Xanadu of Cocoa Beach, Inc. v. Zetley

822 F.2d 982
CourtCourt of Appeals for the Eleventh Circuit
DecidedJuly 24, 1987
DocketNo. 86-3346
StatusPublished
Cited by11 cases

This text of 822 F.2d 982 (Xanadu of Cocoa Beach, Inc. v. Zetley) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Xanadu of Cocoa Beach, Inc. v. Zetley, 822 F.2d 982 (11th Cir. 1987).

Opinion

LYNNE, Senior District Judge:

This is an appeal from a judgment for the plaintiff in an ejectment action. On appeal, the unsuccessful defendant makes the following contentions: (1) that the trial court erred by failing to consider the doctrine of part performance, which might have enabled the defendant to prove the existence of an oral agreement to convey the subject realty; (2) that the trial court erred by failing to consider various agency doctrines that might have bound the plaintiff to such a contract; (3) that the trial court erroneously found the defendant’s counterclaim to be barred by release; (4) that the trial court erroneously failed to consider the defendant’s equitable defenses; and (5) that the trial court erroneously failed to grant the defendant affirmative relief based upon its counterclaim. We agree with the appellant and reverse the court below.

I. THE FACTS

The subject realty of the ejectment action below was Penthouse 2, a unit of Xanadu Condominiums at Cocoa Beach, Florida. Xanadu was a joint venture of the Sunflower Club, Inc., and Xanadu of Cocoa Beach, Inc. Xanadu Joint Venture held record title to the subject realty from October 31, 1980, when Sunflower and Xanadu of Cocoa Beach entered into the joint venture agreement, until April 18, 1984, when the joint venture was dissolved.

On May 20, 1982, the appellant entered into an agreement with Sunflower and Kenneth Alies, who was an officer and owner of Sunflower. According to the terms of the agreement, Alies and Sunflower would convey to Zetley several Xanadu condominium units, including Penthouse 2 and Unit 1204. In return, Zetley would convey to Alies his interest in the Brown Dear Racquet Club, in Milwaukee, Wisconsin. Alies was to assure delivery of the condominium units to Zetley on or before April 1, 1983; or failing that, was to pay Zetley $500,000 cash without interest, on May 1, 1984.

Because Alies failed to deliver title to Penthouse 2 and Unit 1204 on April 1,1983, he and Zetley signed a mutual general release dated October 6, 1983. In that document, Alies agreed to deliver title to Penthouse 2 on or before March 1, 1984; if he could not deliver title on that date, then he would be indebted to Zetley in the amount of $350,000, upon which interest of 20 per cent per annum would accrue retroactively from October 1, 1983.

In October of 1983, Zetley took possession of Penthouse 2, allegedly with the aid of employees of Xanadu of Cocoa Beach, which shared offices with Sunflower for the purposes of the joint venture. Specifically, Zetley alleges, an employee of Xanadu of Cocoa Beach or of Towne Realty, of which Xanadu of Cocoa Beach was a wholly-owned subsidiary, gave Zetley the key to Penthouse 2, and helped him to furnish the penthouse. Zetley moved to Penthouse 2 in December of 1983. On October 10,1983, Zetley executed a general release in favor of Xanadu of Cocoa Beach, Towne Realty, all of their agents, and others, in return for free and clear title to Xanadu Unit 1204. The release did not name Xanadu Joint Venture, which at the time held record title to Penthouse 2.

Alies never delivered title to Zetley for Penthouse 2, and on April 18, 1984, Sunflower and Xanadu of Cocoa Beach terminated Xanadu Joint Venture. Also on that date, Xanadu Joint Venture conveyed Penthouse 2 by warranty deed to Xanadu of Cocoa Beach. Zetley apparently received no demand for possession of the unit until November, 1984, when he was served with the complaint that initiated this lawsuit. After a bench trial, the district court awarded possession of Penthouse 2, along with $45,000 rent, to Xanadu of Cocoa Beach. The court also found that third-party defendant, Kenneth Alies, was indebted to Zetley in the amount of $350,000, plus $75,000 liquidated damages, and interest. The district court further found that Zetley should take nothing on his counterclaim.

II. DISCUSSION

A. Choice of Law.

In the proceedings below, the parties and the court assumed that, because [985]*985the contract between Alies and Zetley was signed in Wisconsin, Wisconsin law would determine the contract’s validity, and would resolve questions concerning its formation. In Florida, however, the validity of a contract to convey an interest in real estate is governed by the law of the state in which the real estate lies. Connor v. Elliott, 79 Fla. 513, 85 So. 164, 165 (1920); Kyle v. Kyle, 128 So.2d 427 (Fla.Dist.Ct.App.1961). Because the realty lies in Florida, and because Florida is the forum state, all aspects of the contract — formation, validity, performance, and remedies — are to be determined in accordance with the principles of Florida law. The law of Florida, therefore, governs the validity and interpretation of any document or oral agreement intended to convey, or having the effect of conveying, any legal or equitable interest in Penthouse 2.

B. Agency and Part Performance.

In his counterclaim, Zetley sought to hold Xanadu of Cocoa Beach liable for specific performance of Alies’ and Sunflower’s contract to convey Penthouse 2. Although Xanadu of Cocoa Beach was not named in any such agreement, Zetley sought to prove his case by relying upon principles of agency and upon the doctrine of part performance, neither of which the trial court considered. According to Florida law, however, a vendee is entitled to specific performance of an oral contract to convey realty if he can prove the terms of the contract and the following: (1) that he has paid part or all of the purchase price; (2) that he has taken possession of the realty; and (3) that he has made valuable improvements with the consent or acquiescence of the vendor. Baker v. Bice, 37 So.2d 837 (Fla.1948). The undisputed facts in this case are that Zetley paid valuable consideration for the realty (at least to Alies), that he entered into possession of Penthouse 2, and that he made valuable improvements with the knowledge of officers of Xanadu Joint Venture.1 Under these facts, it was error not to allow Zetley to prove that Xanadu Joint Venture might have been obligated to convey Penthouse 2.

The undisputed facts show that the appellant is entitled to avail himself of the doctrine of part performance. By no means, however, is the doctrine a substitute for a contract; rather, it prevents the party who denies the contract’s existence from asserting the statute of frauds. To prevail on its counterclaim, therefore, Zetley must prove that Xanadu of Cocoa Beach is bound by contract, either oral or written, to convey Penthouse 2 to Zetley. Moreover, no principle of Florida law precludes Zetley from proving his case by relying upon any of the various principles of agency, whether implied, apparent, actual, or by estoppel.

Xanadu of Cocoa Beach could be contractually bound under either of the two following theories: First, at least for the purposes of this transaction, Alies may have been the agent of Xanadu of Cocoa Beach directly. For example, officers of Xanadu of Cocoa Beach might have led Zetley to believe that Alies was acting at their instigation and representing their interests. Second, Xanadu of Cocoa Beach might be bound by virtue of its having been a partner in the Xanadu Joint Venture. The joint venture, if a partnership, would be bound by the act of either of its members “for apparently carrying on in the usual way the business of the partnership.” Fla.Stat.Ann.

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822 F.2d 982, Counsel Stack Legal Research, https://law.counselstack.com/opinion/xanadu-of-cocoa-beach-inc-v-zetley-ca11-1987.