Sound Around, Inc. v. Hialeah Last Mile Fund VII LLC

United States District Court

for the

Southern District of Florida

Sound Around, Inc., Plaintiff, )

)

v. )

) Civil Action No. 22-20652-Civ-Scola

Hialeah Last Mile Fund VII LLC, )

and Hialeah Last Mile LLC, )

Defendants. )

Order Amending Summary Judgment Order

This matter is before the Court on the Plaintiff Sound Around, Inc.’s

(“Sound Around”) motion for summary judgment. (ECF No. 74.) The Court

previously entered an order granting in part and denying in part Sound

Around’s motion for summary judgment. (ECF No 109.) The Court now

modifies its summary judgment order (Summ. J. Order, ECF No 109) to

grant full summary judgment in favor of Sound Around on its claim for

reformation (Mot. Summ. J., ECF No. 74), as further explained below.

1. Background

The Court assumes the parties’ familiarity with the factual and

procedural background of this case. As relevant here, this matter arises from a

failed real-estate transaction between Sound Around and the Defendants

Hialeah Last Mile Fund VII LLC (“Fund VII”) and Hialeah Last Mile LLC (“HLM”)

(collectively the “Defendants”). In initiating this action, Sound Around seeks the

Defendants’ specific performance of a Purchase Agreement for the sale of a

warehouse located in Miami, Florida (the “Property”), as well as all damages it

suffered as a result of the Defendants’ breaches of the Purchase Agreement.

(Second Am. Compl. ¶¶ 54–77, ECF No. 65.) Critically, because the Purchase

Agreement completely omits HLM, even though HLM is a fee simple owner of

the Property along with Fund VII, Sound Around also seeks reformation of the

Purchase Agreement to include HLM as a seller-signatory. (Id. ¶¶ 42–53.)

On April 7, 2023, the Court granted in part and denied in part Sound

Around’s motion for summary judgment. (Summ. J. Order, ECF No 109.) The

Court concluded that the Purchase Agreement was anticipatorily breached.1

1 In its second amended complaint, Sound Around asserted two breach of contract counts: one

based on the Defendants’ alleged failure to complete the Purchase Agreement’s required

renovations and remodeling (Count Two) and another based on the Defendants’ anticipatory

breach of the Purchase Agreement (Count Three). On summary judgment, the Court found in

The Court also concluded that the parties’ omission of HLM from the Purchase

Agreement was the result of a mutual mistake because the uncontroverted

evidence clearly showed that both sides intended for HLM to be part of the

Purchase Agreement and, indeed, operated as if HLM was part of the Purchase

Agreement. However, the Court ultimately found that there remained a genuine

issue of fact regarding whether Sound Around’s conduct amounted to gross

negligence such that the Purchase Agreement should not be reformed to

incorporate HLM. Because of this, the Court denied Sound Around’s request for

specific performance at the summary judgment stage. In addition, the Court

also denied Sound Around’s request for a ruling entitling it to monetary

damages, concluding that the Purchase Agreement limits Sound Around’s

remedies upon default to a return of its deposit or specific performance.

At the April 18, 2023, calendar call, the parties agreed that all remaining

issues in the case could be resolved by way of a bench trial. (See ECF No. 114.)

While preparing for that bench trial, the Court again reviewed the parties’

written submissions and the relevant case law relating to reformation and

determined that it was partly mistaken in its original order on Sound Around’s

motion for summary judgment. Specifically, the Court now concludes that

there is no evidence in the record that could support a finding of gross

negligence with respect to the identification of the parties in the Purchase

Agreement. Accordingly, the Court modifies its April 7, 2023, order on

summary judgment as follows. (See Summ. J. Order, ECF No 109.)

2. Legal Standard

The Court applies the familiar legal standard for summary-judgment

motions. “Summary judgment is appropriate where the pleadings, affidavits,

depositions, admissions, and the like show that there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a matter of law.”

Urquilla-Diaz v. Kaplan Univ., 780 F.3d 1039, 1050 (11th Cir. 2015)

(punctuation & citation omitted). “[T]o survive summary judgment, the

nonmoving party must . . . make a showing sufficient to permit the jury to

reasonably find on its behalf.” Id.

favor of Sound Around only on its claim for anticipatory breach (Count Three). (See Summ. J.

Order 12–15, ECF No 109.) Since then, Sound Around has clarified that it “proceed[s] solely on

the facts supporting the breaches the Court had already found in its summary judgment Order

and that it d[oes] not intend to prove additional facts supporting additional breaches at trial.”

(See ECF No. 123; see also ECF No. 113.) The Court understands this to mean that Sound

Around is proceeding only as to its breach claim in Count Three.

