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Rosen v. Harborside Suites, LLC

Florida Court of Appeals, Third District

July 17, 2019

Michael Rosen, Appellant,
v.
Harborside Suites, LLC, Appellee.

         This Opinion is not final until disposition of any further motion for rehearing and/or motion for rehearing en banc. Any previously-filed motion for rehearing en banc is deemed moot.

          An Appeal from the Circuit Court for Miami-Dade County Lower Tribunal No. 12-41555, Rodney Smith, Judge.

          Gunster, and Angel A. Cortiñas and Jonathan H. Kaskel, for appellant.

          The Lehman Law Firm PLLC, and Gary E. Lehman; Nelson Mullins Broad and Cassel, and Beverly A. Pohl and Christina Lehm (Fort Lauderdale), for appellee.

          Before LOGUE, SCALES [1] and LINDSEY, JJ.

          PER CURIAM.

         On Motion for Rehearing

         Our previous opinion in this case affirmed a summary judgment for appellee, plaintiff below, Harborside Suites, LLC ("Harborside"). Appellant, defendant below, Michael Rosen, timely filed a motion for rehearing. After carefully reviewing Rosen's motion, Harborside's response to same, and again scrutinizing the summary judgment evidence in a light most favorable to Rosen, we grant Rosen's motion, withdraw our previous opinion, and replace it with this opinion reversing the trial court's summary judgment and remanding the case for further proceedings consistent with this opinion.

         I. Relevant Facts and Procedural Background

         In September 2005, Ohio Savings Bank (also known as AmTrust) (the "Bank") entered into a construction loan agreement with a consortium of borrowers (the "Developer"), memorializing a $41 million dollar construction loan. The purpose of this loan was to enable the Developer to construct a condominium project in Hillsborough County.

         Rosen, a principal of the Developer, personally guaranteed the loan. Pursuant to the guaranty agreement that Rosen signed, Rosen would be released from his guaranty obligations "upon Borrower's satisfaction of the Pre-Sales Requirement in accordance with the terms and conditions of the [construction loan] Agreement." (emphasis added). The Pre-Sales Requirement is a defined term in the construction loan agreement that requires the Developer to execute and deliver to the Bank a minimum of 125 "valid, binding and then effective Approved Sales Contracts." The construction loan agreement defines an "Approved Sales Contract" as a bona fide, enforceable, non-contingent agreement in a form approved by the Bank. Pursuant to the construction loan agreement, the Developer would be in default of the construction loan agreement if the Developer failed to satisfy the Pre-Sales Requirement on or before February 28, 2006.

         The summary judgment record reflects that on or about May 5, 2005, prior to finalizing the loan documents, the Developer delivered 125 contracts that the Developer characterized as "valid, binding and then effective" Approved Sales Contracts to the Bank. An internal Bank memo, dated February 2007, acknowledges that the Developer had met its Pre-Sales Requirement. Additionally, at no point did the Bank ever provide notice to the Developer (or, for that matter, Rosen) that the Developer had defaulted under the construction loan agreement (or any other document memorializing the loan) for not satisfying the Pre-Sales Requirement. Indeed, the Bank continued to fund the loan after February 28, 2006, the date that the Developer was contractually required to satisfy the Pre-Sales Requirement.

          The record reflects that the condominium project was built to completion in May 2007; however, due to the housing market recession, a majority of the 125 contracts that had been delivered to the Bank by the Developer went into default and the unit buyers identified in those contracts failed to close on their contracted-for units. The Developer defaulted on its obligations to the Bank in September 2007, and, in 2009, the Bank sued the Developer in Hillsborough County Circuit Court for foreclosure. Rosen was not named as a defendant in that foreclosure action.

         On December 4, 2009, the federal Office of Thrift Supervision took possession of the business and property of the Bank and appointed the Federal Deposit Insurance Corporation ("FDIC") as its receiver. Ultimately, the FDIC assigned the note, mortgage and guaranty to appellee Harborside. On June 20, 2012, the Hillsborough County Circuit Court entered a final judgment of foreclosure against the Developer, which was subsequently assigned to Harborside. On October 17, 2012 (more than five years after the Developer defaulted on its obligations to the Bank), Harborside filed the instant action in Miami-Dade County Circuit Court against Rosen, seeking to recover approximately $39 million allegedly due and owing by Rosen pursuant to the guaranty agreement. Rosen defended against the action arguing, among other things, that all conditions precedent to Rosen being released from his guaranty obligations had occurred (i.e., the Developer had satisfied the Pre-Sales Requirement of the construction ...


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