Anatomy of a Case: Kluger Kaplan Sets New Standard for Upholding Residential Real Estate Contract

Case: Diaz v. Kosch, Third District Court of Appeal of The State of Florida

Thanks to the arguments of Kluger Kaplan attorneys, Alan Kluger and Ashley Frankel, along with Scott Kravetz of Duane Morris, the Third District Court of Appeal of The State of Florida recently set a new standard for strictly upholding the provisions of the Florida Bar’s standard contract for real estate home purchases.

AJK High ResolutionBackground:

The case began in 2012 with a real estate transaction gone bad.  Coral Gables homeowners, David and Tiffany Kosch, entered an agreement with Miami attorney, Richard Diaz, to sell their home “as-is” for nearly $2.8 million.  The purchase agreement followed the standard form for a real estate contract established by the Florida Bar.

As part of the purchase agreement the sellers completed a disclosure statement affirming, among other things, that they had no knowledge of improvements constructed in violation of applicable building codes, without necessary permits, or with any open permits not closed with a final inspection to the property or the presence of toxic substances. The prospective buyer deposited $50,000 in escrow for the purchase with a further deposit of $235,000 due when the 10-day right of inspection and right to cancel period expired.

AFrankel232During the 10-day inspection/termination period, the buyer raised concerns regarding unpermitted renovations; however, they did not negotiate an extension of the inspection period or terminate the transaction. On the final day of the right to terminate period, the buyers deposited the additional $235,000 in escrow, per the agreement, but also threatened legal action against the sellers.

Shortly before the closing date on the purchase, the buyers terminated the transaction demanding return of the money deposited in escrow. The buyers also filed a lawsuit against the sellers and brokers asserting claims for breach of contract, conversion, fraud in inducement, fraud in concealment, negligent misrepresentation, and conspiratorial fraud, with a claim for punitive damages asserted as well. The buyers also alleged the property contained radon contamination requiring extensive remediation.

The Ruling:

The litigation over the failed sale was extensive, lasting more than four-and-a-half years during which the buyer filed multiple motions for punitive damages. Ultimately, Judge Eric Hendon of the Circuit Court for Miami-Dade County issued a summary judgement in favor of the sellers, ruling the buyers did not properly exercise their right to terminate in the period allowed by the contract, and so were not entitled to a return of the money held in escrow. Additionally, the judge awarded the sellers attorneys fees in the case. In June 2018, the Third District Court of Appeal affirmed Judge Hendon’s decision.

The court ruled that the allegations in the plaintiffs’ complaint were contradicted by the language in the “As Is” Residential Contract for Sale and Purchase, which included non-reliance provisions. The court further ruled that the buyers could not attempt to get around these provisions by effectively creating a “conditional tender” of the second deposit, which would make the sellers liable for repairs, permitting issues and other circumstances.

Impact:

This was a landmark decision that reinforces the strict, but enforceable provisions in contracts governing residential real estate transactions. It affirms that purchasers and sellers must carefully review and comply with the letter of each provision in the Florida Bar’s standard form.

Parties in a home purchase must adhere to the wording of the “As Is” contract, which states that once a deposit is in escrow, the purchaser cannot change the terms of the agreement, and must either move forward or walk away. Purchasers are not allowed to create a “conditional tender” with a second deposit to reserve their right to purchase but hold the sellers liable for repairs.

The Real Deal: Trump Doral to pay tenant’s legal fees tied to lease dispute

Doral resort will have to pay more than $2.5M in legal bills.

Trump National Doral Miami is running up an expensive tab in a long-running legal war it’s losing against Florida Pritikin Center, a rehabilitation spa leasing space at the luxury resort.

On Wednesday, the Third District Court of Appeal affirmed a 2017 final judgement ruling by Miami-Dade Circuit Judge Jose Rodriguez against Trump Endeavor 12, the entity that owns the Doral golf resort managed by Donald Trump Jr…

…By the time the bills are tallied up, Trump Endeavor will have to pay more than $2.5 million in attorney fees in its failed bid to evict the spa from a 40,000-square-foot-space at Trump Doral, said Pritikin’s lawyer, Philippe Lieberman, a partner with the Miami firm Kluger Kaplan Silverman Katzen and Levine.

“The exact amount will be determined by Judge Rodriguez in the next couple of months,” Lieberman said. “Our client is very happy. He is looking forward to putting this behind him and recovering his legal fees from Trump.”

Screen Shot 2018-08-06 at 11.37.16 AM

Trump Endeavor attorney Bruce Rogow did not respond to a request for comment.

Pritikin sued Trump Endeavor in June 2015, alleging breach of contract. According to court documents, Pritikin had a lease with the prior owner dating back to 2009 that was still in effect when Trump Endeavor purchased the golf resort in bankruptcy court three years later. The company affirmed the lease and Pritikin was forced to remain while the Trumps renovated the property, the lawsuit states.

“At that point, the property was in disrepair and bad condition,” Lieberman said. “Trump would not reduce the rent or allow Pritikin out of the lease. When the lease was up for renewal, it coincided with when construction was coming to a close. Trump wanted to bully us off the property.”

Pritikin’s lawsuit claims that Trump tried to increase a special room rate for Pritikin clients by 583 percent, would not replace worn-out refrigeration units in the spa, attempted to reject the tenant’s option to extend the lease until 2019 and tried to improperly terminate the agreement. “We resisted,” Lieberman said. “We pushed back.”

