Petition for Writ of Certiorari — Palm Court, Inc. v. District Court of Appeal of Florida

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oa Supreme Court, us. |

VY) FILED

90° 132? | JAN 15 i991

CASE NO.

| OFFICE OF THE CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER 1990 TERM

PALM COURT, INC., a Florida

corporation, CARL A. SAX and

LANNY A. HORWITZ,

Petitioners,

vs.

THE DISTRICT COURT OF APPEAL

FOR THE FOURTH DISTRICT, STATE OF

FLORIDA, and VAUGHN DURHAM, et al.,

Respondents.

PETITION FOR WRIT OF CERTIORARI

TO THE SUPREME COURT OF FLORIDA

Lanny A. Horwitz, Esq.

7000 Central Parkway

Suite 1460

Atlanta, GA 30328

(404) 399 6066

Counsel of Record

Carl A. Sax, Esq.

6015 N. Ocean Boulevard

Ocean Ridge, FL 33435

(407) 737 9950

Counsel for Petitioners

CASE NO.

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER 1990 TERM

PALM COURT, INC., a Florida

corporation, CARL A. SAX and

LANNY A. HORWITZ,

Petitioners,

vs.

THE DISTRICT COURT OF APPEAL

FOR THE FOURTH DiSTRICT, STATE OF

FLORIDA, and VAUGHN DURHAM, et al.,

Respondents.

PETITION FOR WRIT OF CERTIORARI

TO THE SUPREME COURT OF FLORIDA

Lanny A. Horwitz, Esq.

7000 Central Parkway

Suite 1460

Atlanta, GA 30328

(404) 399 6066

Counsel of Record

Carl A. Sax, Esq.

6015 N. Ocean Boulevard

Ocean Ridge, FL 33435

(407) 737 9950

Counsel for Petitioners

a j

QUESTION PRESENTED FOR REVIEW

MAY A STATE COURT DENY THE CONSTITU-

TIONAL RIGHT TO TRIAL BY JURY AND DUE

PROCESS BY APPELLATE REVIEW BY ENFORCING

A FINAL JUDGMENT BY PERMITTING THE GAR-

NISHMENT OF THE COURT REPORTER TO BLOCK

COMPLETION OF THE RECORD ON APPEAL? --

DID THE SUPREME COURT OF THE STATE OF

FLORIDA DEPRIVE PETITIONERS OF THEIR

CONSTITUTIONAL RIGHT TO JURY TRIAL AND TO

DUE PROCESS BY APPELLATE REVIEW BY DENY-

ING THE PETITION FOR WRIT OF MANDAMUS TO

COMPEL THE FOURTH DISTRICT COURT OF

APPEALS OF THE STATE OF FLORIDA TO PER-

FORM ITS MINISTERIAL DUTY TO REVIEW

PETITIONERS' APPEAL OF THE DECISION OF

THE CIRCUIT COURT OF THE FIFTEENTH JUDI-

CIAL CIRCUIT IN AND FOR PALM BEACH COUN-

TY, FLORIDA, WHERE THE APPLICATION OF

FLA.R.CIV.P. 1.570(a) REGARDING ENFORCE-

MENT OF FINAL JUDGMENTS APPARENTLY CAUSED

(i)

PETITIONERS' APPEAL TO BE DISMISSED SINCE

THE FOURTH DISTRICT COURT OF APPEALS

APPARENTLY DISMISSED PETITIONERS' APPEAL

AS A SANCTION FOR PETITIONERS' ALLEGED

FAILURE TO PROVIDE A COMPLETE TRIAL

TRANSCRIPT ALTHOUGH PETITIONERS' ALLEGED

FAILURE WAS ATTRIBUTABLE TO THE TRIAL

COURT'S ENFORCEMENT OF THE FINAL JUDGMENT

ENTERED AGAINST PETITIONERS BY PERMITTING

RESPONDENTS, VAUGHN DURHAM, et al, TO

GARNISH THE COURT REPORTER AND TO BLOCK

PREPARATION OF THE RECORD ON APPEAL?

(ii)

LIST OF ALL PARTIES

Petitioners:

(a) Palm Court, Inc.

7000 Central Parkway

Suite 1460

Atlanta, GA 30328

(Palm Court, Inc. has neither parent

companies nor subisdiary companies)

(b) Carl A. Sax

6015 N. Ocean Boulevard

Ocean Ridge, FL 33435

7000 Central Parkway

Suite 1460

Atlanta, GA 30328

Respondents:

(a) Fourth District Court of Appeal,

State of Florida

P.O. Box A

West Palm Beach, FL 33402

(b) Vaughn Durham, et al.

c/o Michael A. Hanzman, Esq.

