MECHAIA INVESTEMENTS V. ROMANO
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Third District Court of Appeal
State of Florida, January Term, A.D. 2011
Opinion filed March 9, 2011.
Not final until disposition of timely filed motion for rehearing.
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Nos. 3D09-3291, 09-1736
Lower Tribunal No. 07-34056
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Mechaia Investments, LLC,
Appellant,
vs.
Denise Romano,
Appellee.
Appeals from the Circuit Court for Miami-Dade County, Pedro P. Echarte,
Jr., Judge.
Mase, Lara, Eversole and Richard D. Lara, and Valentina M. Tejera, for
appellant.
Holland & Knight and James D. Wing, for appellee.
Before RAMIREZ, C.J., and SUAREZ and ROTHENBERG, JJ.,
RAMIREZ, C.J.
Denise Romano appeals the trial court’s order granting summary judgment.
Mechaia Investments, LLC, cross-appeals the trial court’s denial of attorney’s fees
and costs. Because we believe that genuine issues of material fact exist, the entry
of the trial court’s order granting summary judgment in favor of Mechaia was
improper. We therefore reverse and remanded.
On April 5, 2006, Romano and Mechaia entered into a contract whereby
Romano agreed to purchase a residence from Mechaia for $2,250,000.
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contract terms required Romano to pay an initial deposit of $200,000, as well as an
additional $250,000 at closing. The balance of $1,800,000 was to be financed by
Romano. The contract further required that Romano apply for the financing within
ten days of the April 5th effective date and that she provide Mechaia with a written
Financing Commitment or Approval Letter within thirty days of the effective date.
The contract provides that if Romano, “using diligence and good faith, [could not]
provide the commitment within the commitment period, the contract [would] be
terminated and buyer’s deposits refunded.”
As required by the contract, Romano contacted a loan consultant at a local
bank and applied for the loan. On May 17, 2006, the last date of the commitment
period, Romano received a one-page fax from the bank, which read: “[w]e are
pleased to inform you that your application for a mortgage loan . . . has been
approved. . . . Enclosed for your information is the commitment letter outlining the
terms and conditions of your loan.” Based on this, Romano believed she was
approved for the $1,800,000 loan. However, this was not the case. Had Romano
received the second page of the fax, she would have discovered that she had only
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been approved for a $1,500,000 loan; leaving her $300,000 short of the contracted
for amount. That day, Romano forwarded the fax to Mechaia and its agents. It
was not until June 26, 2006, the day before the closing date, that Romano was
informed that she had not been approved for the full amount.
Romano’s attorney contacted Mechaia’s counsel, informed them as to
Romano’s inability to proceed to closing. Several extensions were made in an
attempt to close on the property; these were all unsuccessful. Subsequently, on
October 7, 2007, the escrow holder of the $200,000 deposit filed an interpleader
complaint against Romano and Mechaia in order to determine who was entitled to
the deposit. Mechaia and Romano answered and filed cross-complaints against
each other, each claiming a right to the deposit. Mechaia moved for summary
judgment, which the court granted. Romano then moved for clarification and
rehearing, which the trial court summarily denied.
We review the trial court’s order granting summary judgment de novo and
view the evidence in the light most favorable to the non-moving party. See Sierra
v. Shevin, 767 So. 2d 524 (Fla. 3d DCA 2000). In doing so, we conclude that there
is a genuine issue of fact which precludes the entry of summary judgment.
Romano argues that the plain terms of the contract required her to satisfy a
financing contingency which required that she: (1) apply for financing within ten
(10) days of the effective date; (2) provide the seller with the a written financing
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commitment or approval letter with thirty (30) days of the effective date; (3) keep
the seller and broker informed of the loan application status, progress, and
commitment issues; and (4) authorize the lender and mortgage broker to disclose
all information to the seller and the broker. The contract states that “[o]nce [the]
buyer provides the commitment to the seller, the financing contingency is waived
and [the] seller [is] entitled to retain the deposits if the transaction does not close
by the closing date . . . .” However, the contract language also allows the buyer to
retain the deposits if the “buyer, using diligence and good faith, cannot provide the
Commitment within the Commitment Period, the Contract will be terminated and
the buyer’s deposits refunded.”
There is no dispute that Romano failed to provide Mechaia with the
commitment letter within the established commitment period.
What Romano
received from the bank and what she provided to Mechaia was nothing more than a
fax cover sheet.
It lacked the necessary information one would expect in a
commitment letter (e.g. loan amount, interest rate, and other terms). See Black’s
Law Dictionary 308-309 (9th ed. 2009). In fact, in its brief, Mechaia conceded
that the document Romano provided was not a commitment letter, but rather it was
an approval letter. This is a distinction without a difference. What the contract
appears to require is written proof that the buyer has acquired the necessary
financing. Whether it is called a commitment letter or an approval letter, the
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document should contain information that the seller can rely upon as proof that the
buyer is taking the steps necessary to close on the property.
What Romano
provided did not contain such information. For these reasons, we cannot agree
with Mechaia that Romano waived the financing contingency.
Here, obtaining the financing commitment was a condition precedent to the
sale of the property. Romano argues that her failure to obtain the commitment
during the established commitment period terminates the contract. We agree. See
Dennard v. Tri-Corp. Custom Homes, Inc., 583 So. 2d 811 (Fla. 2d DCA 1991).
What remains for determination, however, is whether Romano exercised
“diligence and good faith” to obtain a financial commitment as the contract
required. If she did, the contract specifically stipulates that she should have the
deposit returned to her. However, if she did not, Mechaia would be entitled to the
funds.
Whatever the case, summary judgment was not the proper vehicle to
determine this question because “[t]he issue of whether a purchaser exercises due
diligence and makes a good faith effort to secure the requisite financing is
ordinarily a question of fact for the trier of fact.” Quirch v. Coro, 842 So. 2d 184,
186 (Fla. 3d DCA 2003). Additionally, any claims of deception made by Mechaia
would likewise not be appropriately disposed unless the moving party can show no
genuine issue of material facts exists. See Payne v. Cudjoe Gardens Prop. Owners
Ass’n, Inc., 837 So. 2d 458 (Fla. 3d DCA 2002).
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Because Romano neither waived the financing contingency nor satisfied its
term within the commitment period, the contract terminated. What remains to be
determined is whether Romano exercised diligence and good faith in trying to
obtain financing. We therefore conclude that the trial court erred when it granted
summary judgment in Mechaia’s favor.
Reversed and remanded.
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