Schachter v. Krzynowek

958 So. 2d 1061, 2007 Fla. App. LEXIS 9197, 2007 WL 1687774
CourtDistrict Court of Appeal of Florida
DecidedJune 13, 2007
DocketNo. 4D06-2266
StatusPublished
Cited by2 cases

This text of 958 So. 2d 1061 (Schachter v. Krzynowek) is published on Counsel Stack Legal Research, covering District Court of Appeal of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Schachter v. Krzynowek, 958 So. 2d 1061, 2007 Fla. App. LEXIS 9197, 2007 WL 1687774 (Fla. Ct. App. 2007).

Opinion

GROSS, J.

If a seller breaches a real estate sales contract, does the law require the buyer to file a lis pendens to protect the remedy of specific performance against the seller? We hold that the filing of a lis pendens is a tactical decision of the buyer alone. Without such a filing, the buyer may pursue a timely filed specific performance action; if the seller frustrates the remedy by selling the property to another, the buyer may [1063]*1063recover the profits the seller realized from the sale.

We state the facts in the light most favorable to the buyer, the party who lost the summary judgment below.1 See, e.g., Byrd v. BT Foods, 948 So.2d 921, 923 (Fla. 4th DCA 2007). On June 23, 2003, Jan Krzynowek, as seller, and Tzvi Schachter, as buyer, entered into a contract for the sale and purchase of real property for $800,000 (the “Contract”). Schachter paid a $30,000 deposit on June 24, 2003. Article 32 of the Contract provided in pertinent part:

32. DEFAULT: If either party defaults, the rights of the non-defaulting 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.
32.1 BUYER DEFAULT: If Buyer fails to perform any of the covenants of this Contract, all money paid or to be paid as deposits by Buyer pursuant to this Contract shall be retained by or for the account of Seller.
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).

On July 20, 2003 the seller entered into a “backup” agreement to sell the same property to a third party for $895,000.

On August 6, 2003, the seller’s attorney wrote the buyer and terminated the Contract. However, paragraph 4 of the Contract provided that the closing occur on or before August 10, 2003.

Between August 6, 2003 and August 26, 2003, notwithstanding the seller’s termination letter, the buyer’s agents proceeded with the expectation of closing on the property. During that time, the buyer’s title agent spoke with the buyer’s attorney and became aware “that the seller may be walking.” The title agent informed the buyer of this turn of events.

On August 26, 2003, the buyer’s attorney wrote to the seller’s attorney stating: (1) that it appeared that the seller 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 the buyer was “ready, willing, and able” to close, but the seller was preventing the closing from taking place, and (3) that if the seller continued to frustrate the closing, the buyer would “exercise his right to seek specific performance.”

The buyer and seller did not correspond further after August 26. A closing never occurred. The buyer’s attorney did not file a lis pendens against the property.2

The seller sold the property to another for $895,000 on September 30, 2003.

On October 13, 2003, the buyer filed a two count complaint for breach of contract and, alternatively, for specific performance. The seller sought damages of $95,000 plus $1,205 for costs incurred in anticipation of closing.

Shortly before trial, the circuit court granted the seller’s motion for summary judgment and entered judgment in favor of the seller. As to the specific performance count, the court reasoned that (1) the buyer knew that the seller was attempting [1064]*1064to sell to a third party, (2) the buyer never filed a lis pendens, (3) had a lis pendens been filed, the seller could not have sold 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 of the contract 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.

Under the Contract, the buyer’s remedy upon the seller’s default was either a return of deposit or specific performance. Section 95.11(5), Florida Statutes (2003), allowed the buyer one year from the time the cause of action accrued within which to bring an action for specific performance. This short statute of limitations serves a public policy that “encourage[s] the alienability of real property” by requiring a buyer with the right to specific performance to file a lawsuit within one year. Rybovich Boat Works v. Atkins, 585 So.2d 270, 271 (Fla.1991).

The seller’s September 30, 2003 sale of the property deprived the buyer of specific performance as a remedy. See Seaside Cmty. Dev. Corp. v. Edwards, 573 So.2d 142, 147 (Fla. 1st DCA 1991); Krantz v. Donner, 285 So.2d 699, 700 (Fla. 4th DCA 1973). Under these circumstances, the supreme court has ruled that “ ‘where a vendor is unable to perform a prior contract for the sale of the lands because of a subsequent sale of the same land, he should be held, to the extent of any profit in the subsequent sale, to be a trustee for the prior vendee and accountable to such vendee for any profit.’ ” Coppola Enters., Inc. v. Alfone, 531 So.2d 334, 335 (Fla.1988) (quoting Gassner v. Lockett, 101 So.2d 33, 34 (Fla.1958)); see Seaside Cmty. Dev., 573 So.2d at 147.

We reject 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. The purpose of a notice of lis pendens is not to notify a seller in breach; its purpose is “ ‘to alert creditors, prospective purchasers and others to the fact that the title to a particular piece of real property is involved in litigation.’ ” S & T Builders v. Globe Props., Inc., 944 So.2d 302, 303, n. 1 (Fla.2006) (quoting Am. Legion Cmty. Club v. Diamond, 561 So.2d 268, 269 n. 2 (Fla.1990)). Here, the buyer makes no claim against the subsequent purchaser of the property.

Had the buyer filed a lis pen-dens, the court might have required it to post a bond. See S & T Builders, 944 So.2d at 304-05. An aggrieved buyer has the option of avoiding such potential costs by not filing a lis pendens. Instead, the buyer can press forward with a timely filed specific performance action and rely on the rule of Coppola Enterprises to force the seller in breach to disgorge any profits from a subsequent sale.3 A seller in breach does not have the power to deprive the buyer “of specific performance as a remedy, by severely limiting the time period within which such an action could have been pursued.” Seaside Cmty. Dev., 573 So.2d at 147. It follows 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 remedy of specific performance. It is the seller in breach who bears the risk of having to [1065]*1065disgorge profits realized from a subsequent sale.

The court confronted a similar issue in West Pinal Family Health Center, Inc. v. McBryde, 162 Ariz. 546, 785 P.2d 66 (1989).

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Cite This Page — Counsel Stack

Bluebook (online)
958 So. 2d 1061, 2007 Fla. App. LEXIS 9197, 2007 WL 1687774, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schachter-v-krzynowek-fladistctapp-2007.