Terms Of New Miami Beach Condo Class Action Settlement Harken Back To Happier Times For The Florida Condo Market

As reported in the Miami Herald, a class action filed against the developer of the Deauville condo-hotel in Miami Beach in 2005 has settled. The settlement enables the plaintiffs — who signed purchase agreements in 2004 which were subsequently cancelled by the developer — to close on the original terms of the cancelled 2004 contract, should they choose.  Given current market conditions, of course, there is something not just a little ironic about a settlement which grants plaintiffs the right to close on a condo.  The plaintiffs’ lawyer observed in the Herald, rather unremarkably, that “It’s a different situation [in 2007] than in 2004,” suggesting that many of the plaintiffs won’t end up executing on their settlement rights and closing.  As the anonymous South Florida Lawyers Blog states, it “[d]oesn’t seem like that great a settlement, but the market is in the crapper anyway, so maybe this was the best they could do.”

Those interested in more details on the Deauville case can find them here, on a website established by the plaintiffs’ lawyer which makes available some of the court papers including the complaint.  Apparently, the case had been ordered to arbitration on the basis of an arbitration clause in the purchase agreement, and the core factual issue was whether the developer had actually fallen short of a sales target for the building which would authorize it to cancel the 2004 purchase agreements and presumably sell the units at higher prices. While I am not aware of any Florida cases on this exact issue, I do know of a recent opinion from the 11th Circuit — Zlotnick v. Premier Sales Group, Inc., 480 F.3d 1281 (11th Cir. 2007) — which held against a condo purchaser whose reservation agreement for a Boynton Beach preconstruction unit locking in a reservation price of $310,000 had been cancelled by the developer, which then offered the plaintiff the same unit at a price of $370,000.  While the purchaser claimed that he was the victim of a bait-and-switch under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) (a claim somewhat analagous to the Deauville plaintiffs’ situation), the 11th Circuit found that the developer’s actions were perfectly permissible under the terms of the reservation agreement allowing the developer to cancel the reservation agreement for any reason.

Of course, cases like Deauville will be the exception rather than the norm in the coming months and years as far as condo litigation is concerned, given unprecedented condo market conditions which are described aptly in this Reuters report from 3 days ago.  Indeed, many more lawsuits of various stripes by purchasers seeking not to close (on any terms) but to recover their deposits are inevitable, as I’ve described previously here, here, and here.

This article does not constitute legal advice or the formation of an attorney-client relationship, and is not for re-publication without express permission of the author.

Mr. Beck has a law degree from Harvard Law School, and practices law in the courts of South Florida. A significant portion of his practice is devoted to condo contract issues. He can be reached at 305-789-0072 or jared@beckandlee.com



  1. Todd and in Charge

    Thanks for the shout-out and the amplification of this settlement. To be honest, the website you link to isn’t all that helpful in that Mike has not updated it with any of the settlement terms or related documents. He’s as slow on updating this website as he is on his own firm site.

    As for Zlotnick, good cite. It would be interesting to know at what point those sales targets had to be hit. If a while back, maybe the developer had hit them and was trying to leverage the units to sell them for more. If the target date was more recently, it likely was not hit and the developer would be thrilled to get these units closed at 04 prices.

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