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IN THE CIRCUIT COURT OF THE TWELFTH JUDICIAL CIRCUIT
IN AND FOR SARASOTA COUNTY, FLORIDA
RICHARD C. SENKER, Trustee of the Richard
C. Senker and Patricia A. Senker Land Trust, a
Florida Land Trust,
Plaintiff,
vs. CASE NO. 2007 CA 008509 NC
SNAVELY SIESTA ASSOCIATES, LLC,
an Ohio Limited Liability Company,
Defendant. ay r,
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SECOND SUPPLEMENTAL DIRECTIONS TO CLERK
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Defendant/Appellant, Snavely Siesta Associates, LLC, by and through % iis anion
attorneys and pursuant to Fla. R. App. P. 9.200 and the Order issued in Appedt Rio 2D08- 5044,
by the Second District Court of Appeal, on February 27, 2009, hereby directs the Clerk to
supplement the original record of this matter to include the Transcript of Proceedings before the
Honorable Robert McDonald, of the hearing held on August 27, 2008, said transcript having
been filed with the Clerk of Court on January 15, 2009.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished
via facsimile and by U.S. Mail to: SHERYL A. EDWARDS, ESQ., The Edwards Law Firm, PL,
1901 Morrill Street, Sarasota, FL 34236; STUART C. MARKMAN, ESQ., Post Office Box
i UN
it3396, Tampa, Florida 33601; and CHARLES V. LONGO, ESQ., 25550 Chagrin Blvd., Suite
320, Beachwood, Ohio 44122 on this day of March, 2009.
KIRK # PINKERTON, P.A.
50 Central Avenue, Suite 700
Sarasota, FL 34236
Tel: (941) 364-2449
Fax: (941) 364-2490
Attorney for Defendant/Appellant
]Page 1
1 APPEARANCES: 1
2 SHERYL A. EDWARDS, ESQUIRE 2
The Edwards Law Firm, PL 3
3 1901 Morrill Street 4
Sarasota, Florida 33236
4 Appearing on behalf of the Plaintiffs °
5
6 SCOTT PETERSEN, ESQUIRE 7
Kirk Pinkerton P.A. 8
7 50 Central Avenue, Suite 700 9
Sarasota, Florida 34236
Appearing on behalf of the Defendant it
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Vincent M. Lucente & Associates
1 IN THE CIRCUIT COURT OF THE TWELFTH JUDICIAL CIRCUIT 1
IN AND FOR SARASOTA COUNTY, FLORIDA 2
3
RICHARD C. SENKER, Trustee of the 4
Richard C. Senker and Patricia A. Senker 5
5 Land Trust, a Florida Land Trust, 6
6 Plaintiff, CASE NO..2007-CA-008509-NC 7
7 OY.
8 SNAVELY SIESTA ASSOCIATES, LLC., 8
an Ohio Limited-Liability Company, 9
10
Defendant. li
~ oc SS
13 TRANSCRIPT OF PROCEEDINGS 13
14 Proceedings before the Honorable Robert McDonaid, 14
15 Judge of said Court, Twelfth Judicial Circuit of Florida, at 15
16 a hearing in the above-styled cause at 2:00 p.m. on 16
17 Wednesday, August 27, 2008, held at the Sarasota County 17
18 Judicial Center, Sarasota, Florida. 18
REPORTED BY: Denise Maglich-Stone 19
Court Reporter 20
21 Notary Public 71
State of Florida at Large 22
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_ fepresentative, which is Brian Nichols, and his
Page 3
PROCEEDINGS
THE COURT: Are you ready?
MS. EDWARDS: Yes, sir. Sherrie Edwards
for the Plaintiff, Richard Senker. We are here
today on the Plaintiff's Motion for Partial
Summary Judgment on Count 4 of the Second
Amended Complaint on two very specific and very
narrow legal issues regarding contract
interpretation and the purchase and sale
contract for a condominium that was put under
contract from the Defendants, Snavely Siesta
Associates. It’s the old Summer House, if you
will.
THE COURT: Okay.
MS. EDWARDS: So a lot of history here.
And the question that we're asking the Court to
decide today is whether or not the developers
purchasing the sale contract complies with the
Interstate Land Sales Act, or more accurately
an exemption that was sought from the
disclosures required by the Interstate Land
Sales Act by the Defendant.
Before the Court the Plaintiff has filed
it's Motion for Summary Judgment. We have made
two — given two notices of filing. One of the
Page 4
affidavit of the Plaintiff, Richard Senker, and
a second, which is the Defendant's Responses to
the Plaintiff's Second Interrogatories,
specifically to the issues that the factual
issue is necessary for the Interstate Land
Sales Act to apply.
The Defendant has provided the affidavit
of the Defendant developer, or his
memorandum of law.
The factual issues, I don't think, are in
dispute here. Again, this is just a matter of
contract interpretation. The only facts that
would necessarily be relevant here is whether
or not the Interstate Land Sales Act applies to
this particular contract.
We're not seeking the resolution of the
other three counts -- this is count 4 -- but
only the interpretation of the two very
specific provisions of the contract, which were
cited both in the memorandum and in count four.
It's our position that most of the
information contained in the affidavit filed
most recently by the Defendant, the affidavit
of Brian Nichols, is really irrelevant for
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1 purposes of the determination of the legal 1 I did not cite that in my materials, but I will
2 ' issues that we're asking the Court to decide 2 give you the cite to see if you're interested
3 today. 3 to see what all of those things must be. For
4 So essentially after this hearing today, 4 purposes of background, I'm citing it today.
5 what we're asking the Court to do is make a 5 And again, for purposes of background,
6 determination on these legal issues. If the 6 this is not the property report for this
7 Plaintiff prevails the case is over, because 7 property because the Interrogatory Answers
8 under the Interstate Land Sales Act if the 8 indicate that a property report was not given.
9 contract does not comply with the exemption 9 All right? So if a property is not exempt, a
10 it's not enforceable. It’s not subject to 10 property report must be given, essentially
11 rescission by the Plaintiff with a return of 11 giving the potential purchaser all of the
12 all the deposits made in this case, which are 12 information that they might want, and then
13 significant, over $300,000; attorney's fees, 13 some.
14 interest on the funds, damages, and so on -- 14 THE COURT: Bare with me --
15 which is under the Interstate Land Sales Act. 15 MS. EDWARDS: That's okay.
16 ' THE COURT: What's the status of the 16 THE COURT: -- did you argue in front of
17 projet? == 17 the Second District?
18 MS. EDWARDS: It is complete, I believe, 18 MS. EDWARDS: I'm sorry?
19 based on the affidavit of Mr. Nichols. 19 THE COURT: Did they ask you questions --
20 THE COURT: Yeah. I have read your motion
21 and I haven't had a chance to study the memo
22 and affidavit, but --
23 MS. EDWARDS: I'm going to give you a
24 brief understanding, and I think a brief
25 understanding of the law in this area is
20 MS. EDWARDS: Absolutely. Sure. Yes,
21. sir, I have.
22 THE COURT: So it's not disputed this was
23 over 25 units?
24 MS. EDWARDS: Yes, sir. It’s actually in
the Answers to Interrogatories, and it is 45
Page 6 Page 8
1 probably sufficient because the case law will 1 units.
2 supplement then where the questions might lie. | 2 THE COURT: Okay. And based upon your
3 In my memorandum of law I kind of went 3 argument so far, that. requires the providing of
4 through the statutory structure of the 4 this property report? .
5 Interstate Land Sales Act, which is at 5 MS. EDWARDS: Yes and no. Generally
6 15 USC 1701, and I think it goes up to 1711. 6 speaking, all developments are required to make
7 THE COURT: And I will read it. It wasn't 7 this set of disclosures. All right? There are
8 wasted work. But go ahead. 8 some exemptions that someone can attempt to
9 MS. EDWARDS: Well, in very basic terms, 9 comply with or try for, and it’s one of those
10 the Interstate Land Sales Act requires a set of
11 disclosures from developers who anticipate
12 developing -- full exemptions are those under
13 25 units. So, at least partial exemptions or
14 the act partially applies to all developments
15 that are over 25 units.
16 THE COURT: Now, clarify the exemption
17 aspect of this.
18 MS. EDWARDS: All right. The Interstate
19 Land Sales Act, the basic rule is that any
20 development over 25 units must make a set of
21 disclosures, and it's called the property
22 report. And the property report has — there's
23 a set of requirements, a list of requirements
24 that must be in that property report. And
25 those are set forth at 24 CFR, and it’s 1700.
10 exemptions that is a legal issue at bay today.
11 THE COURT: Okay. So 25 is not an issue
12 then?
13 MS. EDWARDS: No, it’s not the issue of
14 whether or not it's 25 or not 25. And I've
15 been doing some writing in this area of the
16 law, and I just call them large scale
17 developments. Because essentially if you look
18 at all the cases, there's a number of different
19 exemptions. One is it’s fully exempt ifs it's
20 under 25; it’s partially exempt if it's under
21 100. I don't want to bore you with all the
22 irrelevant facts of the law. But what I wanted
23 to do is give you some background as to how a
24 developer arrives where we are today, at the
25 process of the planning and development of
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Vincent M. Lucente & Associates 800-282-8275Page 9
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where we are today.
THE COURT: Okay. The ultimate decision
will be that the property report was not
provided -- that’s agreed -- and whether there
was an exemption that allowed them not to do
it?
And prior to doing some litigation in this
area starting a couple years ago I had never
read one of those before. It's pretty eye
opening stuff. And to be honest with you, I'm
not sure why or how anyone would agree to buy a
unit if they had read those disclosures. And
in that particular one it says: The developer
had never done anything like this before, we
always operate at a loss.
10 I mean, there's some pretty serious
11 financial disclosures in there. I don't know
12 if people who bought in this project, if they
13 decided to read those or not or if they just
14 jumped in with both feet at the time.
