LEE P. JOHNSON, KATHERINE R. JOHNSON, AND EARL N. JAECK, APPELLANTS,
v.
ALAN WORTZEL, MARVIN GRAINICK AND HELENE GRAINICK, APPELLEES
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Buyers who defaulted on an executory contract for real estate sought recovery of payments made in part performance, while the seller sought damages and specific performance. The court held that under Florida law, a defaulting buyer cannot recover payments absent circumstances that would make forfeiture unconscionable, and here the 18.2% forfeiture was not shocking to the conscience.
A buyer in default is not entitled to recover payments absent extraordinary circumstances. The trial court correctly granted directed verdicts against Johnson on fraud, breach of contract, conversion, and civil theft claims, and against Wortzel on the counterclaim. However, the trial court erred in finding unjust enrichment; the court reversed and remanded on the unjust enrichment claim with directions to enter judgment for Johnson, while affirming all other aspects.
[1] A buyer in default under an executory contract for the sale of real estate is not entitled to recover money paid in part performance, absent specific circumstances justif…
[2] Exceptions to the rule that a defaulting buyer cannot recover payments include fraud by the seller, misfortune beyond the buyer's control, mutual rescission of the contra…
Previewing 2 of 4 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“the law in Florida is clear that a buyer in default is not entitled to recover from the seller money paid in part performance of an executory contract, even absent a forfeiture provision in the contract”
Establishes the foundational rule that defaulting buyers generally cannot recover payments to sellers.
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Join FLexlaw to unlock all legal intelligenceJohnson, Katherine Johnson, and Jaeck entered into an executory contract to purchase property in Marathon, Florida for $1,900,000. After extended nego…
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PER CURIAM.
The parties entered into an executory contract for the sale of real estate in Marathon, Florida, at a purchase price of $1,900,000. After many months of negotiations and modifications to the contract, the parties closed in escrow, but Wortzel never executed nor delivered the purchase money mortgage. Johnson retook possession of the property and declined to return any of the items of consideration already received, whereupon Wortzel sought damages for fraud, breach of contract, conversion, civil theft, and unjust enrichment, and requested specific performance. Johnson counterclaimed, seeking damages for fraud and conversion and attempting to establish and enforce an equitable mortgage. After presenting testimony, the parties moved for a directed verdict.
The trial court granted Johnson’s motion as to the claims for fraud, breach of contract, conversion, and civil theft. It granted Wortzel’s motion as to all counts in Johnson’s counterclaim.
The trial court denied specific performance and entered final judgment for Wortzel on his equitable claim of unjust enrichment.
The law in Florida is clear that a buyer in default is not entitled to recover from the seller money paid in part performance of an executory contract, even absent a forfeiture provision in the contract. Beatty v. Flannery, 49 So. 2d 81 (Fla.1950). See also Goldfarb v. Robertson, 82 So. 2d 504 (Fla.1955); Herrera Y Nogueira v. Helker, 139 So. 2d 895 (Fla. 3d DCA 1962). Although a buyer in default may be heard in equity and be relieved of forfeiture if it appears unconscionable in light of circumstances existing at the time of breach, Hutchison v. Tompkins, 259 So. 2d 129 (Fla.1972), there must be circumstances sufficient to constitute an exception to the general rule requiring forfeiture of sums paid to the seller.
We find that Beatty controls on the record before us and requires an inquiry whether any of the following circumstances are present: (1) an intimation of fraud on the seller’s part; (2) misfortune beyond his control accounting for the buyer’s failure to fulfill the contract; (3) a mutual rescission of the contract; or (4) a benefit to the seller “the retention of which [when compared to the total contract price would be] shocking to the conscience of the court.” Beatty, 49 So. 2d at 82.
