WCI Communities, Inc. v. Stafford
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NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
WCI COMMUNITIES, INC., a Florida
corporation,
)
)
)
Appellant,
)
)
v.
)
)
COLIN STAFFORD,
)
)
Appellee.
)
_____________________________________ )
Case No. 2D07-3724
Opinion filed November 13, 2009.
Appeal from the Circuit Court for Hillsborough
County; Claudia R. Isom, Judge.
Thomas J. Roehn and Henry G. Gyden of
Carlton Fields, P.A., Tampa, for Appellant.
James C. Washburn and Stacy J. Borisov of
Pohl & Short, P.A., Winter Park, for Appellee.
GILNER, MARC B., Associate Judge.
WCI Communities, Inc. (WCI), appeals the trial court's award of a final
summary judgment in favor of Colin Stafford. Mr. Stafford sued to rescind a contract to
purchase a condominium-townhouse (unit) from WCI and for the refund of his deposit.
We reverse and remand for further proceedings.1
1
This case was originally argued in April 2008, but our consideration of this
case was delayed by WCI's filing for bankruptcy and the resulting automatic stay of the
In September 2005, Mr. Stafford contracted to buy a $616,790 unit. The
unit was located in a phased development called the Westshore Yacht Club. The
contract provided that Mr. Stafford would also have to pay certain costs, including
homeowners' association fees and assessments. The contract stated, "[A]ll budgets are
subject to change at any time and from time to time to reflect actual and projected
expenditures." Exhibit "E" of the contract, which listed fees and assessments, stated,
"[I]t is very likely that changes will occur and the amounts will increase."
Contemporaneously with the execution of the contract, WCI gave Mr.
Stafford certain condominium documents required by Florida law (referred to collectively
as a "prospectus"). The prospectus included a 2006 "estimated budget and schedule of
homeowner's expense" indicating that the "total assessment to unit owners" would be
$10,343.30. This included a "master association general assessment" of $1876.14, a
"common expense" or "operating budget" assessment of $5298.16, and an annual
"amenities" fee of $3169. The prospectus also included a management agreement
between Westshore Yacht Club Townhomes II Condominium Association and WCI
Communities Property Management, Inc. (the management company). The agreement
provided that the management company would be compensated at $10 per unit per
month ($120 per unit per year).
The contract contained the following cancellation statement required by
section 718.503(1)(a)(1), Florida Statutes (2005):
THIS AGREEMENT IS VOIDABLE BY BUYER BY
DELIVERING WRITTEN NOTICE OF THE BUYER'S
INTENTION TO CANCEL WITHIN FIFTEEN (15) DAYS
proceedings. On September 18, 2009, WCI advised this court that discharge had been
granted and the stay was dissolved as of August 26, 2009.
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AFTER THE DATE OF EXECUTION OF THIS
AGREEMENT BY THE BUYER, AND RECEIPT BY BUYER
OF ALL OF THE ITEMS REQUIRED TO BE DELIVERED
TO HIM BY THE DEVELOPER UNDER SECTION 718.503,
FLORIDA STATU[T]ES. THIS AGREEMENT IS ALSO
VOIDABLE BY BUYER BY DELIVERING WRITTEN
NOTICE OF THE BUYER'S INTENTION TO CANCEL
WITHIN FIFTEEN (15) DAYS AFTER THE DATE OF
RECEIPT FROM THE DEVELOPER OF ANY AMENDMENT
WHICH MATERIALLY ALTERS OR MODIFIES THE
OFFERING IN A MANNER THAT IS ADVERSE TO THE
BUYER. ANY PURPORTED WAIVER OF THESE
VOIDABILITY RIGHTS SHALL BE OF NO EFFECT.
BUYER MAY EXTEND THE TIME FOR CLOSING FOR A
PERIOD OF NOT MORE THAN FIFTEEN (15) DAYS
AFTER THE BUYER HAS RECEIVED ALL OF THE ITEMS
REQUIRED. BUYER'S RIGHT TO VOID THIS
AGREEMENT SHALL TERMINATE AT CLOSING.
(Emphasis added.) The contract provided that closing would take place following
substantial completion of the unit. Closing had not taken place at the time this lawsuit
was filed.
In June 2006, WCI furnished Mr. Stafford with changes to the prospectus.