15 But what the important thing that that
16 property disclosure does, or that property
17 report does, is it allows a developer -- and in
18 this case that developer -- an unlimited amount
19 of time to complete the project. But it takes
20 a little while to get those disclosures done.
21 It has to go through HUD, has to be approved by
22 HUD, has to comply with all the requirements
23 and a code of federal regulations as it
24 pertains to the Interstate Land Sales Act.
Now, as we just discussed, a developer can
MS. EDWARDS: Correct. What we are asking
the Court to do is to make a determination if
the contract language included in the
10 developer's contract is sufficient to qualify
11 the developer for the exemption for which they
12 sought.
13 THE COURT: Okay.
114. MS. EDWARDS: So I don't think the
15... exemption -- in fact, we don't dispute. We
16 - assume that was the exemption they were going
~ 117 for, and that's why I filed their Interrogatory
18 Answerers. They confirmed it. Mr. Nichols’
19 sworn testimony confirmed that they did go for,
20 and in this case, the two year exemption.
21 Meaning, they have to finish construction of
22 the project within two years. But again, to
23 give you some background on --
24 THE COURT: I'll shut up.
25 MS. EDWARDS: It’s okay, I don't mind.
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1 Because I understand. And that’s why we had
2 asked you, walking in the door, if there was
3 some additional time left. Because this is a
4 very specific issue of the law.
5 So a developer has to give this set of
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1 avoid making these disclosures. And again, the
2 exemptions sought here is the 1702-A2 — it has
3 many different names; improved lot exemption,
4 two year completion exemption. The case law
5 kind of names it a number of different things.
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basic rule. Developer has to give this set of
disclosures. And this isn't their disclosure.
They didn't do the disclosures. This is the
Set that I have from the Broadway Promenade, a
But it's very clear that in order for the two
year exemption — in order for a developer to
obtain the two year exemption, to not have to
make the property disclosures, they have to
10 __. little pizza place that's no longer there. 10 have a provision in their contract — and
11 What a property report has to 11 here's the important part — that
12 disclosure -- again, it’s in 24 CFR and starts
13 at 1700 -- is all the information on the
14 project that HUD -- Department of Housing
15 and -- U.S. Department of Housing and Urban
16 Development -- thinks that a potential
17 purchaser might want to know about the project,
18 the area, the services to the area, but most
19 importantly, the developer. And this is,
20 again, not theirs, but this is another property
21 report that did comply with HUD requirements.
22 And the Court can see from there, it
23 starts at the very top in very bold red type
24 where the rest is in black: Read this property
25 report before signing anything.
12 unconditionally obligates the developer to
13 perform under the contract.
14 And in this case that unconditionally
15 obligates the developer to complete
16 construction within two years. And that is
17 something that the Florida Supreme Court has
18 indicated is their interpretation of the
19 Interstate Land Sales Act. And that is in the
20 Sumari case, which is cited in my materials.
21 So again, what we're asking the Court to
22 do today is to determine whether two separate
23° dlauses contained in the contract
24 unconditionally obligate the developer to
perform. If it doesn't, the contract is not
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Vincent M. Lucente & Associates 800-282-8275WON A UA WN
enforceable and my client gets his deposit
" money back. If it does, we continue on with
the litigation.
Now, one of the things that was raised in
Mr. Nichols’ affidavit was the fact that, or
the assertion that the unit was complete within
two years. All right? There's two cases that
I rely on significantly in my memorandum of
law, and I found a third yesterday in my
preparations for today's hearing. But one of
the things that one of my cases indicates --
and that’s the Harvey case -- is that it's
irrelevant -- at this stage of the game in the
examination of whether or not a contract
_ complies with one of the exemptions -- it's
_ irrelevant on whether or not they actually
finish the unit within two years.
THE COURT: What's the analysis of that --
that -- it would strike me initially as being
unusual, if it's actually built within the two
years, that's -- harm and prejudice or
whatever -- strict liability happened?
MS. EDWARDS: It really isn't. Again, the
basis, and the reason I did a little bit of
background on the Interstate Land Sales Act —
The Interstate Land Sales Act was promulgated
essentially as an antifraud set of statutes so
that buyers weren't buying the pig in the poke
properties in the middle of swampland or in the
middle of the desert where there's no services,
or no access, none of that. And essentially,
as many laws do, it has evolved over time where
again it’s gotten down to a very narrow
application interpretation, which is kind of
where we are today.
50, again, the basic rule is you have to
tell everybody everything. And the only way
you get out of telling everybody everything is
if you do this exact thing, if you comply with
it and you unconditionally obligate yourself in
your contract to finish in two years.
And there's also other applications, if
you don't limit damages -- there's a number of
different reasons why the contract would be
illusory. Some are in Hardwick, cited by the
Defendant. Both of those cases were damages
cases where there was a limitation of damages.
But the holding of those cases is that the
contract language must unconditionally obligate
the developer to finish.
Vincent M. Lucente & Associates
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Wen OA UI DP W AD pe
- condominium shall be completed not later than
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THE COURT: So in theory then the
developer can get a -- build a hundred unit
building, get contracts on all of those, get
deposits from all of those, build it all within
two years, but if that language wasn't in their
contract they have to give back all the
deposits because that’s irrelevant it was
actually built in two years?
MS. EDWARDS: Because the law requires
them to make the disclosures. So if they don't
comply with the requirements not to make the
disclosures, they have to make the disclosures.
Well, of course, at this stage of the game you
can't go back and give the disclosures.
THE COURT: Perhaps it’s not a good
analogy, but that’s why the strict liability
came to mind for me, and that’s too bad.
MS. EDWARDS: No, I understand. But
again, there is the set of you have to do this
unless you have this very little thing that you
do. And you have to do this very little thing
that you do exactly correctly or you have to
make the disclosures.
All right. So cut to the chase, where we
are today is Mr. Senker’s contract with the
Page 16
Snavely Group. And attached to the Second
Amended Complaint, also attached to
Mr. Nichols’ affidavit, is the contract. And
it's -- the first provision I'd like the Court
to examine is the two-year completion clause in
paragraph 4.
THE COURT: Is that in the package?
MS. EDWARDS: Yes, sir. Mine is not, but
I can get it for you quickly if you need one.
THE COURT: I'm looking for the actual
contract.
MS. EDWARDS: All right. Let’s see if I
can find it. May I approach?
THE COURT: Yes, you can.
MS. EDWARDS: It starts at the bottom of
page — it’s called P-A3 and goes to the top of
page 4.
THE COURT: All right.
MS. EDWARDS: And skipping most of the
irrelevant language, I'm going start at 4-A,
going to start at: The unit as configured —
THE COURT: All right.
MS. EDWARDS: -- the unit as configured in
seller's plans and specifications for the
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800-282-8275 _WANA UW AWDN
' contract. However, the date for completion may
_ limitation, delays occasioned by rain, wind,
‘order to comply with the very narrow two year
Page 17
two years from the date purchaser signs this
be extended by reasons of delays incurred by
Circumstances -- and here's the important
part -- beyond the seller's control, such as
acts of god, other grounds cognizable in
Florida contract law, such as impossibility or
frustration of performance, including without
WOAN QU A WN
and lightening storms. Pretty broad.
THE COURT: Weather oriented, obviously.
MS. EDWARDS: Well, not necessarily.
Other reasons incurred by circumstances beyond
the seller's control.
And three recent decisions that have been
published in the Middle District of Florida
have indicated that that's way too broad in
exemption.
THE COURT: So the examples that are
weather oriented don't save them?
MS. EDWARDS: If you look at the two cases
I cited to the Court -- I don't know if you
have the case law that I —-
THE COURT: Yeah, you did give me all the
Page 19
THE COURT: -- the reasoning.
MS. EDWARDS: You know, I have not been
elevated to that level where I can dictate
those things.
But I'm looking at the Stein case — I'm
sorry, the Harvey case. And interestingly
enough, it's almost as if the developer in our
case, the Snavely case, took the language
directly from the developer in the Harvey case,
which was Lake Buena Vista Resort.
THE COURT: And that case held that's not
adequate?
MS. EDWARDS: The clause in the Harvey
contract similarly says -- and this is in my
memorandum where I compare the language -- and
this is from the Harvey contract now — the
date for completion may be extended by reasons
of delay incurred by circumstances beyond
seller's contro! - we have that -—- such as
acts of god, or civil unrest, imposition by a
governmental authority of a moratorium upon
construction of the unit, or providing of
utilities or services which are essential to
such construction — material shortages or any
other grounds cognizable in Florida contract
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case law.
MS. EDWARDS: Okay. And I did give you
the copies of the significant cases. I — for
purposes of saving trees -- delivered a disk
with all the case law.
THE COURT: I was wondering why I have a
disc.
MS. EDWARDS: Well, it has all the case
law in it. So I am trying my best. When I
first set up my practice a long time ago, they
assured me — the copier salesman assured me
that I needed this scanning element because it
was going to be a paperless worid. Fifteen
years later I use more paper than ever --
THE COURT: So your position is even
though the specific examples under the such as,
including specifically weather oriented things,
you're saying that by using the language,
Without limitations, which in theory opens it
up to anything at all -
MS. EDWARDS: Well, I'm saying what three
federal courts say —
THE COURT: Well, no, I mean, the
argument --
MS. EDWARDS: Yes, sir.
Vincent M. Lucente & Associates
Page 20
law as impossibility or frustration of
performance — exactly. I think that the
verbiage is frustration of purpose, not
frustration of performance, and that's why I
was thinking, Wow, did they copy this
exactly - including without limitation, delays
occasioned by wind, rain, and lighting storms.
