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Addison Construction Corp. v. Vecellio

Florida Court of Appeals, Fourth District

March 21, 2018

ADDISON CONSTRUCTION CORPORATION, ADDISON DEVELOPMENT CORPORATION, and DANNY E. SWANSON, Appellants,
v.
LEO A. VECELLIO, JR., KATHRYN C. VECELLIO, DEAN DESANTIS, LAURA DESANTIS, DEERFIELD BUILDERS SUPPLY COMPANY, INC., BLADE WINDOW AND DOOR COMPANY a/k/a BLADE CONSTRUCTION, GULFSTREAM ROOFING, INC., and EAGLE WINDOW AND DOOR, LLC, Appellees. DEAN DESANTIS and LAURA DESANTIS, Appellants,
v.
LEO A. VECELLIO, JR., KATHRYN C. VECELLIO, ADDISON CONSTRUCTION CORPORATION, a Florida corporation, ADDISON DEVELOPMENT CORPORATION, a Florida corporation, DANNY E. SWANSON, DEERFIELD BUILDERS SUPPLY COMPANY, INC., a Florida corporation, R. V. ELECTRIC, INC., a Florida corporation, PREFERRED AIR CONDITIONING AND MECHANICAL, INC., a Florida corporation, L&L ORNAMENTAL ALUMINUM AND IRONWORKS, INC., a Florida corporation, PHOENIX ARCHITECTURE, INC., a Florida corporation, and ALFRED CILCIUS, Appellees.

         Not final until disposition of timely filed motion for rehearing.

          Appeals and cross-appeals from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Gregory M. Keyser, Judge; L.T. Case No. 502009CA040005XXXXMB.

          Diane H. Tutt of Conroy Simberg, Hollywood, for Addison Construction Corporation, Addison Development Corporation and Danny E. Swanson.

          Thomas A. Valdez and Robert J. Cousins of Quintairos, Prieto, Wood & Boyer, P.A., Tampa, and Charles E. Muller II and Brian A. Lebensburger of Muller & Lebensburger, P.A., Miami, for Dean DeSantis and Laura DeSantis.

          Jack J. Aiello, G. Joseph Curley, Gregor J. Schwinghammer, Jr., and Roger Feicht of Gunster, Yoakley & Stewart, P.A., West Palm Beach, for Leo A. Vecellio, Jr. and Kathryn C. Vecellio.

          Damoorgian, J.

         The subject of these voluminous appeals, which we have sua sponte consolidated for opinion purposes, is a sprawling ocean-front residence located in the Town of Palm Beach. According to its purchasers, Appellees/Cross-Appellants, Leo and Kathryn Vecellio ("Buyers"), the residence was defectively constructed. Based on the foregoing, Buyers sued the sellers of the home, Dean and Laura DeSantis ("Sellers"); the developer and general contractor who built the home, Addison Development Corporation and Addison Construction Corporation (individually referred to as "Addison Construction" and "Addison Development" and collectively referred to as "Addison"); Addison's principal, Danny Swanson; and a myriad of subcontractors who worked on the home. Ultimately, Buyers settled with the majority of the subcontractors and recovered over $3 million in damages from Addison, Sellers, and Mr. Swanson. Addison, Sellers, and Mr. Swanson each appeal their respective judgment(s) and Buyers cross-appeal, primarily challenging the amount of damages recovered. Collectively, the parties raise more than ten issues for our consideration on appeal. We affirm in all respects and write to discuss two discrete issues: 1) the form of the judgments and 2) the court's decision to apply certain subcontractor settlements as a setoff to Buyers' recovery for Sellers' and Addison's breach of contract.

         Background

         In 2002, Sellers purchased the subject property and then entered into Construction and Marketing Agreements with Addison regarding the construction and sale of a new custom home. Construction of the home began in 2004 and went through late 2006. After receiving a certificate of occupancy for the home, Addison Development began marketing the property on behalf of the Sellers in early 2007. A few months later, Buyers placed an offer on the home thus beginning extensive negotiations between the parties. On November 27, 2007, Buyers and Sellers entered into a formal agreement ("Purchase Agreement") regarding the sale of the home. Addison joined the Purchase Agreement for the limited purpose of agreeing to provide a Warranty. Pursuant to the Purchase Agreement, Buyers had until December 17, 2007 to inspect the home and closing was set to take place on January 10, 2008.

         During the inspection period, Buyers had air quality, roofing, and general inspections performed on their behalf. The air quality inspection indicated that there were elevated mold levels in portions of the home. Based on the inspection reports, Buyers created a punch-list of items they wanted repaired before going forward with the sale. The parties then entered into an Addendum to the Purchase Agreement wherein Sellers and Addison Development agreed to "repair, replace, or correct all items or issues addressed as concerns in the Inspection Reports." Addison then underwent efforts to fix all of the Addendum issues and, while repairs were still ongoing, the parties closed on the home. At closing, Addison Construction provided Buyers with a Warranty as required by the Purchase Agreement. The Warranty provided that Addison Construction agreed to repair any work that was proven to be defective within one year of the closing date.

