FLORIDA HOLDING 4800 LLC v. LAUDERHILL LENDING, LLC

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