And then they have the savings clause,
which I don't include, but I'm guessing he's
going to make argument on, so we'll get to that
in a minute. But the Harvey court indicates —
and this is in the Harvey opinion, which cites
the Stein opinion, which is the other opinion
that I provided to the Court -- and the Harvey
court, in citing the Stein opinion, indicates,
including excused completion in two years for
“other delays beyond the control of the seller"
he, meaning the Judge Stee! in the Stein case,
held were not limited to the narrow doctrine of
impossibility of performance, which "is
employed with great caution” under Florida law,
citing the Shatz case, which I provided to Your
Honor. I believe that’s one of the cases on
the disk.
And continuing further on, and this is on
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Page 21
page 7 of the opinion -- page 7 of the paper, 1
' page 8 of the original opinion -- the issue in 2
this case is whether the -- and it says 3
relater, my guess, is the developer - has a 4
real unconditional obligation to complete the 5
condominium within two years, or whether other | 6
provisions render that apparent obligation 7
illusory. The purchase agreement in this case 8
includes a -- to a clause with a scope well 9
beyond just "acts of god” or the 10
"impossibility" defense, similar. to the causes 11
at issue in Stein. The date for completion may 12
be extended by reason of delays incurred by 13
circumstances beyond seller's control, such as 14
acts of god, war, civil unrest, imposition by a 15
governmental authority of a moratorium upon 16
construction of a unit, or providing of 17
utilities or services which are essential to 18
such construction, casualty losses, or other 19
material shortages or other grounds cognizable | 20
under Florida law as impossibility or 21
frustration of performance -- and it continues. 22
And it says, the -- clause in paragraph 14 23
contains acceptable defenses to the extent that | 24
it lists acts of god in a possibility as
Page 22
defenses to contract actions, citing Stein. 1
However, the resort's ability to extend the 2
completion date by, "reasons of delay -- 3
reasons of delays incurred by circumstances 4
beyond seller's control”, including the very 5
broad category of any other grounds cognizable | 6
in Florida contract law as frustration of 7
performance, induding without limitation 8
occasions by rain -- I'm sorry -- wind, rain, 9
lighting and storms, makes the resort’s two 10
year completion obligation illusory. These far | 11
less compelling reasons are similar to those 12
Judge Stee! determined to be certainly broad [13
enough to allow the seller to excuse completion | 14
on a wide variety of defense. 15
Again, the reason I went back to how this | 16
law is applied, the developer at the beginning | 17
of a project gets a choice; do I take the extra | 18
time and make sure that I have dotted all the | 19
i's, crossed all the t's? Because HUD is going | 20
to give me a stamp to say, You deliver this 21
report to your potential purchasers before they | 22
sign a contract and it complies with all the 23
requirements in 24 CFR 1700, etcetera.
THE COURT: So HUD doesn't approve the
Vincent M. Lucente & Associates
_ dol go all the way and make all these
_ Vanhook V Residences at Coconut Point. And
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contracts, or they wouldn't approve this?
MS. EDWARDS: No. No, HUD says so long as
you make a two year obligation unconditional,
we're going to let you skip this step. So the
developer gets to choose at the beginning; Do I
take the short easy route and skip the step, or
disclosures?
And honestly, this contract was executed
in 2005. Thinking back when they must have
been contemplating this project in 2004, we had
a pretty hot real estate market. You want to
get up and going. You want to maximize that
profit.
THE COURT: What was the date of the
opinion that you quoted --
MS. EDWARDS: This one, Your Honor, is
April 22, 2008. That’s the Harvey opinion.
The Stein opinion is from -- also from earlier
this year. And I believe I cite the date in my
memorandum. I think it’s January.
THE COURT: I'm just curious --
MS. EDWARDS: And the third one, if I
could, Your Honor, I didn't cite it. I just
found it and I gave a copy of it to counse!
Page 24
yesterday, or on the way in. It's the
this one is from July 10, 2008.
THE COURT: So in theory, whoever drafted
the contract at issue, they didn't know of
these cases?
MS. EDWARDS: Well, the case law was out
re
THE COURT: Not that they're required to.
MS. EDWARDS: No, but the case law was out
there saying that it must be an unconditional
obligation to complete within two years. It
must not be illusory.
So I'm in the crux of -- the inquiry here,
is it too loosey goosey? And I think one of
the -- one of the - I think it's the Stein
opinion that says they try to have their cake
and eat it, too. They want to fall under the,
I'm absolutely obligated very narrow exception,
but yet, let's see how many reasons I can give
myself in order to get out of the contract.
I know I'm running short on time, so I
want to bring the Court’s attention to the
second clause.
THE COURT: It’s 2:30, and I see Mr. Denny
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800-282-8275Wan A UI pb WN ps
Page 25
is here, so whenever you wrap up, then.!'ll 1
~ Check with him. 2
MS. EDWARDS: Okay. The second clause | 3
that I'd like to bring the Court's attention to 4
in the contract is the presale contingency, and | 5
that is in paragraph 15 of the contract. And 6
paragraph 15 of the contract indicates, 15-A; 7
if the seller has been unable to obtain 8
purchase contracts, or at least 60 percent of 9
. the units in the condominium in which the unit | 10
iS located, within 180 days -- and I bolded the | 11
language in my argument -- seller may 12
unilaterally terminate this agreement by 13
written notice to purchaser upon delivery of 14
such notice and refunding the purchaser all 15
deposits, including all interest. Seller shall - | 16
have fulfilled it’s obligations under this 17
agreement and the agreement shall terminate. | 18
Well, guess what? The Harvey contract has | 19
almost an identical -- that’s the one I'm 20
thinking maybe we have the same lawyer draft | 21
these contracts, because it's almost identical. | 22
And in the Harvey contract -- in the Harvey 23
case the Court indicates that you can't do 24
that. That negates your unconditional
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obligation. 1
THE COURT: Alli right. Well, let me -- 2
one final comment or so and we'll stop. Okay. | 3
All right. I have to check on my 2:30 -- 4
(A short break was taken.) 5
MR. PETERSON: Scott Petersen with Kirk 6
Pinkerton. Your Honor, let me back up. 7
THE COURT: Okay. 8
MR. PETERSON: If I can make this simpler, | 9
hopefully, for the Court. If we take the 10
premises -- the exemption that is sought is 11
one, the reason why we're here arguing about | 12
this, I guess, is the cases cited by Plaintiff 13
are those that say that the obligation to 14
construct within two years is illusory. That 15
is to say that the seller can back out more or 16
less at the sellers's discretion because the 17
seller has built in so many exemptions to 18
completing the unit within the two years. 19
That's really the focus of what the Stein, 20
Harvey, and Vanhook, which counse! has cited, | 21
comes down to. They've all said, Look, you've | 22
cited to acts of god as exemptions. Okay. But | 23
the frustration of performance, there's just 24
too much there for the seller to take advantage | 25
Vincent M. Lucente & Associates
Page 27
of to back out of the obligation to construct
within two years. Therefore, that exemption
doesn't apply to you, Mr. Seller.
Well, let me take issue with one thing
that counsel for Plaintiff said, and it's --
let me be a little careful in how I say this
because I'm taking an issue with her
characterization that the seller has to
unconditionally obligate itself to complete
within two years. That is the language out of
the Sumari, the Florida Supreme Court case.
However, Sumari doesn't apply in this case, as
Plaintiff counsel has said, because Sumari
dealt with a different language of limitation
on damages. Not that’s not the issue in this
case. It’s a distinct issue. :
And even Plaintiff, in it’s brief, and the
courts in Stein and Harvey, all admit that the
language of unconditional obligation isn't to
be taken literally. There are some exemptions
that apply. And I think it’s page 6 of
Plaintiffs brief, where Plaintiff says, Delays
beyond the two years are acceptable if they're
legally supportable in the jurisdiction. And —
that's language that comes right out of the HUD
Page 28
guidelines on how the ILSA is interpreted. And
it's also both the courts in Stein and Harvey
refer to that and say, We don't take that
unconditional obligation literally. There are
some exceptions that apply. It’s just that the
Courts in Stein and Harvey and Vanhook as well
said, Well, in these contracts, Mr. Seller,
you've taken too many exemptions. There are
some we'll allow, there are some we won't. And
I'll go further with that as we go on.
In support of it’s position, Plaintiff
cites two federal court decisions, Stein and
Harvey -- three, I guess Vanhook as well -- and
as the Court knows, those are persuasive
authority only on this Court. But it’s one
important thing that this Court should know --
and unfortunately I filled my brief in
opposition a day before --
THE COURT: Yeah, I haven't seen that.
MR. PETERSON: Oh, okay. I'm sorry.
THE COURT: Do you have that?
MS. EDWARDS: I do have it, actually.
THE COURT: Well, I'll take this under
advisement, as I often do, and read this stuff.
So I can try to just not go and judge with my
7 (Pages 25 to 28)
800-282-8275gut feeling. And you can send that over later.
MR. PETERSON: Well, I have a copy right
here. Can I approach?
THE COURT: Yes. Not that it controls,
but I was thinking, well, gosh, there seems to
be no law going the other way, I guess. But
you do have some stuff --
MR. PETERSON: Well, what I was going to
say, Your Honor, is I filed my brief in
opposition a day before counsel for Plaintiff
filed it's motion. I didn't have a chance to
address some of the points.
THE COURT: Okay.
MR. PETERSON: I will follow-up, if the
Court permits me to, with a couple more cases
I'd like to lay out for the Court, o
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
THE COURT: In ya'll's proposed orders --
and you've done that with me before --
MR. PETERSON: Yes.
THE COURT: -- so you know that's your
chance to argue again.
MR. PETERSON: Sure.
THE COURT: And we'll have response
opportunity, too.
MR. PETERSON: Okay. Thank you. But the
one point that I really want to stress to the
Court is these courts from the Middle District
have held this way. The courts from the
southern district, however, have held just the
opposite. There is currently a split in the
jurisdictions in Florida on how to interpret
this exemption, this 1702-A2 exemption. And
the courts -- there's a case called Dubois.
