520 (Fla. 4th DCA 2011))).
    We next address the trial court’s determination that Buyer’s claims
    were precluded under the doctrine of caveat emptor. The doctrine of caveat
    emptor, which Florida courts continue to apply, “places the duty to
    examine and judge the value and condition of the property solely on the
    buyer and protects the seller from liability for any defects.” Transcapital
    Bank, 
    226 So. 3d at 862
     (quoting Turnberry Ct. Corp. v. Bellini, 
    962 So. 2d 1006
    , 1007 (Fla. 3d DCA 2007)). There are, however, three exceptions to
    this doctrine, including: “1) where some artifice or trick has been employed
    to prevent the purchaser from making independent inquiry; 2) where the
    other party does not have equal opportunity to become apprised of the fact;
    and, 3) where a party undertakes to disclose facts and fails to disclose the
    whole truth.” 
    Id.
     (quoting Green Acres, Inc. v. First Union Nat’l Bank of Fla.,
    
    637 So. 2d 363
    , 364 (Fla. 4th DCA 1994)).
    This Court’s holding in Transcapital is instructive. In that case, the
    buyer of a condominium was told that the property was worth $14.8
    million and was shown two prior notes to that effect. 
    Id.
     at 859–60. At
    trial on the buyer’s fraud claim, however, evidence was put forth that the
    buyer never asked for the actual appraisal and since it only purchased
    some of the units, some of which were in horrible condition, the appraisal
    value was less than the orally represented amount. Id. at 860. At the
    close of the buyer’s case, the seller argued that the property value was an
    opinion which could not form the basis of a fraud claim and moved for a
    directed verdict. Id. at 861. The jury found for the buyer and, at a post-
    trial hearing, the trial court denied the motion. Id. at 861–62. Applying
    the doctrine of caveat emptor, this Court held that the “fraud claim could
    not survive a motion for directed verdict” because “[n]one of the exceptions
    to caveat emptor appl[ied].” Id. at 862. Specifically, the buyer was able to
    inspect the property prior to closing, could have obtained its own
    appraisal, and purchased the property without physically viewing the
    appraisal. Id. Additionally, we pointed out that the buyer presented no
    evidence showing that the seller resorted to some fraudulent means in
    preventing the buyer from making an examination of the property.
    Id. at 863.
    5
    Here, like Transcapital, none of the exceptions to caveat emptor apply.
    See id. at 862–63. Although Buyer put forth its manager’s affidavit
    attesting that Seller undertook efforts to actively conceal the roof’s
    condition, Buyer did not allege that Seller’s actions prevented it from
    conducting a thorough inspection of the property or that, but for Seller’s
    conduct, Buyer would have discovered that the roof was defective.
    See Agrobin, Inc. v. Botanica Dev. Assocs., Inc., 
    861 So. 2d 445
    , 446
    (Fla. 3d DCA 2003) (per curiam) (holding, in the context of the doctrine of
    caveat emptor, that “a sophisticated purchaser of commercial property
    who agreed to an ‘as is’ purchase contract, had ample opportunity to
    conduct inspections, and could have discovered an alleged defect through
    the exercise of ordinary diligence, may be disgruntled, but does not have
    a cause of action for fraud” (quoting Wasser v. Sasoni, 
    652 So. 2d 411
    , 413
    (Fla. 3d DCA 1995))). Unable to establish an exception to caveat emptor,
    Buyer is left with the PSA’s express language providing that Buyer was
    purchasing the property “based solely on Buyer’s own inspection,
    investigation and evaluation,” and that Seller made no representations
    regarding the property’s condition, or if it did, Buyer agreed it was not
    relying upon such representations. By these very terms, Buyer waived any
    claim of fraud on the undisputed material facts in this case. See 
    id.
    Affirmed.
    WARNER and FORST, JJ., concur.
    *         *        *
    Not final until disposition of timely filed motion for rehearing.
    6