IN THE SUPREME COURT OF FLORIDA CASE NO. SC11-765
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1 IN THE SUPREME COURT OF FLORIDA CASE NO. SC AL-NAYEM INTER L INCORPORATED Plaintiff/Petitioner, vs. EDWARD J. ALLARD, Defendant/Respondent. PETITIONER S BRIEF ON JURISDICTION SECOND DISTRICT CASE NO.: 2D CIRCUIT COURT CASE NO: CI-15 (PINELLAS COUNTY) MARION HALE FBN #: SHARON E. KRICK FBN #: JOHNSON, POPE, BOKOR, RUPPEL & BURNS, LLP P.O. Box 1368 Clearwater, FL (727) telephone (727) facsimile marionh@jpfirm.com sharonk@jpfirm.com
2 TABLE OF CONTENTS TABLE OF CITATIONS...ii STATEMENT OF THE CASE AND FACTS...1 SUMMARY OF THE ARGUMENT...5 ARGUMENT...6 I. THE SECOND DISTRICT S OPINION IS IN DIRECT CONFLICT WITH A DECISION OF THE FLORIDA SUPREME COURT...6 CONCLUSION...10 CERTIFICATE OF SERVICE...11 CERTIFICATE OF COMPLIANCE...12 i
3 TABLE OF CITATIONS Cases: AB CTC v. Morejon, 324 So.2d 625 (Fla 1975)...6 American Wall Sys., Inc. v. Madison Int l Group, Inc., 944 So.2d 172 (Fla. 2006)...6 Burton v. Price, 141 So. 728 (Fla. 1931)...4, 5, 6, 7, 8, 9 Reaves v. State, 485 So.2d 829 (Fla. 1986)...8 State v. Vickery, 961 So.2d 309 (Fla. 2007)...6, 7 Other Authorities Fla. R. App. P (a)(2)(A)(iv)...5, 6 Fla. R. Civ. P (a)(2)(A)(v)...4 Fla. Const. Art. V, 3(b)(3)...6 ii
4 STATEMENT OF THE CASE AND FACTS This appeal raises the issue of the correct measure of damages for a breach of the covenant of seisin in a general warranty deed. The case stems from the purchase of real property by the petitioner, Al-Nayem Inter l Incorporated (Al-Nayem) from the respondent, Edward J. Allard (Allard). On November 29, 2004, Allard delivered a warranty deed to Al-Nayem which contained a legal description for a tract of land in St. Petersburg bifurcated by a 30-foot wide swale which Allard did not own. The swale had been conveyed by an order of taking to the Florida Department of Transportation in Al-Nayem paid $1,650,000 for the property in St. Petersburg. At the time, a restaurant operated on the property which closed shortly after the purchase. Allard conveyed the land to Al-Nayem by a general warranty deed containing a covenant of seisin. In 2007, Al-Nayem attempted to sell the property and learned that it was not the owner of the entire property as described in the deed. The potential buyer alerted Al-Nayem that the Florida Department of Transportation had acquired the fee simple title by virtue of a final judgment that was entered in 1957 and recorded in the public records of Pinellas County. The loss of the swale was important since it stranded a small portion of the property and it limited the size of any 1
5 building which could be constructed to replace the decrepit and now closed restaurant. Furthermore, Al-Nayem had no access to the portion of the property which was stranded. The value of the land was significantly decreased by the omission of the swale since the total amount of land dictates the size and location of any new building. Al-Nayem sued Allard for breach of his warranty deed. The trial as to liability was held on October 22, Allard raised only one defense which the trial court rejected. On November 13, 2008, the court entered a judgment as to liability, concluding that Allard breached all the covenants in the deed and is liable to the plaintiff for its losses. In the judgment, the trial court found, The loss of the 30 foot swale decreases the plaintiff s ability to develop the property as it limits the size of any building which could be constructed to replace the decrepit and now closed Crabby Bill s restaurant. In addition, the loss of the swale strands a small sliver of the property which also affects how the property can be developed. The court concluded: Due the 1957 final judgment, the plaintiff does not own all the property that was described in the warranty deed.... The plaintiff paid for property it did not receive. Allard did not appeal. At the trial as to damages, Al-Nayem s expert, Ken Frost, calculated the square footage of the ditch and the stranded 2