         In May of 2008, after Addison was done with its Addendum work, Buyers moved into the home. Shortly thereafter, Buyers began to notice that that the home still had moisture intrusion issues. Buyers contacted Addison in August of 2008 and made a warranty claim. After conducting additional testing, Addison discovered the presence of mold and water damage along the east wall of the master bedroom. At this point, Addison disclosed the fact that the master bedroom suffered water damage during 2005's Hurricane Wilma. This admission alarmed Buyers and caused them to question the integrity of the home's overall construction.

         Thereafter, Buyers performed extensive testing throughout the home and discovered numerous additional latent defects. Having "lost trust" in Addison and Sellers at this point, Buyers sent Addison and the Sellers notice that they were in default of their respective obligations under the Purchase Agreement, Addendum, and Warranty. A few months later, Buyers filed their lawsuit against Addison, Mr. Swanson, Sellers, and twelve of the subcontractors who worked on the home.

         Against Addison, the Buyers alleged causes of action for violation of the Florida Building Code, breach of contract, negligent failure to disclose, fraud, and violation of Florida's Deceptive and Unfair Trade Practices Act ("FDUTPA"). Against Sellers, they alleged causes of action for breach of contract, negligent failure to disclose, fraud, violation of FDUTPA, and securities fraud. Against the subcontractors whom they were not in privity with, Buyers alleged a cause of action for violation of the Florida Building Code. Finally, against Mr. Swanson, they alleged causes of action for violation of the Florida Building Code, negligent failure to disclose, fraud and FDUTPA. Because the Purchase Agreement and Warranty contained a jury trial waiver, all claims against Sellers and Addison were set for a bench trial. The remaining claims, including the claims against Mr. Swanson, were set for a jury trial.

         Before trial, Buyers settled with ten of the subcontractors. The sum total of the Buyers' settlements with the subcontractors was $2, 725, 000. Buyers moved in limine to exclude mention of these settlements. In their motion, Buyers represented that the settlements resolved their building code claims against Mr. Swanson as well as their building code claims relating to: the main entry door of the house, stucco, cast stone, exterior balcony and interior railings, steel columns and beams, truss girder hanger, concrete defects, exterior wall coverings in the summer kitchen, roof trusses, HVAC, electrical, and plumbing. They also argued that although "evidence of the settlement discussions and negotiations pertaining to these issues may be relevant as evidence of a setoff to any damages awarded to [Buyers], . . . evidence relating to setoff is premature [and] should be made at the conclusion of the trial outside the jury's presence so as to not confuse or unduly prejudice the jury." The court granted Buyers' motion without elaboration.

         Following nearly ten weeks of evidence and testimony, the jury entered a special verdict wherein it found that neither of the two remaining subcontractors (the roofer and window/door installer) violated the Florida Building Code. The jury also found that Mr. Swanson did not violate FDUTPA but did knowingly made a false statement or intentional omission concerning the Hurricane Wilma water damage with the intention that Buyers would rely on the statement or omission and which reliance called injury to Buyers. Based on its fraud finding, the jury awarded Buyers $78, 984.30 in damages against Mr. Swanson.

         After the non-jury proceedings, the court entered an extensive order making detailed and thorough findings regarding the defects in the home and Buyers' entitlement to damages. The court found that none of the parties violated the Florida Building Code, FDUTPA, or committed the tort of negligent failure to disclose. Likewise, it found that Sellers did not commit securities fraud. It did find, however, that Addison committed fraud by failing to disclose, post-closing, information "regarding water entry into the Home associated with Hurricane Wilma and leaking through or around the center window in the Master Bedroom." It also found that when Addison committed the fraud, it was acting as Sellers' actual and apparent agent and, therefore, also found Sellers liable. Finally, the court found that Addison and Sellers breached their respective contractual duties under the Purchase Agreement, Addendum, and Warranty.

         With respect to damages, the court found that Buyers were entitled to a total of over $3.5 million in damages associated with the repair and loss of use of their home. It found that $2, 525, 684.72 of those damages were recoverable against Addison Construction under the Warranty; $3, 339, 654.04 were recoverable against Addison Development and Sellers under the Addendum; and $2, 365, 651.01 were recoverable against Sellers under the Purchase Agreement. Many of these damages overlapped.

         Pertaining to its fraud finding, the court found that Buyers would not have incurred some of the afore-outlined repair and loss of use damages had Addison and Sellers disclosed their water intrusion knowledge earlier on. The court found that Buyers incurred $78, 984.30 in damages flowing from this fraud, which was comprised of Buyers' inspection fees and the cost of replacing the wood floors in the master ...


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