We do not find that Johnson has been unjustly enriched in retaining items of consideration determined by the trial court to amount to $347,011.66, as compared to a total purchase price of $1,900,000. The amount forfeited by the buyers represents 18.2% of the total contract, a percentage that is not sufficient to shock the conscience of the court. See Dade National Dev. Corp. v. Southeast Invs., 471 So. 2d 113 (Fla. 4th DCA 1985) (seller’s obligation amounted to 18% of purchase price under $1,085,000 contract), rev. denied, 482 So. 2d 349 (Fla.1986); Hooper v. Breneman, 417 So. 2d 315 (Fla. 5th DCA 1982) ($20,000 deposit retained by seller on $150,000 contract/13%); O'Neill v. Broadview, Inc., 112 So. 2d 280 (Fla. 2d DCA 1959) ($1,500 deposit retained by seller on $10,440 contract/15%).
None of the remaining Beatty exceptions are relevant here.
We, therefore, reverse and remand with directions to enter judgment in favor of Johnson on the unjust enrichment claim. However, in all other respects we affirm the trial court’s order. Affirmed in part, reversed in part, and remanded with directions.
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Laudecio v. K-Site 500 Assocs. & Chicago Title Ins. Co., 619 So. 2d 333 (Fla. 3d DCA 1993)…purchase of the condominium unit, although they had a binding mortgage commitment, violated the terms of the sale agreement. This being so, the plaintiffs’ default under the contract authorized the subject forfeiture of deposit. Johnson v. Wortzel, 517 So. 2d 42, 43 (Fla. 3d DCA1987), rev. denied, 528 So. 2d 1184 (Fla.1988); Ruiz v. Huddle, 420 So. 2d 327, 328 (Fla. 4th DCA1982); Bee Kay Realty Corp. v. Cayre, 256 So. 2d 539 (Fla. 3d DCA), cert. denied, 263 So. 2d 207 (Fla. 1972); Herrera y Nogueira v. Helk…
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HOT Developers, Inc. v. Willow Lake Ests., Inc., 950 So. 2d 537 (Fla. 4th DCA 2007)…retained a $49,500 deposit as liquidated damages on a contract for $225,000 or 22% of the purchase price); Hooper, 417 So. 2d at 818 (upholding liquidated damages provision calling for forfeiture of 13.3% of the purchase price); Johnson v. Wortzel, 517 So. 2d 42, 43 (Fla. 3d DCA 1987) (approving forfeiture of 18.2% of contract price); Bradley v. Sanchez, 943 So. 2d 218, 222 (Fla. 3d DCA 2006) (finding that “forfeiture of 4.85% of the total sales price (or $510,000) as liquidated damages is not an unconscion…
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Liork, LLC v. Bh 150 Second Ave., LLC, 241 So. 3d 920 (Fla. 3d DCA 2018)…f the investment – the office building – which was in excess of $22 million. The approximate 14.97 percent of liquidated damages to the total purchase price of the office building was not grossly disproportionate. See, e.g., Johnson v. Wortzel, 517 So. 2d 42 (Fla. 3d DCA 1987) (18.2%); Dade Nat’l Dev. Corp. v. Southeast Inv. of Palm Beach Cty., 471 So. 2d 113 (Fla. 4th DCA 1985) (18%); Hooper v. Breneman¸417 So. 2d 315 ---PAGE 11--- (Fla. 5th DCA 1982) (13.3%). Conclusion In conclusion, the subscr…
Previewing 3 of 6 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Hutchison v. Tompkins, 259 So. 2d 129 (Fla. 1972)
- Goldfarb v. Robertson, 82 So. 2d 504 (Fla. 1955)
- Beatty v. Flannery, 49 So. 2d 81 (Fla. 1950)
- O'Neill v. Broadview, Inc., 112 So. 2d 280 (Fla. 2d DCA 1959)
- Tidwell v. The Southland Corp., 417 So. 2d 315 (Fla. 1st DCA 1982)
- Nogueira v. Helker, 139 So. 2d 895 (Fla. 3d DCA 1962)
- Dade Nat'l Dev. Corp. & Fla. Coast Dev. Grp. v. Se. Invs. OF Palm Beach Cnty., Inc., 471 So. 2d 113 (Fla. 4th DCA 1985)