There is another called McGuire. There's
another called Camel. I'll provide all these
to the Court. In all of these cases they've
heid that exceptions to the two-year deadline
do not necessarily make that obligation
illusory. And unfortunately, we haven't had
any guidance from the Eleventh Circuit yet to
But to go to the reasoning in Stein and
Harvey, the curious thing about both Stein and
Harvey, and Vanhook as well, is — I think it’s
page 12 of the Plaintiff's brief -- both Stein
and Harvey and the Plaintiff admits delays
occasioned by acts of god such that performance
is impossible or illegally permissible. But
both Stein and Harvey, and Vanhook as well,
Page 31
fail to recognize, or refuse to recognize the
long held and long recognized doctrine in
Florida of frustration of performance. There's
no real explanation given by the court as to
why on one hand it recognizes the impossibility
doctrine, on the other hand it doesn't
recognize the frustration of performance
doctrine.
And let's remember the HUD guidelines say
when interpreting the ILSA exception, any
legally recognized and legally cognizable
defense for extending that two-year deadline is
permissible. So neither Stein nor Harvey go
through that analysis and say why they pick and
choose out of Florida law.
Also -- and I know the Court looked at
paragraph 4 here -— but the next sentence that
counsel didn't read to the Court -- and I can
provide this copy back to the Court to see for
itself -- the parties state it is the intention
of the parties that this sale qualify for the
exemption provide by 15 USC Section 1702-A2,
and that nothing contained in this agreement
shall be construed or so operated as to any
obligations of seller or rights of buyer in a
Page 32
manner which would render said exemption
inapplicable.
So in this case not only does the contract
have two very narrow exceptions to the two-year
deadline, it further has a savings clause that
says; If the court interprets either of these
impossibility of performance or frustration of
performance as allowing too much discretion and
not qualifying the seller for the exemption,
it's the intent of the parties that that
language be stricken and the contract be narrow
such that it will qualify for that exemption.
Again, there is similar language in both
Stein and Harvey. The court, however, doesn't
address why -- well, it does address why but it
doesn't address why it doesn't follow that
intention. The Courts in Stein, I believe it
was, said something to the effect of, Well,
that’s just sort of an expressed intention but
we're not going to give it any affect. But
that's not how contract law operates in
Florida.
The contract law in Florida — contract
interpretation in Florida states that every
provision is to be given affect unless it
8 (Pages 29 to 32)
800-282-8275Won nu A WA
Page 33
contradicts or is ambiguous. But there is
‘ nothing ambiguous about that. It’s the
intention of both parties that the project
qualify for the exemption.
Now, as I said, the key is was the seller
obligated? Was the seller - or did the seller
have discretion to extend that two-year
deadline? Well, in this case the contract
limits the seller, limits my client, Snavely,
to qualify for impossibility of performance or
frustration of performance. Both of those are
very high hurdles for the seller to meet.
If Snavely had not constructed the
building within two years the only way it gets
to extend that deadline is to show acts of god
that made performance impossible or frustration
of performance, such as excessive rain, wind,
lighting storms, which are recognized as
frustration of performance exceptions under
Florida law.
There is nothing that allows Snavely to
Say, Well, you know, we just couldn't get it
done on time because X, Y, and Z. It’s got two
very narrow exceptions, and those are limited
and subscribed by Florida law.
Page 34
So I would put it to the Court that rather
than what Plaintiff characterizes as unbridled
discretion on the part of Snavely, quite the
_ contrary. The language of the contract -- the
plain language of the contract and the
expressed intention of the parties was that
Snavely's obligated to build that project
within the two years, but for those two narrow
exemptons.
THE COURT: Now, you said -- did I
understand you to indicate that Stein and
Harvey had the similar -- what you called
savings clause language?
MR. PETERSON: Your Honor, I'll have -- I
think Stein does. Or maybe Harvey --
MS. EDWARDS: It’s Harvey.
MR. PETERSON: Or maybe Harvey does.
THE COURT: Okay.
MR. PETERSON: Harvey has similar
language. But again, if the Court examines
some of the cases -- and I'll provide those to
the Court -- from the Southern District, the
cases from the Southern District say, Well,
this is the parties expressed intent, and to
the extent that this language can be read too
Vincent M. Lucente & Associates
WON AU AWN
Page 35
broadly, we're going to limit it because the
parties intend to qualify for the exemption
under 1702-A2.
THE COURT: So - and there's no Florida
District Court of Appeal case that's ruled on
this?
MR. PETERSON: No, unfortunately not.
THE COURT: An awful lot of first
impressions --
MR. PETERSON: Yeah. So just in brief
summary, Plaintiff is not only in this case
trying to escape the plain language of the
contract, the intention of the parties of
the -- contracting, but also the fact that
Snavely performed as it was obligated to do.
Snavely constructed the building within two
years. And the affidavit of Brian Nichols is
provided to the Court to show the Court if
Snavely felt it was not obligated to perform
within those two years, then why did it
struggle so mightily to complete it under the
deadline?
Obviously, it felt obligated by the
language of the contract and did perform under
the contract as it was obligated to do.
Page 36
In that case, and for those reasons, Your
Honor, I think that Plaintiffs motion should
be denied.
THE COURT: Thank you.
MS. EDWARDS: Very briefly, Your Honor,
because Your Honor asked a few questions that I
think I can clear up now.
THE COURT: Okay.
MS. EDWARDS: As I had expected counsel!
would bring to the Court's attention the
Savings Clause in it’s contract, as it’s
termed, which essentially says that we realty
mean that we're going to comply, even if we
don't comply. In the court in Harvey
essentially says, Similar saving clauses -- and
this is on page 8 of the paper opinion --
similar savings Clauses included in other
commercial contracts have been rejected by
Florida courts as providing an absolute bar to
holding the draft reliable for violating the
statute. Which is essentially what happened
here.
Were the Court to accept the savings
Clause it would undermine public policy and
defeat Congress's purpose in creating this
9 (Pages 33 to 36)
800-282-8275Page 37
consumer protection legislation and requirement
_ that the exemptions be read narrowly. Which is
essentially why we're saying that because they
made it too broad they don't comply with the
exemption.
THE COURT: So in Florida in federal court
in the Southern District, the savings cause
matters, but for in general on Florida District
Court -- well, state cases, savings Clauses
10 don't save you?
11 MS. EDWARDS: Weil, and-I don't know so.
12 much the Southern District cases address the
13 Savings Clauses. I think they're examining —
14 and counsel said something to the effect of
15 ‘that all of the two-year exemptions, if unless
16 they're narrowly tailored -- and I don't know
17 that all of the courts say that. I think what
18 ~_all of the courts in the Middle and Southem
19 Districts all say is that you have to look at
20 the specific provisions of the particular
21 contract to see is it broad; Is it overty
22 broad? Is it narrowly construed? Is it
23 narrowly constricted to essentially protect the
24 legislation intended under the Interstate Land
Sales Act? Do you disclose or do you take the
WON Hut WAN
oon nu A WN
Page 38
1 shortcut? And if you get the shortcut, the
2 Courts, in my opinion, the Stein and Harvey and
3 Vanhook courts properly determined if you're
4 going to get the shortcut you got to do it
5 right. You have to narrowly tailor it. You
6 just can't make this big --
7 THE COURT: We need to wrap up.
8 MS. EDWARDS: And I'm sure Your Honor
9 knows with respect to the difference between
10 frustration of purpose -- of performance and
11 impossibility of performance. And I think it’s
12 the Harvey case that goes through the
13 examination of foreseeability. And I think if
14 you look at the restatement of contracts with
15 respect to impossibility of performance it
16 gives you that ability who was able to
17 foresee -- who was in a position to best
18 understand or protect or foresee? Who is under
19 contro! here?
20 And clearly, in this case, it would be the
21 developer. The developer is the one who has
22 control of whether or not they performed within
23 this period of time. And only for those
24 instances where it is dearty outside of their
25 control are they allowed this — to escape or
Vincent M. Lucente & Associates
Page 39
extend the two-year exemption.
One last point I'd like to make is this
case isn't only about the two-year exemption.
It is about the presale contingency, as well.
So while all of this supplemental information
that we're going to provide to the court
addresses one of those contract clauses, there
is nothing on the other side that says if you
allow this developer unilateral right to
terminate the contract that that in and of
itself outside of the two-year exemption
renders the contract illusory.
So even if the Court decides to side with
the Second District and find some reason under
the two-year clause that it is not illusory,
Clearty that presale contingency does in and of
itself make the contract illusory.
THE COURT: Okay. Well, I know you will
address those issues in your proposed orders.
And let's talk about the dates now. I
always assume the better, but knowing you have
other things to do, what is a reasonable
timeframe to get me a Partial Summary Judgment
and an order denying the motion?
MR. PETERSON: I can probably have it done
Monday.
MS. EDWARDS: I can do it Friday.
MR. PETERSON: Friday is fine.
THE COURT: Okay. So Friday at noon,
then. Two days -- the 29th. And then you want
to say Tuesday at noon for any response if you
want to file one? 9-2?
MR. PETERSON: Let's do that.
THE COURT: That's all real quick. So —
okay. And as always, thorough as you need to
be but as concise as you can.
MS. EDWARDS: Do you want citations
according to authority in the proposed order?
THE COURT: Yes, supporting authority and
the analysis that you want me to adopt,
etcetera. And I'll try to figure it out the
best I can.
MR. PETERSON: Thank you.
MS. EDWARDS: Thank you.
(Proceedings were concluded at 3:05 p.m.)
10 (Pages 37 to 40)
800-282-8275Page 41
REPORTER'S CERTIFICATE
STATE OF FLORIDA )
COUNTY OF SARASOTA )
WOn awn Ah WN
I, Denise Maglich-Stone, Court Reporter, certify
10 that I was authorized to and did stenographically report the
11 proceedings herein, and that the transcript is a true and
12 complete record of my stenographic notes.
