Richard J. Diaz, et al., Appellants,
David Kosch, et al., Appellees.
final until disposition of timely filed motion for rehearing.
Appeals from the Circuit Court for Miami-Dade County, Lower
Tribunal Nos. 12-38485, 12-41460 Eric William Hendon, Judge.
& Wolk, PL, and Douglas F. Eaton; Steven Kellough;
Ramόn A. Abadin, for appellants.
Morris, LLP, and Scott D. Kravetz; Kluger Kaplan, and Alan J.
Kluger; Russomanno & Borrello, and Herman J. Russomanno,
III, for appellees.
ROTHENBERG, C.J., and SALTER and SCALES, JJ.
Diaz and Ana Santisteban-Diaz ("Buyers") appeal a
final summary judgment regarding claims and counterclaims in
a failed residential real estate transaction (Case No.
3D17-621 here), and a final judgment against them for $850,
000.00 for attorney's fees and costs incurred in the
litigation by the appellees, David and Tiffany Kosch
("Sellers") (Case No. 3D17-1498). The cases were
consolidated for oral argument and decision. We affirm the
final judgments in each case.
cases turn on strict, but enforceable, provisions in a
contract governing a residential real estate transaction. The
application of particular terms specifying the parties'
paths toward closing or termination, and controlling the
legal status of claims for damages in the aftermath of
termination, presented proper issues for final summary
Facts and Procedural History
Disclosure Agreement and "As Is" Purchase
Sellers owned a home in Coral Gables. In March 2012, they
listed the home for sale through Esslinger-Wooten-Maxwell,
Inc. ("EWM"), an area real estate broker and sales
company. As they did so, the Sellers also completed EWM's
printed form of "Owner's Property Disclosure
Statement, " signed by them March 21, 2012 (the
"March 2012 Disclosure Statement"). That form
prominently discloses that the information provided is
"to the best of the Owner's knowledge, " that
"it is not a warranty of any kind by the Owner, "
and that "it is not a substitute for any inspections or
warranties the parties may wish to obtain."
March 2012 Disclosure Statement included handwritten entries
describing damage to a wall, the existence of a
homeowners' association for an included backyard lot, and
responses regarding a total of 16 different topics. Pertinent
here, the Sellers marked "No" to any awareness of
improvements constructed in violation of applicable building
codes, without necessary permits, or with any open permits on
the property not closed with a final inspection. They also
marked "No" to any awareness of any toxic
substances in the residence, including "accumulated
radon." On the fourth page of disclosures, and above
signature lines indicated for any prospective buyer or tenant
receiving a copy of the completed form, bold-print terms
INSTRUCTIONS TO THE BUYER/TENANT:
Buyer/Tenant is encouraged to thoroughly inspect the property
personally and/or have it inspected by a third party, and to
inquire about any specific areas of concern. NOTE: If Owner
answers "NO" to any of the pervious [sic] questions
listed above, Owner does not necessarily mean that the matter
in question does not exist on the property. "NO"
may mean that the Owner is unaware that the matter in
question exists on the property.
RECEIPT AND ACKNOWLEDGEMENT OF BUYER/TENANT
Owner is using this form to disclose Owner's knowledge of
the condition of the property and improvements located on the
property as of the date signed by Owner. This disclosure form
is not a warranty of any kind. The information contained in
the disclosure is limited to information which the Owner has
knowledge. It is not intended to be a substitute for any
inspection or professional advice the Buyer/Tenant may wish
to obtain. An independent professional inspection is
encouraged and may be helpful to verify the condition of the
property and to determine the costs of repairs, if any.
the spring of 2012, the Buyers learned that the home was for
sale and walked through it with the broker. Both of the
Buyers were attorneys with substantial experience with real
estate transactions and title matters. After various
negotiations, the Buyers and Sellers entered into a printed
form "‛As Is' Residential Contract for Sale
and Purchase" (the "Contract"), 1 effective
September 2, 2012, for a purchase price of $2, 850, 000.00.
Buyers made a $50, 000.00 deposit with the Buyer's broker
serving as escrow agent. A further deposit of $235, 000.00
was payable to the escrow agent by September 12, 2012, the
date at which a ten-day right of inspection and right to
cancel was to expire absent Buyer termination.
Contract included a handful of terms that governed the
subsequent actions of the Buyers and Sellers. First, time was
specified to be "of the essence." Second, the
Contract included an integration and modification provision:
INTEGRATION; MODIFICATION: This Contract
contains the full and complete understanding and agreement of
Buyer and Seller with respect to the transaction contemplated
by this Contract and no prior agreements or representations
shall be binding upon Buyer or Seller unless included in this
Contract. No modification to or change in this Contract shall
be valid or binding upon Buyer or Seller unless in writing
and executed by the parties intended to be bound by it.
Third, regarding disclosures, the Contract provisions
included these terms:
RADON GAS: Radon is a naturally occurring
radioactive gas that, when it is accumulated in a building in
sufficient quantities, may present health risks to persons
who are exposed to it over time. Levels of radon that exceed
federal and state guidelines have been found in buildings in
Florida. Additional information regarding radon and radon
testing may be obtained from your county health department.