These changes included a reduction of the "total assessment to unit owners" from
$10,343.30 to $10,291.84. Some of the assessment components had increased; others
had decreased. The net reduction was $51.46. The annual management company fee
of $120 per unit was not changed, but a provision was added stating that the
management company would either receive the $120 annual fee or a flat fee of $462
per month, "whichever is greater." There was no indication that the $462 monthly flat
fee would be per unit. Another change provided that the management company would
be paid a one-time fee of $3000 for "start-up costs and preliminary management work."
There was no indication that Mr. Stafford or any other purchaser would be responsible
for this fee. The management agreement was also changed to provide that, upon
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turnover of control of the association to the unit owners, the management company
could terminate its agreement upon thirty days' written notice instead of the 180-day
notice called for in the original agreement. There was no suggestion of any associated
increase in cost. The changes also included an eleven-unit reduction in Westshore
Yacht Club.
Mr. Stafford provided written notice to WCI of his intention to cancel his
contract pursuant to section 718.503(1)(a)(1). In early September 2006, Mr. Stafford
sued WCI. He alleged that the changes to the prospectus were material and adverse to
him.
The parties engaged in discovery, highlighted by Mr. Stafford's requests
for admission to WCI. Mr. Stafford requested that WCI admit that if he should be the
only unit owner, he would be responsible for paying the management company the
monthly flat fee of $462 which he calculated to be $5544 per year for each unit. WCI
denied this request. Mr. Stafford requested that WCI admit that if he were the only unit
owner, he could be required to pay the entire $3000 one-time start up fee for the
management company. WCI denied this request, too. Mr. Stafford requested that WCI
admit that a new line item of $89.40 annually for accounting services had been added to
the "common expenses" budget. WCI admitted this request; this item had contributed
to the increase in the "common expenses" component of the "total assessments."
Finally, WCI admitted that the changes to the prospectus "may result in increased costs
to the Buyer."2
2
Mr. Stafford also requested that WCI admit that it had raised the
maximum "settlement services" charges, resulting in a potential increase of "more than
$1,500." WCI denied the request. Mr. Stafford reduced this figure to $1465 in his
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In January 2007 Mr. Stafford moved for summary judgment, relying on the
contract, prospectus and amendments, and WCI's responses to requests for admission.
WCI filed no written response to Mr. Stafford's motion and offered no affidavits or other
documentary evidence in opposition. At an April 2007 hearing, WCI simply argued that
the trial court should continue the hearing because it had not completed discovery. The
trial court denied a motion for continuance and later rendered a final summary judgment
for Mr. Stafford.
We review a final summary judgment de novo. Deutsch v. Global Fin.
Servs., LLC, 976 So. 2d 680, 682 (Fla. 2d DCA 2008). Mr. Stafford is entitled to
summary judgment "if the pleadings, depositions, answers to interrogatories,
admissions, affidavits, and other materials as would be admissible in evidence on file
show that there is no genuine issue as to any material fact and that [he] is entitled to a
judgment as a matter of law." Fla. R. Civ. P. 1.510(c). Mr. Stafford bears the burden of
proving that WCI cannot prevail. If the record raises even the slightest doubt that an
issue might exist, summary judgment is precluded. Pasco v. City of Oldsmar, 953 So.
2d 766, 769 (Fla. 2d DCA 2007). We must view the facts and the inferences in the light
most favorable to WCI. See Estate of Githens v. Bon Secours-Maria Manor Nursing
Care Ctr., Inc., 928 So. 2d 1272, 1274 (Fla. 2d DCA 2006).
answer brief, but continues to assert that it constitutes a material, adverse change. WCI
responds that it had advised Mr. Stafford that the revised estimated settlement charges
cannot be unilaterally changed by WCI and are applicable only to future purchasers not
currently under contract. We note that the difference between the maximum estimated
charges in the contract actually signed by Mr. Stafford and the maximum potential
charges under the revised version appears to be $165, not $1465. However, because
WCI concedes that the estimated charges contained in the disclosure statement notice
actually signed by Mr. Stafford cannot be changed as to him, we conclude that this
issue is moot and decline to address it further.
