Smurfit-Stone Container Enterprises, Inc. v. Zion Jacksonville Ltd. Partnership
52 So. 3d 55
Fla. Dist. Ct. App.2010Background
- In 1989, Zion and Smurfit's predecessors entered into a land sales agreement with a ROFO on the adjacent parcel.
- The ROFO required notice to Smurfit and allowed Smurfit to propose a price within 15 days after notice; seller could sell to third parties if Smurfit did not accept a price within 15 days, within an Alternate Offer Period of one year.
- The ROFO was recorded and remained potentially unlimited in duration, with no fixed price term or stated purpose in the document.
- In December 2004, Zion sold the subject parcel to the City for about $800,000 plus a $700,000 donation, allegedly without Smurfit receiving notice as required by the ROFO; the land was then valued at $1.5 million.
- Smurfit filed a two-count complaint: Count I for declaratory relief on ROFO validity/enforceability and notice; Count II for injunctive relief requiring sale terms to Smurfit.
- The trial court granted summary judgment against Smurfit on Count I and dismissed Count II; it also dissolved a lis pendens.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity/enforceability of the ROFO | Smurfit argues ROFO limits alienability and imposes a restraint on transfer. | City and Zion argue ROFO is not an unreasonable restraint and may be validly enforced. | ROFO not invalid as unreasonable restraint; reversible on count I for proper analysis. |
| Proper legal test for restraints on alienation | Iglehart framework controls; restraint assessed for effect on marketability and developability. | Trial court used improper factors (duration, fixed price, purpose) to conclude invalidity. | Court adopts Iglehart-based reasonableness test focusing on marketability and developability; reversal of part of summary judgment. |
| Relief remedy and lis pendens | Smurfit seeks declaratory relief and preservation of rights; Lis pendens should remain. | Relief sought not properly pleaded or supported; lis pendens issue resolved differently. | Count II was properly dismissed; lis pendens order reversed/remanded consistent with restatement. |
Key Cases Cited
- Iglehart v. Phillips, 383 So.2d 610 (Fla. 1980) (test for restraints on alienation; reasonableness governs validity)
- Kelley v. Burnsed, 805 So.2d 1101 (Fla. 1st DCA 2002) (fixed price option not per se unreasonable; may encourage improvements)
- Sandpiper Development & Construction, Inc. v. Rosemary Beach Land Co., 907 So.2d 684 (Fla. 1st DCA 2005) (upheld fixed-price repurchase when duration limited; marketability considerations noted)
- Metropolitan Dade County v. Sunlink Corp., 642 So.2d 551 (Fla. 3d DCA 1992) (invalidated restrictive covenant limiting purchaser class, impacting marketability)
- Camino Gardens Ass’n, Inc. v. McKim, 612 So.2d 636 (Fla. 4th DCA 1993) (invalidated option reducing incentives for financing mortgages due to repurchase design)
- Brine v. Fertitta, 537 So.2d 113 (Fla. 2d DCA 1988) (repurchase option deemed an unreasonable restraint due to indefiniteness and fixed price)
- Aquarian Foundation, Inc. v. Sholom House, Inc., 448 So.2d 1166 (Fla. 3d DCA 1984) (association's disapproval of purchasers impeded improvement and marketability)
- Perry Banking Co. v. Swilley, 17 So.2d 103 (Fla. 1944) (sanctity of contract; public policy disfavors unreasonable restrictions)
- Fox v. Harris, 773 So.2d 107 (Fla. 1st DCA 2000) (leave to amend must be sought in trial court, not appellate court)
- Olesh v. Greenberg, 978 So.2d 238 (Fla. 5th DCA 2008) (reversing lis pendens dissolution with related summary judgment reversal)
- Mr. Sign Sign Studios, Inc. v. Miguel, 877 So.2d 47 (Fla. 4th DCA 2004) (noted related procedural point in lis pendens context)
- Vonmitschke-Collande v. Kramer, 841 So.2d 481 (Fla. 3d DCA 2002) (case law cited in context of restraint analyses)