14 I further certify that I am not a relative,
15 employee, attorney or counsel of any of the parties, nor am
16 1a relative or employee of any of the parties’ attorney or
17 counsel connected with the action, nor am I financially
18 interested in the action.
19
20 Dated this 6th day of January, 2009.
21 .
22 - j
23 KNMWA n DA
DENISE MAGLICH-STONE
24 Court Reporter
25
11 (Page 41)
Vincent M. Lucente & Associates 800-282-8275
Preview
IN THE CIRCUIT COURT OF THE TWELFTH JUDICIAL CIRCUIT IN AND FOR SARASOTA COUNTY, FLORIDA RICHARD C. SENKER, Trustee of the Richard C. Senker and Patricia A. Senker Land Trust, a Florida Land Trust, Plaintiff, vs. CASE NO. 2007 CA 008509 NC SNAVELY SIESTA ASSOCIATES, LLC, an Ohio Limited Liability Company, Defendant. ay r, foe ce? LU t Bae . 3 ¢ SECOND SUPPLEMENTAL DIRECTIONS TO CLERK » . HOE) S72 Toe caus bale set vo hee va . m , Bir Defendant/Appellant, Snavely Siesta Associates, LLC, by and through % iis anion attorneys and pursuant to Fla. R. App. P. 9.200 and the Order issued in Appedt Rio 2D08- 5044, by the Second District Court of Appeal, on February 27, 2009, hereby directs the Clerk to supplement the original record of this matter to include the Transcript of Proceedings before the Honorable Robert McDonald, of the hearing held on August 27, 2008, said transcript having been filed with the Clerk of Court on January 15, 2009. CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished via facsimile and by U.S. Mail to: SHERYL A. EDWARDS, ESQ., The Edwards Law Firm, PL, 1901 Morrill Street, Sarasota, FL 34236; STUART C. MARKMAN, ESQ., Post Office Box i UN it3396, Tampa, Florida 33601; and CHARLES V. LONGO, ESQ., 25550 Chagrin Blvd., Suite 320, Beachwood, Ohio 44122 on this day of March, 2009. KIRK # PINKERTON, P.A. 50 Central Avenue, Suite 700 Sarasota, FL 34236 Tel: (941) 364-2449 Fax: (941) 364-2490 Attorney for Defendant/Appellant ]Page 1 1 APPEARANCES: 1 2 SHERYL A. EDWARDS, ESQUIRE 2 The Edwards Law Firm, PL 3 3 1901 Morrill Street 4 Sarasota, Florida 33236 4 Appearing on behalf of the Plaintiffs ° 5 6 SCOTT PETERSEN, ESQUIRE 7 Kirk Pinkerton P.A. 8 7 50 Central Avenue, Suite 700 9 Sarasota, Florida 34236 Appearing on behalf of the Defendant it 12 13 14 15 16 17 18 19 20 21 22 23 24 Vincent M. Lucente & Associates 1 IN THE CIRCUIT COURT OF THE TWELFTH JUDICIAL CIRCUIT 1 IN AND FOR SARASOTA COUNTY, FLORIDA 2 3 RICHARD C. SENKER, Trustee of the 4 Richard C. Senker and Patricia A. Senker 5 5 Land Trust, a Florida Land Trust, 6 6 Plaintiff, CASE NO..2007-CA-008509-NC 7 7 OY. 8 SNAVELY SIESTA ASSOCIATES, LLC., 8 an Ohio Limited-Liability Company, 9 10 Defendant. li ~ oc SS 13 TRANSCRIPT OF PROCEEDINGS 13 14 Proceedings before the Honorable Robert McDonaid, 14 15 Judge of said Court, Twelfth Judicial Circuit of Florida, at 15 16 a hearing in the above-styled cause at 2:00 p.m. on 16 17 Wednesday, August 27, 2008, held at the Sarasota County 17 18 Judicial Center, Sarasota, Florida. 18 REPORTED BY: Denise Maglich-Stone 19 Court Reporter 20 21 Notary Public 71 State of Florida at Large 22 23 24 25 _ fepresentative, which is Brian Nichols, and his Page 3 PROCEEDINGS THE COURT: Are you ready? MS. EDWARDS: Yes, sir. Sherrie Edwards for the Plaintiff, Richard Senker. We are here today on the Plaintiff's Motion for Partial Summary Judgment on Count 4 of the Second Amended Complaint on two very specific and very narrow legal issues regarding contract interpretation and the purchase and sale contract for a condominium that was put under contract from the Defendants, Snavely Siesta Associates. It’s the old Summer House, if you will. THE COURT: Okay. MS. EDWARDS: So a lot of history here. And the question that we're asking the Court to decide today is whether or not the developers purchasing the sale contract complies with the Interstate Land Sales Act, or more accurately an exemption that was sought from the disclosures required by the Interstate Land Sales Act by the Defendant. Before the Court the Plaintiff has filed it's Motion for Summary Judgment. We have made two — given two notices of filing. One of the Page 4 affidavit of the Plaintiff, Richard Senker, and a second, which is the Defendant's Responses to the Plaintiff's Second Interrogatories, specifically to the issues that the factual issue is necessary for the Interstate Land Sales Act to apply. The Defendant has provided the affidavit of the Defendant developer, or his memorandum of law. The factual issues, I don't think, are in dispute here. Again, this is just a matter of contract interpretation. The only facts that would necessarily be relevant here is whether or not the Interstate Land Sales Act applies to this particular contract. We're not seeking the resolution of the other three counts -- this is count 4 -- but only the interpretation of the two very specific provisions of the contract, which were cited both in the memorandum and in count four. It's our position that most of the information contained in the affidavit filed most recently by the Defendant, the affidavit of Brian Nichols, is really irrelevant for 1 (Pages 1 to 4) 800-282-8275Page 5 Page 7 1 purposes of the determination of the legal 1 I did not cite that in my materials, but I will 2 ' issues that we're asking the Court to decide 2 give you the cite to see if you're interested 3 today. 3 to see what all of those things must be. For 4 So essentially after this hearing today, 4 purposes of background, I'm citing it today. 5 what we're asking the Court to do is make a 5 And again, for purposes of background, 6 determination on these legal issues. If the 6 this is not the property report for this 7 Plaintiff prevails the case is over, because 7 property because the Interrogatory Answers 8 under the Interstate Land Sales Act if the 8 indicate that a property report was not given. 9 contract does not comply with the exemption 9 All right? So if a property is not exempt, a 10 it's not enforceable. It’s not subject to 10 property report must be given, essentially 11 rescission by the Plaintiff with a return of 11 giving the potential purchaser all of the 12 all the deposits made in this case, which are 12 information that they might want, and then 13 significant, over $300,000; attorney's fees, 13 some. 14 interest on the funds, damages, and so on -- 14 THE COURT: Bare with me -- 15 which is under the Interstate Land Sales Act. 15 MS. EDWARDS: That's okay. 16 ' THE COURT: What's the status of the 16 THE COURT: -- did you argue in front of 17 projet? == 17 the Second District? 18 MS. EDWARDS: It is complete, I believe, 18 MS. EDWARDS: I'm sorry? 19 based on the affidavit of Mr. Nichols. 19 THE COURT: Did they ask you questions -- 20 THE COURT: Yeah. I have read your motion 21 and I haven't had a chance to study the memo 22 and affidavit, but -- 23 MS. EDWARDS: I'm going to give you a 24 brief understanding, and I think a brief 25 understanding of the law in this area is 20 MS. EDWARDS: Absolutely. Sure. Yes, 21. sir, I have. 22 THE COURT: So it's not disputed this was 23 over 25 units? 24 MS. EDWARDS: Yes, sir. It’s actually in the Answers to Interrogatories, and it is 45 Page 6 Page 8 1 probably sufficient because the case law will 1 units. 2 supplement then where the questions might lie. | 2 THE COURT: Okay. And based upon your 3 In my memorandum of law I kind of went 3 argument so far, that. requires the providing of 4 through the statutory structure of the 4 this property report? . 5 Interstate Land Sales Act, which is at 5 MS. EDWARDS: Yes and no. Generally 6 15 USC 1701, and I think it goes up to 1711. 6 speaking, all developments are required to make 7 THE COURT: And I will read it. It wasn't 7 this set of disclosures. All right? There are 8 wasted work. But go ahead. 8 some exemptions that someone can attempt to 9 MS. EDWARDS: Well, in very basic terms, 9 comply with or try for, and it’s one of those 10 the Interstate Land Sales Act requires a set of 11 disclosures from developers who anticipate 12 developing -- full exemptions are those under 13 25 units. So, at least partial exemptions or 14 the act partially applies to all developments 15 that are over 25 units. 16 THE COURT: Now, clarify the exemption 17 aspect of this. 18 MS. EDWARDS: All right. The Interstate 19 Land Sales Act, the basic rule is that any 20 development over 25 units must make a set of 21 disclosures, and it's called the property 22 report. And the property report has — there's 23 a set of requirements, a list of requirements 24 that must be in that property report. And 25 those are set forth at 24 CFR, and it’s 1700. 10 exemptions that is a legal issue at bay today. 11 THE COURT: Okay. So 25 is not an issue 12 then? 13 MS. EDWARDS: No, it’s not the issue of 14 whether or not it's 25 or not 25. And I've 15 been doing some writing in this area of the 16 law, and I just call them large scale 17 developments. Because essentially if you look 18 at all the cases, there's a number of different 19 exemptions. One is it’s fully exempt ifs it's 20 under 25; it’s partially exempt if it's under 21 100. I don't want to bore you with all the 22 irrelevant facts of the law. But what I wanted 23 to do is give you some background as to how a 24 developer arrives where we are today, at the 25 process of the planning and development of 2 (Pages 5 to 8) Vincent M. Lucente & Associates 800-282-8275Page 9 Page 11 where we are today. THE COURT: Okay. The ultimate decision will be that the property report was not provided -- that’s agreed -- and whether there was an exemption that allowed them not to do it? And prior to doing some litigation in this area starting a couple years ago I had never read one of those before. It's pretty eye opening stuff. And to be honest with you, I'm not sure why or how anyone would agree to buy a unit if they had read those disclosures. And in that particular one it says: The developer had never done anything like this before, we always operate at a loss. 10 I mean, there's some pretty serious 11 financial disclosures in there. I don't know 12 if people who bought in this project, if they 13 decided to read those or not or if they just 14 jumped in with both feet at the time. 15 But what the important thing that that 16 property disclosure does, or that property 17 report does, is it allows a developer -- and in 18 this case that developer -- an unlimited amount 19 of time to complete the project. But it takes 20 a little while to get those disclosures done. 21 It has to go through HUD, has to be approved by 22 HUD, has to comply with all the requirements 23 and a code of federal regulations as it 24 pertains to the Interstate Land Sales Act. Now, as we just discussed, a developer can MS. EDWARDS: Correct. What we are asking the Court to do is to make a determination if the contract language included in the 10 developer's contract is sufficient to qualify 11 the developer for the exemption for which they 12 sought. 