6 portion and found it was 13.5 percent of the parcel. He then multiplied that percentage against the purchase price and calculated the damages at $222, After Al-Nayem rested, Allard argued that the measure of damages was not the proportionate share of the purchase price attributable to the 30-foot swale but rather the fair market value of that property. Allard moved for an involuntary dismissal of the complaint. The court granted the motion and dismissed the complaint with prejudice. The court ruled that the correct measure of damages was not the proportionate share of the purchase price. Instead, the Court adopted the reasoning of courts in other jurisdictions to hold that the measure of damages was the value of the land reduced by the value of the improvements. 1 Al-Nayem filed a motion for rehearing. The court granted the motion and ordered the parties to coordinate an evidentiary hearing on damages. Allard appealed that decision. Al-Nayem cross-appealed the order dismissing the complaint to contest the trial court s determination of the measure of damages. In an opinion dated November 5, 2010, the Second District reversed the decision of the trial court granting a new trial as to damages and affirmed the trial court s decision to 1 Because Allard hid this theory of damages until trial and relied upon decisions from other states, Al-Nayem was blindsided at trial resulting in the new trial ordered by the trial court and reversed by the appellate court. 3
7 involuntarily dismiss the case under the theory that Al-Nayem had failed to provide evidence as to the measure of damages. The Second District concluded, as the trial court had, that Burton s measure of damages was inapplicable. Al-Nayem filed a timely motion for rehearing en banc which was denied and a new opinion was issued in its place on March 16, (App. Tab 1). The new opinion contained some minor changes to the majority s decision. There were also changes to the dissenting opinion. Judge Villanti dissented from the majority s refusal to certify the question of how to calculate damages for breach of seisin to this Court as one of great public importance. 2 2 Al-Nayem recognizes that it cannot appeal the decision of the appellate court not to certify the question as being one of great public importance. Fla. R. Civ. P (a)(2)(A)(v). 4
8 SUMMARY OF ARGUMENT This Court should accept jurisdiction pursuant to Art. V, 3(b)(3), Fla. Const. and Fla. R. App. P (a)(2)(A) (iv) as the District Court s decision is in express and direct conflict with this Court s decision in Burton v. Price, 141 So. 728 (Fla. 1931) on the issue of how to measure damages for the breach of the covenant of seisin. The Burton Court ruled that the correct measure of damages for breach of warranty of seisin is the portion of the purchase price attributable to the property which was not conveyed. The Second District did not follow Burton but instead held that the measure of damages for the breach of the covenant of seisin is the portion of the purchase price attributed to the property which was not conveyed after subtracting the value of the improvements. Accordingly, this Court has discretionary jurisdiction to review this case as it expressly and directly conflicts with a decision of this Court. It should accept jurisdiction to provide guidance to the lower courts on the issue of the correct measure of damages for breach of the covenant of seisin. 5
9 ARGUMENT I. THE SECOND DISTRICT S OPINION IS IN EXPRESS AND DIRECT CONFLICT WITH A DECISION OF THE FLORIDA SUPREME COURT This Court has discretionary jurisdiction to resolve conflicts between the decision of the Second District and this Court pursuant to Art. V, 3(b)(3), Fla. Const. and Fla. R. App. P (a)(2)(A)(iv). See American Wall Sys., Inc. v. Madison Int l Group, Inc., 944 So.2d 172 (Fla. 2006). The Second District ignored this Court s ruling in Burton, 141 So. 728, to hold that the measure of damages for the breach of the covenant of seisin is the portion of the purchase price attributed to the property which was not conveyed after subtracting the value of the improvements. The Second District's opinion expressly and directly conflicts with the Burton decision. Although the Second District refused to certify the decision as in direct conflict, this Court has jurisdiction if it expressly and directly conflicts with a decision of this Court. State v. Vickery, 961 So.2d 309 (Fla. 2007). 3 As this Court noted in Vickery, the Court has jurisdiction if either the District Court expressly certifies the decision as conflicting pursuant to Art. V, 3(b)(4), Fla. Const. or if the decision expressly and directly conflicts with a decision of this Court 3 Even a per curiam decision may create conflict jurisdiction. AB CTC v. Morejon, 324 So.2d 625 (Fla. 1975). 6