Zack, Hanzman & Ponce, P.A.

One Centrust Financial Centre

100 S.E. Second Street

Suite 3300

Miami, FL 33131

(iii)

TABLE OF CONTENTS

Page

QUESTION PRESENTED

FOR REVIEW (i)

LIST OF ALL PARTIES (iii)

TABLE OF AUTHORITIES 1

LIST OF ORDERS 2

GROUNDS FOR JURISDICITON 3

CONSTITUTIONAL PROVISIONS 4

STATEMENT OF THE CASE 6

ARGUMENT 9

CERTIFICATE OF SERVICE

APPENDIX

Exhibit

June 4, 1990 Fourth District

Dismissal of the Appeal 1

September 5, 1990 Fourth District

Denial for Motion for Rehearing

and for Rehearing En Banc 2

October 17, 1990 State Supreme

Court Denial of Petition for

Writ of Mandamus 3

September 20, 1990 Petition

for Writ of Mandamus and

Appendix 4

TABLE OF AUTHORITIES

U.S. Constitution, Amendment VII

U.S. Constitution, Amendment XIV

Declaration of Rights,

Art. I, § 9, Fla.Const.

Declaration cf Rights,

Art. I, § 22, Fla.Const.

Fla.R.Civ.P. 1.430 (a)

Fla.R.Civ.P. 1.570 (a)

LIST OF ORDERS

1. October 17, 1990 Order of the Supreme

Court of Florida in Case No. 76,653,

denying Petition for Writ of Mandamus,

without opinion.

2. September 5, 1990 Order of the Fourth

District Court of Appeal of the State of

Florida in Case No. 88-1203, denying

Motion for ReheaTing and Motion for

Rehearing En Banc, without opinion.

3. June 4, 1990 Order of the District

Court of Appeal of the State of Florida

in Case No. 88-1203, dismissing the

Appeal from the decision of the Circuit

Court of the Fifteenth Judicial Circuit

in and for Palm Beach County, Florida in

Case No. 86-3885, without opinion.

GROUNDS FOR JURISDICTION

Pursuant to 28 USC § 1257, Palm Court,

Inc., a Florida corporation, Carl A. Sax

and Lanny A. Horwitz (collectively,

"Petitioners"), respectfully petition

this Court for a Writ of Certiorari

compelling the Supreme Court of the State

of Florida (the "State Supreme Court") in

Case No. 76,653, to reverse its October

17, 1990 Order denying the Petition for

Writ of Mandamus, and to remand to the

District Court of Appeal for the Fourth

District, State of Florida (th "Fourth

District") Case No. 88-1203, to perform

the Fourth District's ministerial duty to

review, on its merits, Petitioner's

appeal (the "Appeal"), of the decision of

the Circuit Court of the Fifteenth Judi-

cial Circuit in and for Palm Beach Coun-

ty, Florida (the "Trial Court") in Case

No.

86-3885.

CONSTITUTIONAL PROVISIONS

U.S. Constitution, Amendment VII -

"In Suits at common

law, where the value

in controversey shall

exceed twenty dol-

lars, the right of

trial by jury shall

be preserved...."

U.S. Constitution, Amendment XIV -

",...-No State shall

make or enforce any

law which shall

abridge the privi-

leges or immunities

of citizens of the

United States; nor

shall any state

deprive any person of

life, liberty, or

property, without due

process of law; nor

deny to any person

within its jurisdic-

tion the equal pro-

tection of the laws."

Declaration of Rights, Art.

Fla.Const.

§ 9,

"No person shall be

deprived of life,

liberty, or property

without due process

of law...."

Declaration of Rights, Art.

Fla.Const. -

"The right of trial

by jury shall be

secure to all and

remain inviolate."

Fla.R.Civ.P. 1.430 (a) -

"The right of trial

by jury as declared

by the Constitution

or by statute shall

be preserved to the

parties inviolate."

Fla.R.Civ.P. 1.570 (a) -

"Final process to

enforce a judgment

solely for the pay-

ment of money shall

be by execution, writ

of garnishment, or

other appropriate

process or proceed-

ings."

§ 22,

cei STATEMENT OF THE CASE

On March 28, 1988, the Trial Court,

sitting without a jury, entered a final

monetary judgment and memorandum opinion

which found that Petitioners violated (a)

§ 12(2) of the Securities Act of 1933, 15

U.S.C. § 771(2), (b) Chapter 517, §

301(1)(a)3 Fla.Stat. and (c) Chapter 517,

§ 301(1)(a)2 Fla.Stat.