3. Discussion

A. Reformation

As noted above, the Court already found, in its original order on

summary judgment, that the parties intended for the Purchase Agreement to

include HLM as a party, but that HLM was omitted due to a mutual mistake.

The Court now also finds that the parties’ mutual mistake was not the result of

any gross negligence on the part of Sound Around that would preclude Sound

Around’s ability to have the Purchase Agreement reformed.

A court of equity may reform a contract when “due to a mutual mistake,

the instrument as drawn does not accurately express the true intention or

agreement of the parties.” Providence Square Asso. v. Biancardi, 507 So. 2d

1366, 1369, 1372 n.3 (Fla. 1987); see also Barber v. Am.’s Wholesale Lender,

542 F. App’x 832, 837 (11th Cir. 2017) (same). However, under Florida law, “a

plaintiff’s gross negligence [] will prevent him from obtaining reformation from a

court of equity.” Goodall v. Whispering Woods Ctr., L.L.C., 990 So. 2d 695, 701

(Fla. 4th DCA 2008) (emphasis in original). “[G]ross negligence requires: ‘(1)

circumstances constituting an imminent or clear and present danger

amounting to a more than normal or usual peril, (2) knowledge or awareness of

the imminent danger on the part of the tortfeasor, and (3) an act or omission

that evinces a conscious disregard of the consequences.’” Moradiellos v. Gerelco

Traffic Controls, Inc., 176 So. 3d 329, 335 (Fla. 3d DCA 2015) (quoting Vallejos

v. Lan Cargo S.A., 116 So. 3d 545, 551 (Fla. 3d DCA 2013)); see also Restat 2d

of Contracts, § 157, cmt. a. (“[I]n extreme cases the mistaken party’s fault is a

proper ground for denying him relief for a mistake that he otherwise could have

avoided.”). “The question of whether one who seeks reformation is guilty of

gross negligence is one of fact to be determined in the light of the

circumstances of the particular case[.]” Goodall, 990 So. 2d at 701.

After re-reviewing the parties’ written submissions and the relevant case

law relating to reformation, the Court concludes that, even if it adopts the

Defendants’ version of events as to how HLM was omitted from the Purchase

Agreement, the evidence does not support a finding that the omission

resulted from Sound Around’s gross negligence. Specifically, the undisputed

facts establish that the parties exchanged multiple drafts of the Purchase

Agreement and that, at some point during that exchange, HLM was omitted

from the final draft. While Sound Around evidently did not notice that HLM

was missing from the final written contract, neither did the Defendants nor

any of the individuals involved in the transaction, including the Defendants’

principals. In line with this, after the Purchase Agreement was executed, both

parties acted as if HLM was in fact part of the transaction. (See generally

Summ. J. Order 6–8, ECF No 109.) The Court thus finds that the fact

that Sound Around (and the other parties) did not notice that HLM was

missing from the final written contract was the result of a simple, not grossly

negligent, oversight during the fast-moving process of papering the deal. See

In re United Tile & Stone, Inc., 449 F. App’x. 901, 907 (11th Cir. 2011).

In short, this is not one of those “extreme cases” where a mistaken

party’s actions should preclude its ability to have the contract reformed. See

Restat 2d of Contracts, § 157, cmt. a. The Court, therefore, concludes that

Florida law permits the Purchase Agreement to be reformed to add HLM as a

party. Accordingly, the Court will reform the Purchase Agreement to add HLM

as a party.2

B. Specific Performance

In its order on summary judgment, the Court previously concluded that

the Defendants anticipatorily breached the Purchase Agreement, as evidenced

by their statements and conduct informing Sound Around that they would not

proceed under its terms. (See Summ. J. Order 14–15, ECF No 109.) Now, the

Court determines that Sound Around is clearly entitled to specific performance

as a remedy for the Defendants’ anticipatory breach of the Purchase

Agreement.

Specific performance “is an equitable remedy not granted as a matter of

right or grace but as a matter of sound judicial discretion governed by legal and

equitable principles.” Castigliano v. O’Connor, 911 So. 2d 145, 148 (Fla. 3d

DCA 2005) (internal quotations omitted) (citing Humphrys v. Jarrell, 104 So. 2d

404, 410 (Fla. 2d DCA 1958)). Specific performance may only be granted if “1)

the plaintiff is clearly entitled to it, 2) there is no adequate remedy at law, and

3) the judge believes that justice requires it.” See id. (citations omitted). In

addition, as a condition precedent to an award of specific performance, the

plaintiff must prove that he or she either paid the contract sum; tendered the

contract sum; was ready, willing and able to pay the contract sum; or was

excused from doing so. See Invego Auto Parts, Inc. v. Rodriguez, 34 So.3d 103,

104-05 (Fla. 3d DCA 2010) (internal quotations and citations omitted).