13 THE COURT: Okay. 114. MS. EDWARDS: So I don't think the 15... exemption -- in fact, we don't dispute. We 16 - assume that was the exemption they were going ~ 117 for, and that's why I filed their Interrogatory 18 Answerers. They confirmed it. Mr. Nichols’ 19 sworn testimony confirmed that they did go for, 20 and in this case, the two year exemption. 21 Meaning, they have to finish construction of 22 the project within two years. But again, to 23 give you some background on -- 24 THE COURT: I'll shut up. 25 MS. EDWARDS: It’s okay, I don't mind. WON AU AWN pe OON OUI A WN Page 10 1 Because I understand. And that’s why we had 2 asked you, walking in the door, if there was 3 some additional time left. Because this is a 4 very specific issue of the law. 5 So a developer has to give this set of 6 7 8 9 Page 12 1 avoid making these disclosures. And again, the 2 exemptions sought here is the 1702-A2 — it has 3 many different names; improved lot exemption, 4 two year completion exemption. The case law 5 kind of names it a number of different things. 6 7 8 9 basic rule. Developer has to give this set of disclosures. And this isn't their disclosure. They didn't do the disclosures. This is the Set that I have from the Broadway Promenade, a But it's very clear that in order for the two year exemption — in order for a developer to obtain the two year exemption, to not have to make the property disclosures, they have to 10 __. little pizza place that's no longer there. 10 have a provision in their contract — and 11 What a property report has to 11 here's the important part — that 12 disclosure -- again, it’s in 24 CFR and starts 13 at 1700 -- is all the information on the 14 project that HUD -- Department of Housing 15 and -- U.S. Department of Housing and Urban 16 Development -- thinks that a potential 17 purchaser might want to know about the project, 18 the area, the services to the area, but most 19 importantly, the developer. And this is, 20 again, not theirs, but this is another property 21 report that did comply with HUD requirements. 22 And the Court can see from there, it 23 starts at the very top in very bold red type 24 where the rest is in black: Read this property 25 report before signing anything. 12 unconditionally obligates the developer to 13 perform under the contract. 14 And in this case that unconditionally 15 obligates the developer to complete 16 construction within two years. And that is 17 something that the Florida Supreme Court has 18 indicated is their interpretation of the 19 Interstate Land Sales Act. And that is in the 20 Sumari case, which is cited in my materials. 21 So again, what we're asking the Court to 22 do today is to determine whether two separate 23° dlauses contained in the contract 24 unconditionally obligate the developer to perform. If it doesn't, the contract is not 3 (Pages 9 to 12) Vincent M. Lucente & Associates 800-282-8275WON A UA WN enforceable and my client gets his deposit " money back. If it does, we continue on with the litigation. Now, one of the things that was raised in Mr. Nichols’ affidavit was the fact that, or the assertion that the unit was complete within two years. All right? There's two cases that I rely on significantly in my memorandum of law, and I found a third yesterday in my preparations for today's hearing. But one of the things that one of my cases indicates -- and that’s the Harvey case -- is that it's irrelevant -- at this stage of the game in the examination of whether or not a contract _ complies with one of the exemptions -- it's _ irrelevant on whether or not they actually finish the unit within two years. THE COURT: What's the analysis of that -- that -- it would strike me initially as being unusual, if it's actually built within the two years, that's -- harm and prejudice or whatever -- strict liability happened? MS. EDWARDS: It really isn't. Again, the basis, and the reason I did a little bit of background on the Interstate Land Sales Act — The Interstate Land Sales Act was promulgated essentially as an antifraud set of statutes so that buyers weren't buying the pig in the poke properties in the middle of swampland or in the middle of the desert where there's no services, or no access, none of that. And essentially, as many laws do, it has evolved over time where again it’s gotten down to a very narrow application interpretation, which is kind of where we are today. 50, again, the basic rule is you have to tell everybody everything. And the only way you get out of telling everybody everything is if you do this exact thing, if you comply with it and you unconditionally obligate yourself in your contract to finish in two years. And there's also other applications, if you don't limit damages -- there's a number of different reasons why the contract would be illusory. Some are in Hardwick, cited by the Defendant. Both of those cases were damages cases where there was a limitation of damages. But the holding of those cases is that the contract language must unconditionally obligate the developer to finish. Vincent M. Lucente & Associates Page 13 Page 14 Wen OA UI DP W AD pe - condominium shall be completed not later than Page 15 THE COURT: So in theory then the developer can get a -- build a hundred unit building, get contracts on all of those, get deposits from all of those, build it all within two years, but if that language wasn't in their contract they have to give back all the deposits because that’s irrelevant it was actually built in two years? MS. EDWARDS: Because the law requires them to make the disclosures. So if they don't comply with the requirements not to make the disclosures, they have to make the disclosures. Well, of course, at this stage of the game you can't go back and give the disclosures. THE COURT: Perhaps it’s not a good analogy, but that’s why the strict liability came to mind for me, and that’s too bad. MS. EDWARDS: No, I understand. But again, there is the set of you have to do this unless you have this very little thing that you do. And you have to do this very little thing that you do exactly correctly or you have to make the disclosures. All right. So cut to the chase, where we are today is Mr. Senker’s contract with the Page 16 Snavely Group. And attached to the Second Amended Complaint, also attached to Mr. Nichols’ affidavit, is the contract. And it's -- the first provision I'd like the Court to examine is the two-year completion clause in paragraph 4. THE COURT: Is that in the package? MS. EDWARDS: Yes, sir. Mine is not, but I can get it for you quickly if you need one. THE COURT: I'm looking for the actual contract. MS. EDWARDS: All right. Let’s see if I can find it. May I approach? THE COURT: Yes, you can. MS. EDWARDS: It starts at the bottom of page — it’s called P-A3 and goes to the top of page 4. THE COURT: All right. MS. EDWARDS: And skipping most of the irrelevant language, I'm going start at 4-A, going to start at: The unit as configured — THE COURT: All right. MS. EDWARDS: -- the unit as configured in seller's plans and specifications for the 4 (Pages 13 to 16) 800-282-8275 _WANA UW AWDN ' contract. However, the date for completion may _ limitation, delays occasioned by rain, wind, ‘order to comply with the very narrow two year Page 17 two years from the date purchaser signs this be extended by reasons of delays incurred by Circumstances -- and here's the important part -- beyond the seller's control, such as acts of god, other grounds cognizable in Florida contract law, such as impossibility or frustration of performance, including without WOAN QU A WN and lightening storms. Pretty broad. THE COURT: Weather oriented, obviously. MS. EDWARDS: Well, not necessarily. Other reasons incurred by circumstances beyond the seller's control. And three recent decisions that have been published in the Middle District of Florida have indicated that that's way too broad in exemption. THE COURT: So the examples that are weather oriented don't save them? MS. EDWARDS: If you look at the two cases I cited to the Court -- I don't know if you have the case law that I —- THE COURT: Yeah, you did give me all the Page 19 THE COURT: -- the reasoning. MS. EDWARDS: You know, I have not been elevated to that level where I can dictate those things. But I'm looking at the Stein case — I'm sorry, the Harvey case. And interestingly enough, it's almost as if the developer in our case, the Snavely case, took the language directly from the developer in the Harvey case, which was Lake Buena Vista Resort. THE COURT: And that case held that's not adequate? MS. EDWARDS: The clause in the Harvey contract similarly says -- and this is in my memorandum where I compare the language -- and this is from the Harvey contract now — the date for completion may be extended by reasons of delay incurred by circumstances beyond seller's contro! - we have that -—- such as acts of god, or civil unrest, imposition by a governmental authority of a moratorium upon construction of the unit, or providing of utilities or services which are essential to such construction — material shortages or any other grounds cognizable in Florida contract Page 18 case law. MS. EDWARDS: Okay. And I did give you the copies of the significant cases. I — for purposes of saving trees -- delivered a disk with all the case law. THE COURT: I was wondering why I have a disc. MS. EDWARDS: Well, it has all the case law in it. So I am trying my best. When I first set up my practice a long time ago, they assured me — the copier salesman assured me that I needed this scanning element because it was going to be a paperless worid. Fifteen years later I use more paper than ever -- THE COURT: So your position is even though the specific examples under the such as, including specifically weather oriented things, you're saying that by using the language, Without limitations, which in theory opens it up to anything at all - MS. EDWARDS: Well, I'm saying what three federal courts say — THE COURT: Well, no, I mean, the argument -- MS. EDWARDS: Yes, sir. Vincent M. Lucente & Associates Page 20 law as impossibility or frustration of performance — exactly. I think that the verbiage is frustration of purpose, not frustration of performance, and that's why I was thinking, Wow, did they copy this exactly - including without limitation, delays occasioned by wind, rain, and lighting storms. And then they have the savings clause, which I don't include, but I'm guessing he's going to make argument on, so we'll get to that in a minute. But the Harvey court indicates — and this is in the Harvey opinion, which cites the Stein opinion, which is the other opinion that I provided to the Court -- and the Harvey court, in citing the Stein opinion, indicates, including excused completion in two years for “other delays beyond the control of the seller" he, meaning the Judge Stee! in the Stein case, held were not limited to the narrow doctrine of impossibility of performance, which "is employed with great caution” under Florida law, citing the Shatz case, which I provided to Your Honor. I believe that’s one of the cases on the disk. And continuing further on, and this is on 5 (Pages 17 to 20) 800-282-8275WON A uh WN pe Page 21 page 7 of the opinion -- page 7 of the paper, 1 ' page 8 of the original opinion -- the issue in 2 this case is whether the -- and it says 3 relater, my guess, is the developer - has a 4 real unconditional obligation to complete the 5 condominium within two years, or whether other | 6 provisions render that apparent obligation 7 illusory. The purchase agreement in this case 8 includes a -- to a clause with a scope well 9 beyond just "acts of god” or the 10 "impossibility" defense, similar. to the causes 11 at issue in Stein. The date for completion may 12 be extended by reason of delays incurred by 13 circumstances beyond seller's control, such as 14 acts of god, war, civil unrest, imposition by a 15 governmental authority of a moratorium upon 16 construction of a unit, or providing of 17 utilities or services which are essential to 18 such construction, casualty losses, or other 19 material shortages or other grounds cognizable | 20 under Florida law as impossibility or 21 frustration of performance -- and it continues. 