Owner of property that increased in value at termination of lis pendens may be entitled to consequential damages.
In November 2001, FCD Development, Inc. (FCD) agreed to purchase property from South Florida Sports Committee, Inc. (SFSC) for $2.9 million. In May 2004, FCD sued SFSC seeking specific performance action. FCD also flied a ]is pendens notice of a pending lawsuit and posted a $1 million bond. When SFSC failed to pay the mortgage, Samjaz Holdings, Inc. (Samjaz), the mortgagee, initiated foreclosure proceedings.
In June 2005, SFSC received a verbal offer to purchase the property for $6.3 million from Ray Parker. In August 2005, SFSC received an offer from OCO LLC to purchase the property for $5 million. A principal of OCO testified that OCO did not have the funds to purchase the property, but would have no problem borrowing the necessary funds. SFSC claimed it did not accept either of these offers because it would have been unable to convey clear title due to the lis pendens.
In September 2006, the trial court found in favor of SFSC and dissolved the lis pendens. In October 2006, SFSC filed a motion to recover against FCD's lis pendens bond and sought to recover damages incurred as a result of the lis pendens. In December 2006, SFSC quitclaimed the property to Samjaz in lieu of foreclosure.
At an evidentiary hearing in September 2008, SFSC's appraiser testified that the value of the property was $3,492,000 in May 2004, $5,000,000 in August 2005, and $6,487,000 in September 2006. The trial court found in favor of SFSC and awarded $538,479.87 in damages measured by the difference between OCO's $5 million offer and the $4,461,520.13 mortgage payoff.
FCD argued that SFSC lacked standing to pursue the lis pendens damage award because it had quitclaimed the property to Samjaz. The court of appeal rejected this argument, and affirmed the trial court's finding that SFSC had incurred potential damages while the underlying suit was pending, and had filed its motion to recover damages against the lis pendens bond while it still owned the property.
FCD further argued that SFSC was not entitled to damages. The court of appeal determined that the proper method of measuring damages for wrongful Filing of a lis pendens is the difference between fair market value at the time of filing and at the time of termination, plus consequential damages including attorney's fees.
The court of appeal found the trial court erred in determining SFSC's damages. The court should have compared the value at the time the lis pendens was filed, which SFSC's expert testified was $3,492,000, with the value at the time the lis pendens was terminated, which SFSC's expert testified was $6,487,000. Because the property had increased in value during the relevant period, SFSC did not suffer damages attributable to the lis pendens.
SFSC further argued that it was entitled to consequential damages. The court of appeal stated, "in order to sustain a claim for consequential damages arising out of a wrongful lis pendens, a wronged seller must show a diligent yet unsuccessful attempt to resell the property after the buyer breached the agreement' This is accomplished by proof that there was a bona fide contract with a ready, willing and able buyer.
The court of appeal determined that SFSC did not have a ready, willing and able buyer because Parker's offer was not in writing and OCO did not have financing. Therefore, SFSC was not entitled to consequential damages.
FCD Development, LLC v. South Florida
Sports Committee, Incorporated
District Court of Appeal of Florida, Fourth District
May 26, 2010
2010 WL 2076954 (Fla. App. 4 Dist.)
|Printer friendly Cite/link Email Feedback|
|Author:||Weinberger, Alan M.|
|Date:||Sep 22, 2010|
|Previous Article:||Appraisal Institute SRA designation requirements.|
|Next Article:||Loss of view properly considered in determining incidental damages in partial takings case.|