On April 15, 1990, Petitioners filed

their Initial Brief and Appendix to

Initial Brief to review the issues raised

On appeal which were not evidentiary,

including whether the Trial Court erred

in denying Petitioners the constitutional

right to jury trial. (See Composite

Exhibit A, Pages 85 - 98, 121 - 125,

Appendix, Exhibit 4)

On June 4, 1990, the Fourth District,

without opinion, dismissed the Appeal

apparently based upon the assertion that

"this appeal (should) be dismissed as a

sanction for the appellants' repeated

failures to provide a transcript of the

trial." (Appendix, Exhibit 1)

On September 5, 1990, the Fourth

District, again without opinion, denied

Petitioners' Motion for Rehearing and

Motion for Rehearing En Banc. (Appendix,

Exhibit 2)

On September 20, 1990, Petitioners

filed a Petition for Writ of Mandamus and

Appendix petitioning the State Supreme

Court to compel the Fourth District to

review, on its merits, Petitioners'

Appeal. (Appendix, Exhibit 4, Pages 23

- 31)

On October 17, 1990, the State Su-

preme Court, without opinion, rendered a

final state court judgment, by denying

the Petition for Writ of Mandamus.

(Appendix, Exhibit 3)

As a result of the State Supreme

Court's denial of the Writ of Mandamus,

and the Fourth District's dismissal of

the Appeal and denial of Petitioners'

Motion for Rehearing and Motion for

Rehearing En Banc, Petitioners have been

denied the constitutional right to trial

by jury and to due process by appellate

review since Petitioners were financially

unable to post a supersedeas bond to

avoid the enforcement of a final judgment

by garnishing the court reporter to block

the preparation of the record of appeal,

and, in turn, the Appeal itself.

ARGUMENT

This Court has jurisdiction to issue

a Writ of Certiorari under 28 USC § 1257,

since (a) the October 17, 1990 Order

denying the Petition for Writ of Mandamus

was a final state court judgment, (b) the

state court judgment hinges upon a sub-

stantial federal question, and (c) the

state court rendering the judgment has so

far departed from the accepted course of

judicial proceedings as to call for the

exercise of this Court's supervisory

power.

The State Supreme Court had jurisdic-

tion to issue a Writ of Mandamus under

Art. V § 3(b)(8) Fla.Const. (1980) and

Fla.R.App.P. 9.030(a) (3), Since the

jurisdiction of the Fourth District was

properly invoked, and the Fourth Dis-

trict, in discharging it's ministerial

duty to resolve the Appeal on its merits,

should not have decided the Appeal,

without opinion, on apparently procedur-

al grounds, namely Petitioners' alleged

failure to complete the record on appeal,

since:

",...the Constitution

provides that 'The

Supreme Court shall

have appellate juris-

diction of all cases

at law and in equity

originating in cir-

cuit ocourte*....but

-. appellate proce-

dure cannot be legal-

ly used to impair the

right to invoke the

appellate jurisdic-

tion conferred upon

the Supreme Court by

the Constitution or

to obstruct the

powers of the court

to make its appellate

jurisdiction effec-

tive." Willey v. W.J.

Hodgson Corporation,

89 Fla. 446, 105

S$o.126 (1925) See

also, Sky Lake Gar-

dens Recreation, Inc.

v. District Court of

Appeal, Third Dis-

trict, 511 So. 2d 293

(Fla. 1987);

The nature of the relief sought by

this Petition is a Writ of Certiorari

compelling the State Supreme Court to

remand, for review on its merits, to the

Fourth District, Petitioner's Appeal.

The State Supreme Court's denial of

the Petition for Writ of Mandamus, with-

out opinion, prior to receipt of Respond-

ent's Reply, and the Fourth District's

(a) dismissal of the Appeal almost two

months after the filing of the Initial

Brief, without opinion, and (b) denial of

the Motion for Rehearing and Motion for

Rehearing En Banc, also without opinion,

are attem-ts by the State Supreme Court

and the Fourth District to avoid their

ministerial duty to decide the Appeal on

its merits, thereby denying Petitioners

both the right to trial by jury and due

process by appellate review.+

Under the U.S. Constitution, Amend-

ments VII and XIV, "In Suits at common

law...the right of trial by jury shall be

preserved...." and "No State

shall...deprive any person of...property,

without due process of law...."

Under Declaration of Rights, Art. 1,

§§ 22 and 10, Fla.Const., "The right of

trial by jury shall be secure to all and

1. In the Petition for Writ of Mandamus,

Petitioners contended that (a) the ap-

plicable portion of the record on appeal

had been prepared and (b) the appropriate

statutory procedure for the Fourth Dis-

trict to have followed in the discharge

of its ministerial duties would have been

to review the Initial Brief and request

Respondents Vaughn Durham, et al, not

Petitioners, to supplement the record

consistent with Fla.R.App.P. 9.200(b)1.