22 And it says, the -- clause in paragraph 14 23 contains acceptable defenses to the extent that | 24 it lists acts of god in a possibility as Page 22 defenses to contract actions, citing Stein. 1 However, the resort's ability to extend the 2 completion date by, "reasons of delay -- 3 reasons of delays incurred by circumstances 4 beyond seller's control”, including the very 5 broad category of any other grounds cognizable | 6 in Florida contract law as frustration of 7 performance, induding without limitation 8 occasions by rain -- I'm sorry -- wind, rain, 9 lighting and storms, makes the resort’s two 10 year completion obligation illusory. These far | 11 less compelling reasons are similar to those 12 Judge Stee! determined to be certainly broad [13 enough to allow the seller to excuse completion | 14 on a wide variety of defense. 15 Again, the reason I went back to how this | 16 law is applied, the developer at the beginning | 17 of a project gets a choice; do I take the extra | 18 time and make sure that I have dotted all the | 19 i's, crossed all the t's? Because HUD is going | 20 to give me a stamp to say, You deliver this 21 report to your potential purchasers before they | 22 sign a contract and it complies with all the 23 requirements in 24 CFR 1700, etcetera. THE COURT: So HUD doesn't approve the Vincent M. Lucente & Associates _ dol go all the way and make all these _ Vanhook V Residences at Coconut Point. And Page 23 contracts, or they wouldn't approve this? MS. EDWARDS: No. No, HUD says so long as you make a two year obligation unconditional, we're going to let you skip this step. So the developer gets to choose at the beginning; Do I take the short easy route and skip the step, or disclosures? And honestly, this contract was executed in 2005. Thinking back when they must have been contemplating this project in 2004, we had a pretty hot real estate market. You want to get up and going. You want to maximize that profit. THE COURT: What was the date of the opinion that you quoted -- MS. EDWARDS: This one, Your Honor, is April 22, 2008. That’s the Harvey opinion. The Stein opinion is from -- also from earlier this year. And I believe I cite the date in my memorandum. I think it’s January. THE COURT: I'm just curious -- MS. EDWARDS: And the third one, if I could, Your Honor, I didn't cite it. I just found it and I gave a copy of it to counse! Page 24 yesterday, or on the way in. It's the this one is from July 10, 2008. THE COURT: So in theory, whoever drafted the contract at issue, they didn't know of these cases? MS. EDWARDS: Well, the case law was out re THE COURT: Not that they're required to. MS. EDWARDS: No, but the case law was out there saying that it must be an unconditional obligation to complete within two years. It must not be illusory. So I'm in the crux of -- the inquiry here, is it too loosey goosey? And I think one of the -- one of the - I think it's the Stein opinion that says they try to have their cake and eat it, too. They want to fall under the, I'm absolutely obligated very narrow exception, but yet, let's see how many reasons I can give myself in order to get out of the contract. I know I'm running short on time, so I want to bring the Court’s attention to the second clause. THE COURT: It’s 2:30, and I see Mr. Denny 6 (Pages 21 to 24) 800-282-8275Wan A UI pb WN ps Page 25 is here, so whenever you wrap up, then.!'ll 1 ~ Check with him. 2 MS. EDWARDS: Okay. The second clause | 3 that I'd like to bring the Court's attention to 4 in the contract is the presale contingency, and | 5 that is in paragraph 15 of the contract. And 6 paragraph 15 of the contract indicates, 15-A; 7 if the seller has been unable to obtain 8 purchase contracts, or at least 60 percent of 9 . the units in the condominium in which the unit | 10 iS located, within 180 days -- and I bolded the | 11 language in my argument -- seller may 12 unilaterally terminate this agreement by 13 written notice to purchaser upon delivery of 14 such notice and refunding the purchaser all 15 deposits, including all interest. Seller shall - | 16 have fulfilled it’s obligations under this 17 agreement and the agreement shall terminate. | 18 Well, guess what? The Harvey contract has | 19 almost an identical -- that’s the one I'm 20 thinking maybe we have the same lawyer draft | 21 these contracts, because it's almost identical. | 22 And in the Harvey contract -- in the Harvey 23 case the Court indicates that you can't do 24 that. That negates your unconditional Page 26 obligation. 1 THE COURT: Alli right. Well, let me -- 2 one final comment or so and we'll stop. Okay. | 3 All right. I have to check on my 2:30 -- 4 (A short break was taken.) 5 MR. PETERSON: Scott Petersen with Kirk 6 Pinkerton. Your Honor, let me back up. 7 THE COURT: Okay. 8 MR. PETERSON: If I can make this simpler, | 9 hopefully, for the Court. If we take the 10 premises -- the exemption that is sought is 11 one, the reason why we're here arguing about | 12 this, I guess, is the cases cited by Plaintiff 13 are those that say that the obligation to 14 construct within two years is illusory. That 15 is to say that the seller can back out more or 16 less at the sellers's discretion because the 17 seller has built in so many exemptions to 18 completing the unit within the two years. 19 That's really the focus of what the Stein, 20 Harvey, and Vanhook, which counse! has cited, | 21 comes down to. They've all said, Look, you've | 22 cited to acts of god as exemptions. Okay. But | 23 the frustration of performance, there's just 24 too much there for the seller to take advantage | 25 Vincent M. Lucente & Associates Page 27 of to back out of the obligation to construct within two years. Therefore, that exemption doesn't apply to you, Mr. Seller. Well, let me take issue with one thing that counsel for Plaintiff said, and it's -- let me be a little careful in how I say this because I'm taking an issue with her characterization that the seller has to unconditionally obligate itself to complete within two years. That is the language out of the Sumari, the Florida Supreme Court case. However, Sumari doesn't apply in this case, as Plaintiff counsel has said, because Sumari dealt with a different language of limitation on damages. Not that’s not the issue in this case. It’s a distinct issue. : And even Plaintiff, in it’s brief, and the courts in Stein and Harvey, all admit that the language of unconditional obligation isn't to be taken literally. There are some exemptions that apply. And I think it’s page 6 of Plaintiffs brief, where Plaintiff says, Delays beyond the two years are acceptable if they're legally supportable in the jurisdiction. And — that's language that comes right out of the HUD Page 28 guidelines on how the ILSA is interpreted. And it's also both the courts in Stein and Harvey refer to that and say, We don't take that unconditional obligation literally. There are some exceptions that apply. It’s just that the Courts in Stein and Harvey and Vanhook as well said, Well, in these contracts, Mr. Seller, you've taken too many exemptions. There are some we'll allow, there are some we won't. And I'll go further with that as we go on. In support of it’s position, Plaintiff cites two federal court decisions, Stein and Harvey -- three, I guess Vanhook as well -- and as the Court knows, those are persuasive authority only on this Court. But it’s one important thing that this Court should know -- and unfortunately I filled my brief in opposition a day before -- THE COURT: Yeah, I haven't seen that. MR. PETERSON: Oh, okay. I'm sorry. THE COURT: Do you have that? MS. EDWARDS: I do have it, actually. THE COURT: Well, I'll take this under advisement, as I often do, and read this stuff. So I can try to just not go and judge with my 7 (Pages 25 to 28) 800-282-8275gut feeling. And you can send that over later. MR. PETERSON: Well, I have a copy right here. Can I approach? THE COURT: Yes. Not that it controls, but I was thinking, well, gosh, there seems to be no law going the other way, I guess. But you do have some stuff -- MR. PETERSON: Well, what I was going to say, Your Honor, is I filed my brief in opposition a day before counsel for Plaintiff filed it's motion. I didn't have a chance to address some of the points. THE COURT: Okay. MR. PETERSON: I will follow-up, if the Court permits me to, with a couple more cases I'd like to lay out for the Court, o 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 THE COURT: In ya'll's proposed orders -- and you've done that with me before -- MR. PETERSON: Yes. THE COURT: -- so you know that's your chance to argue again. MR. PETERSON: Sure. THE COURT: And we'll have response opportunity, too. MR. PETERSON: Okay. Thank you. But the one point that I really want to stress to the Court is these courts from the Middle District have held this way. The courts from the southern district, however, have held just the opposite. There is currently a split in the jurisdictions in Florida on how to interpret this exemption, this 1702-A2 exemption. And the courts -- there's a case called Dubois. There is another called McGuire. There's another called Camel. I'll provide all these to the Court. In all of these cases they've heid that exceptions to the two-year deadline do not necessarily make that obligation illusory. And unfortunately, we haven't had any guidance from the Eleventh Circuit yet to But to go to the reasoning in Stein and Harvey, the curious thing about both Stein and Harvey, and Vanhook as well, is — I think it’s page 12 of the Plaintiff's brief -- both Stein and Harvey and the Plaintiff admits delays occasioned by acts of god such that performance is impossible or illegally