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Because WCI offered nothing in opposition to Mr. Stafford's motion, we
must define Mr. Stafford's burden in seeking cancellation of the contract and then
determine whether he met that burden. Section 718.503(1)(a)(1) provides that he can
cancel his contract "within 15 days after the date of receipt from the developer of any
amendment which materially alters or modifies the offering in a manner that is adverse
to the buyer." Thus, Mr. Stafford had to demonstrate with undisputed facts that WCI
materially changed the prospectus and that such changes were adverse to him.3
At this point, however, we must recognize that the legislature amended
the condominium statute in 2007. Particularly important for our purposes is section
718.504(21)(e):
Each budget for an association prepared by a developer
consistent with this subsection shall be prepared in good
faith and shall reflect accurate estimated amounts for the
required items in paragraph (c) at the time of the filing of the
offering circular with the division, and subsequent increased
amounts of any item included in the association's estimated
budget that are beyond the control of the developer shall not
be considered an amendment that would give rise to
rescission rights set forth in s. 718.503(1)(a) or (b), nor shall
such increases modify, void, or otherwise affect any
guarantee of the developer contained in the offering circular
or any purchase contract. It is the intent of this paragraph to
clarify existing law.
§ 718.504(21)(e) (emphasis added). Simply put, changes to the budget which may
materially and adversely impact the unit buyer, if they are beyond the developer's
control, will not give rise to a cancellation right under section 718.503(1)(a)(1). See
D&T Props., Inc. v. Marina Grande Assocs., Ltd., 985 So. 2d 43 (Fla. 4th DCA 2008).
3
The parties do not contest that Mr. Stafford exercised his rescission right
in a timely manner.
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Moreover, because this statutory change clarifies existing law, it applies to Mr. Stafford's
contract. See id. at 47-48.
At first blush, we tend to view the changes made by WCI as relating to
matters within its control. We need not resolve that issue, however. Mr. Stafford cannot
prevail on summary judgment. On a more basic level, he has not demonstrated the
absence of a genuine issue of material fact as to whether the changes were material
and adverse to him.
In assessing materiality, our sister district in D&T provided an appropriate
guidepost:
[W]e hold that an objective test is appropriate to decide
whether an amendment amounts to a "material" alteration or
modification of an offering under section 718.503(1)(a)would a reasonable buyer under the purchase agreement
find the change to be so significant that it would alter the
buyer's decision to enter into the contract?
Id. at 49. See also Mastaler v. Hollywood Ocean Group, L.L.C., 10 So. 3d 1114, 1116
(Fla. 4th DCA 2009); In re Paramount Lake Eola, L.P., Litigation, 2009 WL 2525558, at
*3 (M.D. Fla. Aug. 17, 2009) (Slip Copy). We conclude that Mr. Stafford has not shown
that any of the changes to the prospectus were objectively material. After all, the
changes made by WCI resulted in a decrease, albeit minor, in Mr. Stafford's estimated
assessment. As for nonmonetary changes, we conclude, based on D&T, that the
change in the management company’s timing for notice of termination is not material.
It is equally clear that Mr. Stafford has failed to establish in any objective
manner that the changes are adverse to him. Again, the net monetary change benefits
him. Moreover, Mr. Stafford's speculation about his potential responsibility for the $462
flat fee or the $3000 one-time start up fee should he be the only unit owner is
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unsupported by any evidence. To the contrary, WCI denied, in its responses to
requests for admission, that this was the case. Further, there was no indication that Mr.
Stafford and other unit buyers would be responsible for any of these costs. Finally, Mr.
Stafford's argument that the planned reduction in total number of units from 537 to 526
proves that his allocated costs must increase fails because the amended prospectus
does not support any cost increase to unit owners resulting from the eleven-unit
reduction. Thus, the evidence on which Mr. Stafford relies either fails to support his
claims or affirmatively disputes them.
"[T]he burden of proving the absence of a genuine issue of material fact is
upon the moving party. Until it is determined that the movant has successfully met this
burden, the opposing party is under no obligation to show that issues do remain to be
tried." Holl v. Talcott, 191 So. 2d 40, 43 (Fla. 1966). See also Fla. R. Civ. P. 1.510(c).
Because the record does not establish as a matter of law that Mr. Stafford was
materially and adversely affected by the amended prospectus, he has not met his
burden of proving the absence of a genuine issue of material fact. Accordingly, we
reverse the trial court's order granting Mr. Stafford a final summary judgment.
Reversed and remanded for further proceedings.
VILLANTI and LaROSE, JJ., Concur.
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