As Sound Around correctly points out, it is well established that specific

performance is particularly appropriate in contracts for the sale of land

because land is considered unique, and its loss generally cannot be fully

compensated by an award of monetary damages. See, e.g., Sterling Crest, Ltd.

2 In adding HLM to the Purchase Agreement, the Court is not adding a non-party to the

agreement; it is remediating the written contract’s failure to accurately reflect the agreement

the parties actually reached.

v. Blue Rock Partners Realty Grp., LLC, 164 So. 3d 1273, 1278 (Fla. 5th DCA

2015) (“Because real property is considered unique, money damages to a

contract purchaser of real property is an inadequate remedy at law.”); Bermont

Lakes, Ltd. Liab. Co. v. Rooney, 980 So. 2d 580, 586 (Fla. 2d DCA 2008) (same);

Sipes v. Atl. Gulf Cmtys. Corp. (In re Gen. Dev. Corp.), 84 F.3d 1364, 1370 (11th

Cir. 1996) (same). In addition, the Purchase Agreement specifically provides for

specific performance as a remedy for a failure to perform on the part of the

Defendants. (See Purchase Agreement ¶ 14, ECF No. 75-6.)

Moreover, the Defendants have not significantly questioned Sound

Around’s ability to pay the sum due to finalize the sale contemplated by the

Purchase Agreement. It is undisputed that after the Purchase Agreement was

executed, Sound Around complied with its pre-closing obligations by tendering

the agreed deposits, and that Sound Around has been ready, willing, and able

to proceed to closing consistent with its contractual obligations. (See Pl.’s Stmt.

of Facts ¶¶ 24–25, ECF No. 75; Defs.’ Resp. Stmt. of Facts ¶¶ 24–25, ECF No.

85-1.) Sound Around’s corporate representative, Jerry Brach, has declared that

“[a]t all relevant times, Sound Around has been (and continues to be) ready,

willing and able to proceed to closing under the” Purchase Agreement. (See J.

Brach Decl. ¶ 5, ECF No. 75-8.) The Defendants attempt to question Sound

Around’s ability to pay the contract sum by highlighting that it did not finalize

the process to secure financing to purchase the property in 2021. (See Defs.’

Resp. Stmt. of Facts ¶ 25, ECF No. 85-1.) Given that the deal fell through in

2021, however, this in no way evidences Sound Around’s inability to comply

with its obligations under the Purchase Agreement. In fact, Brach has testified

that, should Sound Around be unable to acquire a loan from a bank, it could

use private funds to finalize the purchase. (See J. Brach Dep. 69:15-22, ECF

No. 85-3.)

Finally, the Defendants’ only other arguments against an award of

specific performance focus on HLM’s absence from the Purchase Agreement.

(See generally Resp. in Opp’n, generally 14–17, ECF No. 85.) However, now that

the Court has granted Sound Around’s request for reformation to correct HLM’s

mistaken omission from the contract, that is no longer obstacle. Because the

Purchase Agreement bound both Defendants, and the Defendants

anticipatorily breached the Purchase Agreement by refusing to sell the Property

to Sound Around for the agreed purchase price, the Court concludes that the

only just result in this case is an award of specific performance.

For these reasons, the Court concludes that an order requiring the

Defendants to specifically perform under the Purchase Agreement and transfer

the Property to Sound Around is appropriate.

C. Damages Incidental to Specific Performance

In its motion for summary judgment, Sound Around asked the Court to

rule that it is entitled to recover both damages incidental to specific

performance and all other monetary damages suffered as a result of the

Defendants’ breach. (See Mot. Summ. J. 19–20, ECF No. 74). In its order on

summary judgment, the Court determined that the Purchase Agreement limits

Sound Around’s remedies upon default to a return of its deposit or specific

performance, and, accordingly, that Sound Around could not recover all

monetary damages resulting from the breach. (See Summ. J. Order 16–17,

ECF No 109.) However, the Court did not need to reach the specific issue of

Sound Around’s entitlement to damages incidental to specific performance. For

the reasons explained below, the Court now declines to conclude that Sound

Around is entitled to recover an award of damages incidental to specific

performance.

