Southern National Track Services, Inc. v. DJ Gilley
152 So. 3d 13
| Fla. Dist. Ct. App. | 2014Background
- Appellant (Southern National Track Services) contracted to buy property from Appellee that included cottages and a larger "modular" structure used to house employees; advertisement and walk-throughs suggested a two-bedroom residence with pool.
- Buyer’s representative (Plezia) inspected informally before signing but did not obtain the 20‑day professional "home inspection" allowed under the contract and did not provide written defect notice before closing.
- After closing, Plezia discovered leaks and what appeared to be painted‑over black mold; later inspections indicated the structure was a converted storage shed not built to residential codes or permits.
- Appellant sued for breach of contractual warranty (failure to disclose code/zoning compliance), fraudulent misrepresentation, and rescission (rescission later dropped); trial court dismissed the Johnson disclosure count and later granted defendant summary judgment and awarded fees.
- Trial court found no admissible evidence of breach, that buyer waived defects by failing to inspect or notify, that seller had no duty to disclose for commercial property, and that contract warranties merged with the deed.
- The First DCA reversed summary judgment, holding genuine issues of material fact existed about intentional non‑disclosure/misrepresentations, whether defects were latent, and whether merger barred the warranty claim; the fee award was dismissed without prejudice to renewed challenge if appellant prevails below.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to disclose / fraudulent misrepresentation about nature of structure | Seller (Appellee) and listing led buyer to reasonably believe structure was a residence; seller made post-contract representations and concealed defects (mold, leaks) | Seller contends no knowledge of defects; buyer failed to inspect and thus waived claims; commercial sale duty to disclose inapplicable | Reversed SJ: factual disputes exist whether seller or her agents misrepresented or concealed latent defects and whether ordinary diligence would have revealed them |
| Breach of contractual warranty re: code/zoning compliance | Contract expressly warranted no violations at closing; buyer unable to use structure due to code/zoning violations existing at closing | Seller argues merger doctrine and buyer’s knowledge/closing waived remedies; buyer failed to inspect | Reversed SJ: issues of fact on whether violations existed at closing and whether parties intended warranty to merge; merger did not automatically bar claim |
| Applicability of "commercial property" rule (Johnson/Wasser) | Buyer argues exceptions apply when latent defects or affirmative misrepresentations were made to a negligent purchaser | Seller relies on Wasser: nondisclosure for commercial property generally not actionable and buyer could have discovered defects with diligence | Court distinguished Wasser and found possible exceptions: latent defects and plausible affirmative misrepresentations create material factual disputes |
| Attorney’s fees award predicated on prevailing party status | Buyer: reversing underlying judgment nullifies prevailing‑party fee award | Seller: buyer failed to appeal fee order substantively | Appeal of fee award dismissed without prejudice; if buyer prevails below it may timely challenge fees (prevailing‑party reversal principle applied) |
Key Cases Cited
- Johnson v. Davis, 480 So. 2d 625 (Fla. 1985) (seller’s disclosure obligations in residential sales)
- Wasser v. Sasoni, 652 So. 2d 411 (Fla. 3d DCA 1995) (intentional nondisclosure of commercial property generally not actionable; diligence principle)
- Besett v. Basnett, 389 So. 2d 995 (Fla. 1980) (buyer not justified in relying on misrepresentation that is patent upon cursory inspection)
- Stephan v. Brown, 233 So. 2d 140 (Fla. 2d DCA 1970) (merger doctrine: contract covenants merge into deed absent incorporation)
- Sager v. Turner, 402 So. 2d 1282 (Fla. 4th DCA 1981) (warranty in contract re: code compliance may survive closing when buyer lacked prior knowledge of violations)
- Fraser v. Schoenfeld, 364 So. 2d 533 (Fla. 3d DCA 1978) (merger bars post‑closing claims when buyer had knowledge of violations before closing)
- Marty v. Bainter, 727 So. 2d 1124 (Fla. 1st DCA 1999) (reversal of underlying judgment defeats prevailing‑party fee award)