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Arlington Pebble Creek, LLC v. Campus Edge Condominium Association, Inc.

Florida Court of Appeals, First District

November 6, 2017

ARLINGTON PEBBLE CREEK, LLC, Appellant,
v.
CAMPUS EDGE CONDOMINIUM ASSOCIATION, INC., a Florida non-profit corporation, Appellee. ARLINGTON PROPERTIES, INC., Appellant,
v.
CAMPUS EDGE CONDOMINIUM ASSOCIATION, INC., Appellee.

         NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED

         An appeal from the Circuit Court for Alachua County. Toby S. Monaco, Judge.

          Mark A. Boyle, Molly Chafe Brockmeyer, and Alexander L. Brockmeyer of Boyle & Leonard, P.A., Fort Myers, for Appellant Arlington Pebble Creek, LLC.

          Hinda Klein and Brian Lee Ellison of Conroy Simberg, Hollywood; Jeffrey M. Paskert and Dara L. Dawson of Mills Paskert Divers, P.A., Tampa, for Appellant Arlington Properties, Inc.

          Jefferson M. Braswell of Scruggs & Carmichael, P.A., Gainesville, for Appellee.

          BILBREY, J.

         Appellants, Arlington Properties, Inc., and Arlington Pebble Creek, LLC, appeal the final judgment in favor of Campus Edge Condominium Association, entered after denial of Appellants' motions for directed verdict and based upon the jury's verdict and award of damages. "A directed verdict is proper when the evidence and all inferences from the evidence, considered in the light most favorable to the non-moving party, support the movant's case as a matter of law and there is no evidence to rebut it." Wald v. Grainger, 64 So.3d 1201, 1205 (Fla. 2011). An appellate court reviews an order on a motion for directed verdict de novo. Kopel v. Kopel, __ So.3d __, 42 Fla.L.Weekly S26, 2017 WL 372074 (Fla. Jan. 26, 2017); Christensen v. Bowen, 140 So.3d 498 (Fla. 2014); Hoffmann-LaRoche Inc. v. Mason, 27 So.3d 75 (Fla. 1st DCA 2009). Here, the evidence and inferences from the evidence do not establish proof of all the elements of fraudulent misrepresentation or negligent misrepresentation, even when viewed in a light most favorable to the Association. Therefore, the final judgment is reversed and the trial court is directed to enter judgment in favor of the Appellants.

         Arlington Properties, Inc., purchased an existing apartment complex in January 2006, for the purpose of converting the facilities to condominium ownership under chapter 718, Florida Statutes. Upon this purchase, Arlington Pebble Creek, LLC, was created to conduct the conversion, including creation and initial management of the Association. See § 718.111, Fla. Stat. In December 2008, Arlington Pebble Creek relinquished management and control of the Association to the unit owners. See § 718.301, Fla. Stat.

         The original complaint was filed by the Association on January 6, 2012, after extensive water intrusion damage to common areas of the condominium property was discovered. Necessary repairs to the common areas required the Association to increase, and for some years double or more, the assessments upon its members in order to preserve the utility and value of both the common areas and the individual condominium units. The Association sought damages from both Arlington Properties and Arlington Pebble Creek, asserting that the developer and the managing company knew of the water intrusion problems but neglected to fully cure the situation, turned over to the Association responsibility for upkeep and repairs knowing that damage to the buildings was ongoing, and knew the Association would incur substantial expense to preserve the integrity and safety of the common areas. Based on the factual allegations in its Fourth Amended Complaint, and after clarification by counsel and the trial court as the litigation progressed, the Association proceeded on causes of action for fraudulent misrepresentation and negligent misrepresentation.[1]

         As the Florida Supreme Court has stated, a party seeking to establish fraudulent misrepresentation is required to prove the following elements:

(1) a false statement concerning a material fact; (2) the representor's knowledge that the representation is false; (3) an intention that the representation induce another to act on it; and (4) consequent injury by the party acting in reliance on the representation.

Butler v. Yusem, 44 So.3d 102, 105 (Fla. 2010) (quoting Johnson v. Davis, 480 So.2d 625, 627 (Fla. 1985)). To establish negligent misrepresentation, a party is required to prove: (1) a misrepresentation of material fact that the defendant believed to be true but which was in fact false; (2) that defendant should have known the representation was false; (3) the defendant intended to induce the plaintiff to rely on the misrepresentation; and (4) the plaintiff acted in justifiable reliance upon the misrepresentation, resulting in injury. See Specialty Marine & Industrial Supplies, Inc. v. Venus, 66 So.3d 306, 309 (Fla. 1st DCA 2011).

         The first elements of both causes of action require false statements of material fact. The Association admitted into evidence Arlington Properties' Facility Evaluation Report from December 2005. This report was prepared as required by section 718.616, Florida Statutes, when converting an apartment complex to a residential condominium. The report stated an estimated remaining useful life of the structures of 35 to 45 years and described the functional soundness of the structures as "Good (localized deterioration)." In addition, the Association presented Arlington Pebble Creek's budget for Association maintenance for 2008 (the year immediately prior to turnover of Association management), showing less than $10, 000 expended for building repairs.

         To prove the falsity of the Facility Evaluation Report and the maintenance budget, and to prove the defendants' knowledge of such falsity (for the fraudulent misrepresentation count) or that they should have known of the falsity (for the negligent misrepresentation count), the Association admitted into evidence a second engineering report, the Property Condition Assessment. Arlington Properties had obtained the Property Condition Assessment around the time of the Facility Evaluation Report in December 2005 as it prepared to purchase the then apartment complex. The Property Condition Assessment was not filed with the State of Florida or otherwise published to third parties. It described moisture intrusion affecting the exterior balconies including columns, handrails, concrete decks, and balcony ceilings. The Property Condition Assessment included the engineers' estimate that at the time of that report water damage to the buildings required repairs to the "Structure/Building envelope" costing ...


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