Sound Around, Inc. v. Hialeah Last Mile Fund VII LLC
1:22-cv-20652
S.D. Fla.Apr 7, 2023Background
- Sound Around contracted to buy a Miami warehouse (6501 NW 37th Ave.) for $11,434,050; the property is owned jointly (Fund VII 25%, Hialeah Last Mile LLC (HLM) 75%).
- Negotiations, marketing materials, and a Letter of Intent identified both Fund VII and HLM as sellers, but the executed Purchase Agreement omitted HLM as a seller signatory.
- Defendants (through Douglas O’Donnell) later informed Sound Around they would not proceed and sent correspondence terminating/conditioning the sale; Sound Around sued for reformation, breach, and anticipatory breach and moved for summary judgment.
- The court found undisputed evidence of a mutual mistake omitting HLM, but a genuine fact issue exists whether Sound Around was grossly negligent (which would bar reformation).
- The court held that absent reformation the fully integrated Purchase Agreement cannot be enforced against HLM (statute of frauds); it granted summary judgment only on anticipatory breach as to Fund VII and denied relief on reformation, breach (as to HLM), specific performance, most damages, and attorney’s fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Reformation for mutual mistake (add HLM to contract) | Parties intended HLM to be a seller; omission was mutual scrivener mistake; equitable reformation appropriate | No mutual mistake or, even if mistake, Sound Around was grossly negligent and thus barred from reformation | Mutual mistake established, but genuine issue exists whether Sound Around’s gross negligence bars reformation — summary judgment denied on reformation |
| Buyer’s negligence / allocation of risk | Purchase Agreement does not allocate risk of omitted seller to Buyer | Buyer had title/due-diligence provisions that placed risk on Buyer | Contract provisions (title/due diligence) do not allocate the drafting-omission risk to Buyer; nevertheless gross-negligence fact issue remains |
| Enforceability against non-signatory HLM (statute of frauds) | HLM’s post-signing conduct and related documents show assent; statute of frauds satisfied by other writings | Fully integrated Purchase Agreement controls; statute of frauds requires a signed writing by the party to be charged | Absent reformation, statute of frauds bars enforcing the Purchase Agreement against HLM; summary judgment denied as to HLM |
| Breach vs. Anticipatory breach (Fund VII) | Defendants breached renovation/remodel obligations and repudiated sale; seeks breach and anticipatory breach remedies | Defendants point to continued construction work and dispute scope/timing of obligations | Court: anticipatory breach proved as to Fund VII (summary judgment granted); genuine issue of material fact exists on breach claim tied to construction obligations (summary judgment denied) |
| Specific performance & monetary remedies | Entitled to specific performance and monetary damages; alternatively incidental damages if specific performance awarded | Specific performance cannot be ordered against unsigned HLM; contract limits remedies to deposit return or specific performance; attorney’s fees contingent on prevailing party | Specific performance denied at this time because HLM not shown bound; contract language (crossed-out clause) and integration suggest remedies limited to deposit or specific performance; damages and fees not awarded now |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standard)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (evidence must be significantly probative; court views facts in nonmoving party's favor)
- Providence Square Assocs. v. Biancardi, 507 So. 2d 1366 (Fla. 1987) (reformation for mutual mistake; corrects written instrument to reflect true agreement)
- Goodall v. Whispering Woods Ctr., L.L.C., 990 So. 2d 695 (Fla. 4th DCA 2008) (gross negligence bars reformation)
- Moradiellos v. Gerelco Traffic Controls, Inc., 176 So. 3d 329 (Fla. 3d DCA 2015) (elements/definition of gross negligence)
- Rohlfing v. Tomorrow Realty & Auction Co., 528 So. 2d 463 (Fla. 5th DCA 1988) (distinguishing integrated written real-estate contracts from proof by series of documents)
- Brace v. Comfort, 2 So. 3d 1007 (Fla. 2d DCA 2008) (specific performance requires a writing signed by the party to be charged)
- 24 Hr Air Serv. v. Hosanna Cmty. Baptist Church, Inc., 322 So. 3d 709 (Fla. 3d DCA 2021) (demand for extra performance coupled with refusal to perform is anticipatory repudiation)
- Lasco Enters. v. Kohlbrand, 819 So. 2d 821 (Fla. 5th DCA 2002) (contract language interpreting whether remedies clause limits recovery)
- Redington Grand, Ltd. Liab. P’ship v. Level 10 Props., Ltd. Liab. Co., 22 So. 3d 604 (Fla. 2d DCA 2009) (similar: remedial limitation construed to bar other damages)