(See Appendix, Exhibit 4, Pages 29 - 32)

trial by jury shall be secure to all and

remain inviolate." and "No person shall

be deprived of life, liberty, or property

without due process of law...." (See also

Fla.R.Civ.P. 1.430(a))

If the State Supreme Court is not

compelled to remand Petitioners' Appeal

to the Fourth District and the dismissal

of the Appeal by the Fourth District was

premised on procedural grounds, namely

Petitioners' failure to complete the

trial record, then the Trial Court's

order permitting Respondents' Vaughn

Durham et al to garnish the court report-

er deprived Petitioners of due process by

appellate review and the right to trial

by jury because Petitioners were unable

to post a supercedeas bond to stay final

enforcement of the Trial Court's judgment

under Fla.R.Civ.P. 1.570(a).

This Court should compel the State

Supreme Court to remand this case to the

Fourth District to determine Petitioners'

Appeal on its merits, or a state court

would otherwise be permitted to deny a

citizen of these United States the con-

stitutional right to trial by jury and

due process by appellate review by per-

mitting the garnishment of a court re-

“

porter to serve as an excuse to dismiss

an appeal for failure to complete the

Steak

record on appeal. Po 2

Lanny A. Horwitz, Esq.

7000 Central Parkway

Suite 1460

Atlanta, GA 30328

(404) 399 6066

"a pee

Carl A. Sax, ez

6015 N. Ocean Boulevard

Ocean Ridge, FL 33435

(407) 737 9950 -

Counsel for Petitioners

CERTIFICATE OF SERVICE

As counsel of record, I hereby certi-

Ey that three copies each of the forego-

ing Petition for Writ of Certiorari and

Appendix has been furnished to the Dis-

trict Court of Appeal for the Fourth

District of the State of Florida, P.O.

Box A, West Palm Beach, FL 33402 and to

Michael A. Hanzman, Esq., Zack, Hanzman &

Ponce, P.A. attorneys for Respondents,

Vaughn Durham et al, One Centrust Finan-

Cial Centre, Suite 3300, 100 S.E. Second

Street, Miami, FL 33131 this _l4¢, day of

“ebruary , 1991.

~~.

—

Lanvy A. Horwitz, Esq.

BEST AVAILABLE COP

CASE NO.

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER 1990 TERM

PALM COURT, INC., a Florida

corporation, CARL A. SAX and

LANNY A. HORWITZ,

Petitioners,

vs.

THE DISTRICT COURT OF APPEAL

FOR THE FOURTH DISTRICT, STATE OF

FLORIDA, and VAUGHN DURHAM, et al.,

Respondents.

APPENDIX TO PETITION FOR WRIT OF

CERTIORARI TO THE SUPREME COURT

OF FLORIDA

Lanny A. Horwitz, Esq.

7000 Central Parkway

Suite 1460

Atlanta, GA 30328

(404) 399 6066

Counsel of Record

Carl A. Sax, Esq.

6015 N. Ocean Boulevard

Ocean Ridge, FL 33435

(407) 737 9950

Counsel for Petitioners

APPENDIX, EXHIBIT 1

JUNE 4, 1990 FOURTH DISTRICT

DISMISSAL OF THE APPEAL

IN THE DISTRICT COURT OF APPEAL OF THE

STATE OF FLORIDA FOURTH DISTRICT, P.O.

BOX A, WEST PALM BEACH, FL 33402

PALM COURT, INC., et al.,

Appellant(s),

Vv. CASE NO. 88-1203

VAUGHN DURHAM, et al.,

Appellee(s). ALL PLEADINGS

SIGNED BY AN AT-

June 4, 1990 TORNEY MUST IN-

CLUDE THE ATTOR-

BY ORDER OF THE COURT: NEY'S FLORIDA

BAR NUMBER.

ORDERED that the Appellees' March 16,

1990 renewed motion to dismiss appeal is

granted and the above-styled appeal is

dismissed.

I hereby certify the foregoing is a

true copy of the original court order.

CLYDE L. HEATH,

CLERK.

cc: Sally R. Doerner

Lanny A. Horwitz

Hon. John B. Dunkle, Clerk (86-3885 CLF &

86-9123 CEF)

cmsS

APPENDIX, EXHIBIT 2

SEPTEMBER 5, 1990 FOURTH DISTRICT

DENIAL OF MOTION FOR REHEARING

AND MOTION FOR REHEARING EN BANC

’

IN THE DISTRICT COURT OF APPEAL OF THE

STATE OF FLORIDA FOURTH DISTRICT, P.O.

