Main Street Management Services, Inc. v. Eight Sixty South Ocean Boulevard, Inc.
Docket: No. 4D07-3835
Court: District Court of Appeal of Florida; November 4, 2008; Florida; State Appellate Court
Main Street Management Services, Inc. (Appellant) appeals a final judgment awarding Eight Sixty South Ocean Boulevard, Inc. (Appellee) $500,000 in liquidated damages for breach of a real estate purchase contract and denying Main Street's claim for deposit return. The contract, executed on February 7, 2006, involved a property sale for $18,250,000, with Main Street initially depositing $250,000 and agreeing to deposit another $250,000 after the inspection period. Under Standard N of the FAR/BAR Contract, Main Street had 20 days post-effective date to inspect the property and notify the seller of defects, with the seller obligated to repair items up to 3% of the purchase price. Repairs exceeding this amount could lead to contract cancellation by either party. Main Street submitted a repair notice on February 22, detailing over $900,000 in necessary repairs, which exceeded the allowable limit. Main Street indicated it would cancel the contract unless 860 South confirmed intent to make the repairs. On February 23, 860 South responded that it would evaluate the repairs but contended Main Street could not terminate the contract yet. Main Street acknowledged this communication, understanding that ongoing inspections would toll contractual timelines. On March 6, 860 South reiterated that its election regarding repairs would not affect existing deadlines or the closing date.
Main Street communicated its disagreement with 860 South's interpretation of tolling deadlines on March 7 and maintained that all contractual deadlines were suspended until inspections were completed. The contingency period, allowing Main Street to terminate the contract if an affiliate's property sale was canceled, ended on March 9. On March 10, Main Street notified 860 South of the cancellation and exercised its right to terminate. In the meantime, 860 South engaged a contractor for property repairs, spending between $70,000 and $200,000, with outstanding repair bills totaling $193,678.48. A dispute arose regarding the necessity of a new roof estimated at $365,000. Unable to secure a roofing company before the closing date, 860 South arrived prepared to place the roof repair funds into escrow, but the closing did not occur. Main Street sought recovery of its $250,000 deposit, while 860 South counterclaimed for breach of contract.
The trial court ruled that the March 9 deadline was not tolled, rendering Main Street's termination attempt ineffective. It also found that the contract did not require 860 South to inform Main Street of its repair decisions before the termination right expired. Consequently, the court ruled in favor of 860 South, allowing it to keep the deposit, awarding an additional $250,000 in liquidated damages, and denying Main Street's claim. On appeal, Main Street contended that 860 South breached the implied covenant of good faith and fair dealing by failing to notify it of repair decisions. However, the court found no express contractual obligation for such notification, and evidence did not support claims of bad faith, as 860 South had not denied information when asked, and it had undertaken significant repair efforts. The appellate court affirmed the trial court's decision, dismissing Main Street's arguments.