“[D]amages awarded incident to a decree of specific performance are

clearly different from those which would be awarded for breach of the

contract.” Wiborg v. Eisenberg, 671 So. 2d 832, 835 (Fla. 4th DCA 1996)

(internal quotation marks omitted) (quoting Walker v. Benton, 407 So. 2d 305,

307 (Fla. 4th DCA 1981)). These types of damages serve as “compensation to

adjust the equities between the parties to place them in a position that they

would have occupied had the contract been timely performed.” Id. More

specifically:

The general rule, where specific performance is granted of a contract

to sell realty, is that the vendor must account to the purchaser for

any deprivation of the use of the property from the date when

possession should have been transferred, and for any detriment to

the property caused by his failure to preserve it properly; as against

which the vendor is entitled to credit for any expenses properly

incurred by him for the improvement or preservation of the property,

and for any loss of the use of the purchase money or other

consideration from that same date, the legal rate of interest being

the measure of compensation as to the purchase money unless the

contract specifies a different rate.

Walker v. Benton, 407 So. 2d 305, 307 (Fla. 4th DCA 1981) (quoting 7 A.L.R.2d

1206). Thus, to award damages incidental to specific performance, not only

does there need to be clarity as to the nature of the amounts sought, but “the

court [] really requir[es] an accounting . . . to adjust the equities between both

parties in order to return them to their relative position at the time of closing.”

Wiborg, 671 So. 2d at 835 (quoting Walker, 407 So. 2d at 307). Sound Around’s

request for damages incidental to specific performance lacks both things.

In its summary judgment briefing Sound Around sought a generic ruling

that it is entitled to damages incidental to specific performance, but it failed to

provide any specifics as to the nature of the damages requested, such as how

they were incurred. On this point, the Court agrees with the Defendants that,

although Sounds Around’s motion for summary judgment briefly touches on

the types of damages Sound Around claims to have suffered, its description of

those damages is imprecise at best. In addition, while the Court notes that

Sound Around’s proposed findings of fact and conclusions of law delve into this

topic in some additional detail, they still fail to address it with any real

specificity. For example, while Sound Around proposes that it should be

compensated as a result of being deprived of the use of the Property, it is

unclear what harm Sound Around actually claims it suffered by being denied

access to the Property since the breach. This is significant because certain

categories of damages that Sound Around might be contemplating are clearly

not authorized as incidental damages under Florida law. Thus, while Sound

Around may be able to recover the “rents and profits” it could have acquired

from the Property had the transaction gone through as planned, it is not

entitled to the costs for “a separate property which [it may have been] forced to

rent because of the seller[s’] breach.” Kissman v. Panizzi, 891 So. 2d 1147,

1151 (Fla. 4th DCA 2005) (citing Walker, 407 So. 2d at 307). In short, without

clarity as to the nature of the incidental damages Sound Around is seeking, the

Court is unable to adequately analyze this request for relief.

Relatedly, although Sound Around seeks a ruling on its entitlement to

incidental damages on summary judgment, it presents no evidence that it has

suffered those damages at all. As the Defendants correctly point out, Sound

Around’s motion does little or nothing in the way of setting forth facts showing

how an award of incidental damages would place it in the position that it would

have occupied had the Purchase Agreement been performed. Although Sound

Around does state that it does not seek an award of damages in a specific

amount at this time because such amount may be the subject of disputed

evidence, this does not excuse Sound Around from pointing to the specific ways

in which it was damaged by being deprived of the Property at issue.

Finally, Florida law on a party’s entitlement to an award of damages

incidental to a decree of specific performance contemplates an accounting of

the costs suffered by both sides when a contract for the sale of land is not

performed as anticipated. Thus, while Sound Around may be entitled to certain

categories of damages incidental to the Defendants’ refusal to transfer the

Property, the latter are “entitled to a credit for all reasonable expenses,

including property taxes, on the property since the scheduled closing date, as

well as the legal rate of interest on the sale price since the scheduled closing

date, to compensate the[m] for the unavailability of the sale funds.” See

Kissman v. Panizzi, 891 So. 2d 1147, 1151 (Fla. 4th DCA 2005); see also

Walker, 407 So. 2d at 308 (“Should the purchasers at this time seek the

additional allowable damages occasioned by the deprivation of the use of the

property, the trial court must determine what those damages should be and

offset same by the interest on the purchase money which the seller would have

received.”). Here, however, the Court cannot properly conduct such an

accounting because the parties’ briefing fails to address the costs incurred by

the Defendants at all, let alone whether they are exceeded by any damages

suffered by Sound Around. Thus, it is unclear, from the present record,

whether Sound Around has even suffered enough incidental damages as would

merit an award in its favor.

In short, Sound Around is essentially asking the Court to issue a

hypothetical adjudication as to its entitlement to incidental damages, which the

Court declines to do. Accordingly, the Court denies Sound Around’s request for

a ruling that it is entitled to recover damages incidental to specific performance

at this time.

