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LLC v. PSB Collins, LLC

Florida Court of Appeals, Third District

December 4, 2019

295 Collins, LLC, Appellant,
PSB Collins, LLC, Appellee.

         Not final until disposition of timely filed motion for rehearing.

          An Appeal from a non-final order from the Circuit Court for Miami-Dade County Lower Tribunal No. 18-2139, William Thomas, Judge.

          Damian & Valori, LLP, and Melissa D. Visconti and Melanie Damian, for appellant.

          Kluger, Kaplan, Silverman, Katzen & Levine, PL, and Marko F. Cerenko and Alan J. Kluger; Samson Appellate Law, and Daniel M. Samson, for appellee.

          Before SALTER, LOGUE and SCALES, JJ.

          SALTER, J.

         295 Collins, LLC ("Seller") appeals an order granting partial summary judgment regarding the specific performance of a buyout provision in a property development joint venture with the appellee, PSB Collins, LLC ("Buyer"). We affirm.[1]

         The scenario in the circuit court lawsuit involved a common contractual mechanism for the resolution of an impasse when two equal owners in a joint venture become deadlocked. In this case, major real estate investors Dhruv Piplani and Jason Halpern each created individual New York limited liability companies (Buyer, by Piplani, and Seller, by Halpern), which in turn formed and held 50% interests in "JHPSB Collins Ventures LLC," a Delaware limited liability company (the "Venture").

         The Venture owned, directly and indirectly, three other LLCs, one of which held title to a property the Venture and those related entities planned to develop as a condominium on Collins Avenue in Miami Beach, Florida (the "Project"). To facilitate the Project, the Venture obtained $26, 000, 000.00 in construction financing from Stonegate Bank ("Stonegate"). Jason Halpern personally guaranteed the loan and entered into an environmental indemnity agreement with Stonegate in connection with the loan.

         The operations of the Venture were governed by an amended and restated limited liability company operating agreement (the "Agreement") and by Delaware law. The issue presented here is whether the trial court correctly interpreted the buyout provision in the Agreement following the parties' decision to separate.

         The essence of a buyout provision such as this is that one co-owner proposes to buy the other's interest at a particular price, and the recipient of that proposal either accepts the price (and sells) or responds by agreeing to buy rather than sell at the designated price. In the present case, 295 Collins, LLC first proposed to purchase the interests of PSB Collins, LLC, for a price based on an all-cash Project purchase price of $43, 092, 331.00. In a timely response (30 days after the proposal), PSB Collins, LLC, elected instead to purchase the ownership interest of 295 Collins, LLC, based on the Project purchase price, rather than to sell. This explains the designations of "Seller" for 295 Collins, LLC, and "Buyer" for PSB Collins, LLC, for purposes of this opinion.

         Section 8.7 of the Agreement, captioned "Buy/Sell," governed the transaction and closing in this case. The Buyer made the specified escrow deposit of five percent of the purchase price and the parties communicated via email regarding a closing date set for Friday, January 19, 2018.

         It can signify a problem, though, when a court reporter shows up to transcribe the "closing proceedings" at the time and place of the scheduled closing--and that is what happened here. At the beginning of the closing proceedings, both parties and their counsel indicated that they were present and "ready, willing and able" to close the transaction. The Seller balked at executing the requisite transfer documents after the Buyer (and its attorneys) explained that: the Buyer had already wired to Chicago Title (the title insurer and closing agent for the transaction) $24, 500, 000.00, the proceeds of a new mortgage loan that was arranged with Emerald Creek Capital 2, LLC ("Emerald Creek"), to fund the Buyer's purchase and the payoff of the Stonegate loan (including a satisfaction of Stonegate's existing mortgage and release of Mr. Halpern's personal guaranty of that loan), and had assembled the documents required to be executed in connection with the closing.

         The Seller's refusal was based on an emailed "closing checklist" that contained five items: (1) a release of Mr. Halpern regarding his Stonegate guaranty and a condominium unit owner admission agreement; (2) an indemnity agreement; (3) additional payments of $1, 271, 466.00 regarding an alleged member loan due the Seller, together with accrued and unpaid legal fees, accounting fees, and overhead costs incurred through the closing date; (4) a document to address a non-party alleged to have purchased an interest in the Venture; and (5) a condominium offering plan amendment. The Buyer responded to each of those requirements with its position, and relied on section 8.7(i) of the Agreement, a provision that required the "consummation of the Buy/Sell Closing," even if a dispute had arisen over the purchase price, prorations, adjustments, "or any other calculation or computation." The provision specified that the parties were to consummate the transaction "as if [the dispute] did not exist," with the dispute to continue after the closing with the intention that the parties would ...

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