10 pursuant to Art. V, 3(b)(3), Fla. Const. Vickery, 961 So.2d at 311. In Burton, this Court held that a grantee who did not acquire title and did not acquire possession or any right of possession pursuant to a deed containing covenants of seisin may recover the purchase money paid with interest in an action for breach of the covenant of seisin. Id. at The Burton Court ruled that the correct measure of damages for breach of warranty of seisin is the portion of the purchase price attributable to the property which was not conveyed. Id. If there is a failure of seisin as to a part of the premises described in the deed, the measure of damages is the fractional part of the whole consideration paid as the value at the time of the purchase of the part to which the title failed bears to the whole tract purchased, with interest thereon during the time the plaintiff was deprived of the use of that part to which he could not acquire possession. Id. at 626. Notwithstanding Burton, the Second District concluded that measure of damages should be calculated after subtracting the value of the improvements, not the proportional share of the consideration paid. That measure fails to adequately compensate Al-Nayem as it fails to take into consideration the impact the breach had on the remaining property which had been 7
11 bifurcated by the order of taking almost a half-century earlier. It fails to compensate Al-Nayem for the loss of the value of the improvements it could construct on the land as the loss of the swale resulted in a decrease in the size of the new restaurant which could be built. The Second District also assumed that the property in Burton was unimproved with no evidence to support that assumption. 4 Citing to out-of-state decisions, both the trial court and the Second District concluded that the value of the improvements had to be deducted prior to determining Al-Nayem s damages. The Second District gave no reason for abandoning the Burton standard other than to refer to Allard s argument that it did not apply to improved land. With no facts to support the assumption that Burton only applied to unimproved land, the Second District s decision expressly and directly conflicts with Burton. On its face, Burton applies to all breaches of the covenant of seisin, not merely those in which the buyer purchased raw land. The trial court acknowledged it was deviating from Burton and relying upon decisions from Kentucky, Arkansas and Massachusetts. The Second District relied upon those same 4 Judge Villanti noted that the majority had assumed that the land in Burton had not been improved. Al-Nayem recognizes that the dissent cannot form the basis of conflict jurisdiction. Reaves v. State, 485 So.2d 829 (Fla. 1986). 8
12 decisions. All of the out-of-state cases upon which both the lower courts relied were inapplicable as they involved the sale of real property in which the parties mutually misunderstood the amount of land conveyed. None involved the buyer paying for land he did not receive. The issue is not merely academic. As the dissent noted, [t]he proper measure of damages arising from a breach of the covenant of seisin is an issue with statewide implications, and the majority is interpreting, and perhaps rewriting, supreme court precedent that has been unchanged for over seventy-five years. In my view, fairness dictates on these facts that we accommodate Al-Nayem s ability to seek review in the supreme court. App. Tab 1, at p. 13 (Villanti, J., dissenting). Thus, the Second District deviated from this Court s 75-year-old precedent and adopted the reasoning from other states to limit the damages for a breach of the covenant of seisin. 9
13 CONCLUSION This Court has jurisdiction and review should be granted to resolve the confusion caused by the conflicting decision of this Court and the Second District Court of Appeal. 10
14 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the above has been furnished to Martin S. Awerbach, Esq., Michael A. Cohn, Esq., Awerbach & Cohn, P.A., One Prestige Place, Suite 100, 2600 McCormick Drive, Clearwater, FL 33759, by regular U.S. Mail, this 21st day of April JOHNSON, POPE, BOKOR, RUPPEL & BURNS, LLP By: /s/ Marion Hale Marion Hale FBN # Sharon E. Krick FBN # Post Office Box 1368 Clearwater, FL (727) Telephone (727) Facsimile Attorneys for Appellee marionh@jpfirm.com sharonk@jpfirm.com 11
15 CERTIFICATE OF COMPLIANCE I certify that this brief complies with the type-volume limitation set forth in Florida Rules of Appellate Procedure 9.100(1) and 9.210(a)(2). This brief is in 12 point, Courier New. /s/ Marion Hale Marion Hale
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