Critically, because the Court’s conclusion does not foreclose the

possibility that Sound Around may in fact be able to prove these damages, the

Court will allow the parties to submit additional briefing on this issue. Within

fourteen (14) days of the date of this order, Sound Around shall file a notice

informing the Court whether it still seeks to pursue damages incidental to

specific performance. If so, Sound Around shall file any renewed request for

damages incidental to specific performance within thirty (30) days of the final

closing date on the Property. Such request must set forth with specificity the

nature of the damages sought, why they qualify as incidental to specific

performance, and supporting evidence. The Defendants may then file a

response, which shall detail any expenses by which they seek to offset Sound

Around’s claimed incidental damages.

D. Attorneys’ Fees

Sound Around seeks its attorneys’ fees as the prevailing party pursuant

to paragraph 15 of the parties’ Purchase Agreement. Paragraph 15 allows the

“prevailing party” the right to recover its “reasonable attorneys’ fees, costs and

expenses.” (See Purchase Agreement ¶ 15, ECF No. 75-6.) Applying Florida

law, the Eleventh Circuit Court of Appeals has explained that the party that

should be considered the prevailing party for attorneys’ fees is that which

prevails on the significant issues in the litigation:

The Florida Supreme Court has held that, in general, “the party

prevailing on the significant issues in the litigation is the party that

should be considered the prevailing party for attorney’s fees.” Moritz

v. Hoyt Enters., Inc., 604 So. 2d 807, 810 (Fla. 1992); see also

Prosperi v. Code, Inc., 626 So. 2d 1360, 1363 (Fla. 1993) (courts

should look to which party prevailed on the “significant issues”). In

so holding, the Florida Supreme Court has taken guidance from the

United States Supreme Court, which has “held that the test is

whether the party ‘succeeded on any significant issue in litigation

which achieves some of the benefit the parties sought in bringing

suit.’” Moritz, 604 So. 2d at 809-10 (quoting Hensley v. Eckerhart,

461 U.S. 424, 433, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983)) (internal

quotation marks and brackets removed). Moritz continued: “It is our

view that the fairest test to determine who is the prevailing party is

to allow the trial judge to determine from the record which party has

in fact prevailed on the significant issues tried before the court.” Id.

at 810.

See Chow v. Chak Yam Chau, 640 F. App’x 834, 839 (11th Cir. 2015).

Here, there is no question that Sound Around has prevailed on all the

significant issues in the litigation: it has successfully sought reformation of the

Purchase Agreement to include HLM (Count One); established that the

Defendants anticipatorily breached the Purchase Agreement (Count Three);

and sought specific performance of the reformed Purchased Agreement as a

remedy. Moreover, it bears noting that those issues on which Sound Around

has not been affirmatively successful have not resulted in a corresponding win

for the Defendants. For example, Sound Around’s other breach of contract

claim (Count Two) is no longer before the Court because Sound Around itself

decline to pursue it further, not because the Defendants successfully

established that they did not commit the claimed breach of the Purchase

Agreement. (See ECF No. 123; see also ECF No. 113.)

Therefore, the Court concludes that Sound Around is the prevailing party

in this action and is entitled to recover its reasonable attorneys’ fees incurred

herein pursuant to Paragraph 15 of the Purchase Agreement. Following entry of

final judgment, Sound Around shall file a motion setting forth the amount of

attorneys’ fees it seeks to recover in accordance with the applicable deadlines

and procedures set forth in this Court’s local rules or otherwise imposed by the

Court.

4. Conclusion

For the reasons stated above, the Court modifies its summary

judgment order (Summ. J. Order, ECF No 109) as follows:

e Summary judgment is granted in favor of Sound Around on its

claim for reformation (Count One), and the Purchase Agreement

shall be reformed to add Hialeah Last Mile, LLC as a party thereto;

e Summary judgment is granted in favor of Sound Around on its

claim for anticipatory breach of contract (Count Three), and the

Defendants are ordered to perform their obligations under the

Purchase Agreement forthwith;

e Within fourteen (14) days of the date of this order, Sound Around

shall inform the Court whether it still seeks to pursue damages

incidental to specific performance, and, if so, it shall file any

renewed request for damages incidental to specific performance

within thirty (30) days of the final closing date on the Property;

and

e Summary judgment is granted in favor of Sound Around on its

request for reasonable attorneys’ fees as the prevailing party in this

action, and the Court reserves jurisdiction to award Sound Around

said fees.

The Court’s original order on summary judgment otherwise remains

unchanged.

Done and ordered in Miami, Florida, (IN SS L—

Robert N. Scola, Jr.

United States District Judge