permissible. But both Stein and Harvey, and Vanhook as well, Page 31 fail to recognize, or refuse to recognize the long held and long recognized doctrine in Florida of frustration of performance. There's no real explanation given by the court as to why on one hand it recognizes the impossibility doctrine, on the other hand it doesn't recognize the frustration of performance doctrine. And let's remember the HUD guidelines say when interpreting the ILSA exception, any legally recognized and legally cognizable defense for extending that two-year deadline is permissible. So neither Stein nor Harvey go through that analysis and say why they pick and choose out of Florida law. Also -- and I know the Court looked at paragraph 4 here -— but the next sentence that counsel didn't read to the Court -- and I can provide this copy back to the Court to see for itself -- the parties state it is the intention of the parties that this sale qualify for the exemption provide by 15 USC Section 1702-A2, and that nothing contained in this agreement shall be construed or so operated as to any obligations of seller or rights of buyer in a Page 32 manner which would render said exemption inapplicable. So in this case not only does the contract have two very narrow exceptions to the two-year deadline, it further has a savings clause that says; If the court interprets either of these impossibility of performance or frustration of performance as allowing too much discretion and not qualifying the seller for the exemption, it's the intent of the parties that that language be stricken and the contract be narrow such that it will qualify for that exemption. Again, there is similar language in both Stein and Harvey. The court, however, doesn't address why -- well, it does address why but it doesn't address why it doesn't follow that intention. The Courts in Stein, I believe it was, said something to the effect of, Well, that’s just sort of an expressed intention but we're not going to give it any affect. But that's not how contract law operates in Florida. The contract law in Florida — contract interpretation in Florida states that every provision is to be given affect unless it 8 (Pages 29 to 32) 800-282-8275Won nu A WA Page 33 contradicts or is ambiguous. But there is ‘ nothing ambiguous about that. It’s the intention of both parties that the project qualify for the exemption. Now, as I said, the key is was the seller obligated? Was the seller - or did the seller have discretion to extend that two-year deadline? Well, in this case the contract limits the seller, limits my client, Snavely, to qualify for impossibility of performance or frustration of performance. Both of those are very high hurdles for the seller to meet. If Snavely had not constructed the building within two years the only way it gets to extend that deadline is to show acts of god that made performance impossible or frustration of performance, such as excessive rain, wind, lighting storms, which are recognized as frustration of performance exceptions under Florida law. There is nothing that allows Snavely to Say, Well, you know, we just couldn't get it done on time because X, Y, and Z. It’s got two very narrow exceptions, and those are limited and subscribed by Florida law. Page 34 So I would put it to the Court that rather than what Plaintiff characterizes as unbridled discretion on the part of Snavely, quite the _ contrary. The language of the contract -- the plain language of the contract and the expressed intention of the parties was that Snavely's obligated to build that project within the two years, but for those two narrow exemptons. THE COURT: Now, you said -- did I understand you to indicate that Stein and Harvey had the similar -- what you called savings clause language? MR. PETERSON: Your Honor, I'll have -- I think Stein does. Or maybe Harvey -- MS. EDWARDS: It’s Harvey. MR. PETERSON: Or maybe Harvey does. THE COURT: Okay. MR. PETERSON: Harvey has similar language. But again, if the Court examines some of the cases -- and I'll provide those to the Court -- from the Southern District, the cases from the Southern District say, Well, this is the parties expressed intent, and to the extent that this language can be read too Vincent M. Lucente & Associates WON AU AWN Page 35 broadly, we're going to limit it because the parties intend to qualify for the exemption under 1702-A2. THE COURT: So - and there's no Florida District Court of Appeal case that's ruled on this? MR. PETERSON: No, unfortunately not. THE COURT: An awful lot of first impressions -- MR. PETERSON: Yeah. So just in brief summary, Plaintiff is not only in this case trying to escape the plain language of the contract, the intention of the parties of the -- contracting, but also the fact that Snavely performed as it was obligated to do. Snavely constructed the building within two years. And the affidavit of Brian Nichols is provided to the Court to show the Court if Snavely felt it was not obligated to perform within those two years, then why did it struggle so mightily to complete it under the deadline? Obviously, it felt obligated by the language of the contract and did perform under the contract as it was obligated to do. Page 36 In that case, and for those reasons, Your Honor, I think that Plaintiffs motion should be denied. THE COURT: Thank you. MS. EDWARDS: Very briefly, Your Honor, because Your Honor asked a few questions that I think I can clear up now. THE COURT: Okay. MS. EDWARDS: As I had expected counsel! would bring to the Court's attention the Savings Clause in it’s contract, as it’s termed, which essentially says that we realty mean that we're going to comply, even if we don't comply. In the court in Harvey essentially says, Similar saving clauses -- and this is on page 8 of the paper opinion -- similar savings Clauses included in other commercial contracts have been rejected by Florida courts as providing an absolute bar to holding the draft reliable for violating the statute. Which is essentially what happened here. Were the Court to accept the savings Clause it would undermine public policy and defeat Congress's purpose in creating this 9 (Pages 33 to 36) 800-282-8275Page 37 consumer protection legislation and requirement _ that the exemptions be read narrowly. Which is essentially why we're saying that because they made it too broad they don't comply with the exemption. THE COURT: So in Florida in federal court in the Southern District, the savings cause matters, but for in general on Florida District Court -- well, state cases, savings Clauses 10 don't save you? 11 MS. EDWARDS: Weil, and-I don't know so. 12 much the Southern District cases address the 13 Savings Clauses. I think they're examining — 14 and counsel said something to the effect of 15 ‘that all of the two-year exemptions, if unless 16 they're narrowly tailored -- and I don't know 17 that all of the courts say that. I think what 18 ~_all of the courts in the Middle and Southem 19 Districts all say is that you have to look at 20 the specific provisions of the particular 21 contract to see is it broad; Is it overty 22 broad? Is it narrowly construed? Is it 23 narrowly constricted to essentially protect the 24 legislation intended under the Interstate Land Sales Act? Do you disclose or do you take the WON Hut WAN oon nu A WN Page 38 1 shortcut? And if you get the shortcut, the 2 Courts, in my opinion, the Stein and Harvey and 3 Vanhook courts properly determined if you're 4 going to get the shortcut you got to do it 5 right. You have to narrowly tailor it. You 6 just can't make this big -- 7 THE COURT: We need to wrap up. 8 MS. EDWARDS: And I'm sure Your Honor 9 knows with respect to the difference between 10 frustration of purpose -- of performance and 11 impossibility of performance. And I think it’s 12 the Harvey case that goes through the 13 examination of foreseeability. And I think if 14 you look at the restatement of contracts with 15 respect to impossibility of performance it 16 gives you that ability who was able to 17 foresee -- who was in a position to best 18 understand or protect or foresee? Who is under 19 contro! here? 20 And clearly, in this case, it would be the 21 developer. The developer is the one who has 22 control of whether or not they performed within 23 this period of time. And only for those 24 instances where it is dearty outside of their 25 control are they allowed this — to escape or Vincent M. Lucente & Associates Page 39 extend the two-year exemption. One last point I'd like to make is this case isn't only about the two-year exemption. It is about the presale contingency, as well. So while all of this supplemental information that we're going to provide to the court addresses one of those contract clauses, there is nothing on the other side that says if you allow this developer unilateral right to terminate the contract that that in and of itself outside of the two-year exemption renders the contract illusory. So even if the Court decides to side with the Second District and find some reason under the two-year clause that it is not illusory, Clearty that presale contingency does in and of itself make the contract illusory. THE COURT: Okay. Well, I know you will address those issues in your proposed orders. And let's talk about the dates now. I always assume the better, but knowing you have other things to do, what is a reasonable timeframe to get me a Partial Summary Judgment and an order denying the motion? MR. PETERSON: I can probably have it done Monday. MS. EDWARDS: I can do it Friday. MR. PETERSON: Friday is fine. THE COURT: Okay. So Friday at noon, then. Two days -- the 29th. And then you want to say Tuesday at noon for any response if you want to file one? 9-2? MR. PETERSON: Let's do that. THE COURT: That's all real quick. So — okay. And as always, thorough as you need to be but as concise as you can. MS. EDWARDS: Do you want citations according to authority in the proposed order? THE COURT: Yes, supporting authority and the analysis that you want me to adopt, etcetera. And I'll try to figure it out the best I can. MR. PETERSON: Thank you. MS. EDWARDS: Thank you. (Proceedings were concluded at 3:05 p.m.) 10 (Pages 37 to 40) 800-282-8275Page 41 REPORTER'S CERTIFICATE STATE OF FLORIDA ) COUNTY OF SARASOTA ) WOn awn Ah WN I, Denise Maglich-Stone, Court Reporter, certify 10 that I was authorized to and did stenographically report the 11 proceedings herein, and that the transcript is a true and 12 complete record of my stenographic notes. 14 I further certify that I am not a relative, 15 employee, attorney or counsel of any of the parties, nor am 16 1a relative or employee of any of the parties’ attorney or 17 counsel connected with the action, nor am I financially 18 interested in the action. 19 20 Dated this 6th day of January, 2009. 21 . 22 - j 23 KNMWA n DA DENISE MAGLICH-STONE 24 Court Reporter 25 11 (Page 41) Vincent M. Lucente & Associates 800-282-8275