PERMITS DISCLOSURE: Except as may have been
disclosed by Seller to Buyer in a written disclosure, Seller
does not know of any improvements made to the Property which
were made without required permits or made pursuant to
permits which have not been properly closed.
. . .
SELLER DISCLOSURE: Seller knows of no facts
materially affecting the value of the Real Property which are
not readily observable and have not been disclosed to Buyer.
Except as stated in the preceding sentence or otherwise
disclosed in writing; (1) Seller has received no written or
verbal notice from any governmental entity or agency as to a
currently uncorrected building, environmental or safety code
violation; and (2) Seller extends and intends no warranty and
makes no representation of any type, either express or
implied, as to the physical condition or history of the
and of particular importance here, the pertinent provisions
regarding inspections of the property and the Buyers'
right to cancel the transaction and terminate the Contract,
in Paragraph 12, were:
(a) PROPERTY INSPECTIONS AND RIGHT TO
CANCEL: Buyer shall have  days from Effective
Date ("Inspection Period") within which to have
such Inspections of the Property performed as Buyer shall
desire during the Inspection Period. If Buyer determines, in
Buyer's sole discretion, that the Property is not
acceptable to Buyer, Buyer may terminate this Contract by
delivering written notice of such election to Seller prior to
expiration of Inspection Period. If Buyer timely terminates
this Contract, the Deposit paid shall be immediately returned
to Buyer, thereupon, Buyer and Seller shall be released of
all further obligations under this Contract . . . Unless
Buyer exercises the right to terminate granted herein, Buyer
accepts the physical condition of the Property and any
violation of governmental, building, environmental, and
safety codes, restrictions, or requirements, but subject to
Seller's continuing AS IS Maintenance Requirement, and
Buyer shall be responsible for any and all repairs and
improvements required by Buyer's lender.
(b)WALK-THROUGH INSPECTION/RE-INSPECTION: On
the day prior to Closing Date, or on Closing Date prior to
time of Closing, as specified by Buyer, Buyer or Buyer's
representative may perform a walk-through (and follow-up
walk-through, if necessary) inspection of the Property solely
to confirm that all items of Personal Property are on the
Property and to verify that Seller has maintained the
Property as required by the AS IS Maintenance Requirement and
has met all other contractual obligations.
(c) SELLER ASSISTANCE AND COOPERATION IN CLOSE-OUT OF
BUILDING PERMITS: If Buyer's Inspection of the
Property identifies open or needed building permits, then
Seller shall promptly deliver to Buyer all plans, written
documentation or other information in Seller's
possession, knowledge, or control relating to improvements to
the Property which are the subject of such open or needed
Permits, and shall promptly cooperate in good faith with
Buyer's efforts to obtain estimates of repairs or other
work necessary to resolve such Permit issues. Seller's
obligation to cooperate shall include Seller's execution
of necessary authorizations, consents, or other documents
necessary for Buyer to conduct inspections and have estimates
of such repairs or work prepared, but in fulfilling such
obligation, Seller shall not be required to expend, or become
obligated to expend, any money.
(d) ASSIGNMENT OF REPAIR AND TREATMENT CONTRACTS AND
WARRANTIES: At Buyer's option and cost, Seller
will, at Closing, assign all assignable repair, treatment and
maintenance contracts and warranties to Buyer.
The Inspection Period
the ten-day inspection period, the Buyers learned that there
were open building permits and that unpermitted work might
have been performed as part of the Sellers' extensive
renovations in 2009 and 2010. The Buyers did not obtain
independent legal advice at that point, but instead relied
upon their own real estate and litigation experience.
before the inspection period was to expire, the Buyers
notified their broker by email that they had reviewed the
permit history for the home and were very concerned that
their visual inspection of the property "does not
coincide with the permit history." They advised that
they were obtaining copies of the plans filed in the City and
were conferring with a builder and an architect. They also
reported that they might need to come back to the property
with a City inspector. This communication neither requested
an extension of the inspection period nor served as a
termination of the Contract.
following day, the Buyers emailed these concerns to the
Sellers and their broker. In the late afternoon of the last
day of the inspection period, September 12, 2012, the Buyers
emailed to the Sellers a signed message with a legend,
"This communication is sent for settlement purposes
only, " accusing the Sellers of affirmative
misrepresentations "actionable under Florida law"
and claiming that the property "has a significant
diminished value than what we offered to pay for it."
The email also contended (presciently, as it turned out) that
"Legal fees in litigation with the facts presented here
could easily be in the hundreds of thousands of dollars and
of course during litigation, the property will not be
email also accused the Sellers of a total lack of good faith
and asserted that "we also have independent tort
remedies against you for the fraudulent concealment in not
disclosing to us everything you know, and did, regarding the
condition of the property which could lead to several years
of litigation including a claim for punitive damages and of
course a lis pendens on the property as well." The email
closed with the statement that "If we do not ...