In February 2015, Rodriguez granted Pritikin declaratory relief, which forced Trump Endeavor to honor the lease, as well as decrease its clients’ room rates by 15 percent. The developer won a subsequent appeal to the Third District Court, which sent it back to Rodriguez to provide a better explanation as to why he ruled in Pritikin’s favor, Lieberman said.

“He did that in 38-page judgement filed in June 2017,” Lieberman said. “Trump appealed that judgement and the appellate court ruled in Pritikin’s favor this Wednesday.”

Read the full story in The Real Deal. 

Miami Herald: Trump loses appeal to Doral golf resort tenant whose rent he tried to raise 583 percent

Miami Herald Mast Head

A Trump-owned company that operates the president’s Trump National Doral Miami golf resort has been ordered to pay the legal fees of a spa owner whose rent Trump attempted to raise fivefold during a lease dispute in 2013…

…Alan Kluger, a Pritikin attorney, said Trump had planned to “build a billionaire’s club” and the spa did not match his vision for the resort.

“He did everything he could to force him out,” Kluger said. “He and his team just tried to bully Pritikin. They took outrageous positions, they threatened him. It was really unconscionable.”

golfcourseThe trial judge sided with Pritikin, and on Wednesday Miami’s Third District Court of Appeal agreed.

Kluger and his colleagues are seeking $2.5 million in compensation for legal fees. The appeals court granted Pritikin’s motion for attorney fees — and added attorney fees for the appeal process as well. Pritikin attorneys are now working to set up a September hearing to determine an exact number.

A spokesperson for Trump Hotels did not immediately respond to a request for comment.

“The overwhelming credible and substantial evidence reflects that Trump Endeavor undertook a series of pretextual maneuvers in an effort to force Pritikin to vacate the leased premises,” Circuit Court Judge Rodriguez wrote in his 2017 ruling siding with Pritikin. “The court finds that Pritikin is the prevailing party on the significant issues of the case and is entitled to an award of reasonable attorney’s fees and costs.”

Kluger said Trump Endeavor has a right to file a petition with Florida’s Supreme Court but that it was unlikely to go through.

“For all intents and purposes, all their appellate rights are done,” said attorney Philippe Lieberman. “Now all that needs to be decided is the amount of legal fees that Trump needs to pay Pritikin, and that number is going to be substantial.”

Read the full story in the Miami Herald.

Commercial Property Executive: Gearing Up for the 2018 Hurricane Season

Screen Shot 2018-07-30 at 1.52.29 PM

 

 

 

Real estate professionals in high-risk areas have learned the lessons hurricanes Harvey, Irma and Maria laid out last year, and used them in the preparation process for the 2018 Atlantic hurricane season, now underway. Taking preventive measures is paramount in minimizing damage. However, having a strong insurance policy is equally important…

A comprehensive insurance policy could ultimately smooth out difficult situations left behind by calamities. This task falls to property owners and tenants—landlords must review their assets at least yearly, as the property’s value is determined at the time of loss, according to Philippe Lieberman, a founding member of Kluger, Kaplan, Silverman, Katzen & Levine.

Moreover, parties must have a clear understanding of their lease agreements, making sure that they know who is responsible for obtaining the property insurance and that it covers all types of property loss. For example, in the case of a triple net lease, the tenant is required to pay all real estate taxes, as well as insurance and maintenance.

“Many commercial insurance policies contain coinsurance clauses, which are designed to force or encourage policyholders to insure their properties to a certain percentage—usually 80 to 90 percent—of the properties’ true value. If the amount of insurance is found to be under the coinsurance percentage, then a penalty is applied, which reduces the payout at the time of a loss,” Lieberman concluded. In such cases, there is a risk of litigation over the insurance payment amount.

Click here to read the full article. 

Super Lawyers Recognizes Kluger Kaplan

Florida Super Lawyers Magazine once again recognizes Kluger Kaplan Silverman Katzen & Levine for its top litigation expertise and experience.

Founding Member Alan J. Kluger was named one of the Top-100 attorneys in Miami by the publication. Also named as 2018 Florida Super Lawyers were attorneys Deborah S. Chames, Abbey L. Kaplan, Bruce A. Katzen, Todd A. Levine, Jason R. Marks and Steve I. Silverman. Additionally, attorneys Marko F. Cerenko, Lisa J. Jerles and Josh M. Ruben were named 2018 Florida Rising Stars.

Untitled design (25)

Florida Super Lawyers select attorneys using a patented multiphase selection process. Peer nominations and evaluations, combined with independent research, is evaluated on 12 indicators of peer recognition and professional achievements. These selections are made on an annual, state-by-state basis with an objective to create a credible, inclusive and diverse listing of outstanding attorneys that can be used as a resource for attorneys and consumers searching for legal counsel.

2018 Florida Super Lawyers:

Business Litigation (Years Selected):

  • Abbey L. Kaplan (13 years)
  • Alan J. Kluger (13 years)
  • Todd A. Levine (11 years)
  • Steve I. Silverman (11 years)

Family Law (Years Selected):

  • Deborah S. Chames (5 years)
  • Jason R. Marks (3 years)

Estate & Trust Litigations (Years Selected):

  • Bruce A. Katzen (9 years)

2018 Florida Rising Stars:

  • Marko F. Cerenko (4 years)
  • Josh M. Rubens (4 years)
  • Lisa J. Jerles (2 years)