BOX A, WEST PALM BEACH, FL 33402

PALM COURT, INC., et al.,

Appellant(s),

Vv. CASE NO. 88-1203

VAUGHN DURHAM, et al.,

Appellee(s). ALL PLEADINGS

SIGNED BY AN AT-

September 5, 1990 TORNEY MUST IN-

ee CLUDE THE ATTOR-

BY ORDER OF THE COURT: NEY'S FLORIDA

BAR NUMBER.

ORDERED that the Appellants' June 15,

1990 motion for rehearing and motion for

rehearing en banc are denied.

ORDERED that Appellants' July 16,

1990 motion to sever consolidated appeal

is denied.

I hereby certify the foregoing is a

_.true copy of the original court order.

CLYDE L. HEATH,

CLERK.

cc: Larry A. Horwitz

Carl A. Sax

Michael A. Hanzman

cms

APPENDIX, EXHIBIT 3

STATE SUPREME COURT DENIAL

OF PETITION FOR WRIT OF MANDAMUS

SUPREME COURT OF FLORIDA

WEDNESDAY, OCTOBER 17, 1990

PALM COURT, INC., etc.,

Petitioners,

Vv. CASE NO. 76,653

DISTRICT COURT OF APPEAL,

FOURTH DISTRICT, et al.,

Respondents.

The petitioner in the above cause has

filed a Petition for Writ of Mandamus,

and the same having been duly considered,

it is ordered that said Petition be and

the same is hereby denied.

OVERTON, Acting C.J., MCDONALD, EHRLICH,

BARKETT AND KOGAN, JJ., concur

A True Copy H

TEST: cc: Lanny A. Horwitz,

Esquire

Carl A. Sax,

Esquire

Hon. Clyde L. Heath,

Clerk

Sid J. White Michael A. Hanzman,

Clerk, Supreme Esquire

Hon. George W. Hersey

C.J.

APPENDIX, EXHIBIT 4

PETITION FOR WRIT OF MANDAMUS

AND APPENDIX

IN THE SUPREME COURT

OF THE STATE OF FLORIDA

PALM COURT, INC., a

Florida corporation,

CARL A. SAX and

LANNY A. HORWITZ, CASE NO.

FOURTH DISTRICT

Petitioners, COURT OF APPEAL

CASE NO. 88-1203

vs.

THE DISTRICT COURT

OF APPEAL FOR THE

FOURTH DISTRICT,

STATE OF FLORIDA,

Respondent.

and

VAUGHN DURHAM, et al.,

Respondents.

PETITION FOR WRIT OF MANDAMUS

Lanny A. Horwitz, Esq.

7000 Central Parkway

Suite 1460

Atlanta, GA 30318

(404) 399 6066

Florida Bar No. 142489

Carl A. Sax, Esq.

6015 N. Ocean Boulevard

Ocean Ridge, FL 33435

(407) 737 9950

Florida Bar No. 202266

Attorneys for Petitioners,

Palm Court, Inc., Carl A. Sax

and Lanny A. Horwitz

PETITION FOR WRIT OF MANDAMUS

Pursuant to Fla.R.App.P. 9.100, Palm

Court, Inc., a Florida corporation, Carl

A. Sax and Lanny A. Horwitz (collective-

ly, “Petitioners"), respectfully petition

this Court for a Writ of Mandamus compel-

ling the District Court of Appeal for the

Fourth District, State of Florida (the

"Fourth District") to review, on its

merits, Petitioner's appeal (the

"Appeal"), in Case No. 88-1203, of the

decision of the Circuit Court for the

Fifteenth Judicial Circuit of the State

of Florida (the "Trial Court") in Case No

&€6-3885.

BASIS FOR INVOKING JURISDICTION

This Court has jurisdiction to issue

a Writ of Mandamus under Art. V § 3(b) (8)

Fla.Const. (1980) and Fia.R.App.P.

9.030(a) (3). Mandamus is the proper

remedy since the jurisdiction of the

Fourth District was properly invoked, and

the Fourth District, in discharging it's

ministerial duty to resolve the Appeal on

its merits, should not have decided the

Appeal on, apparently, procedural

grounds, without opinion, since:

",...the Constitution

provides that 'The

Supreme Court shall

have appellate juris-

diction of all cases

at law and in equity

originating in cir-

Suit GOUEGS «...

Wut sec appellate

procedure cannot be

legally used to

impair the right to

invoke the appellate

Jurisdiction con-

ferred upon the

Supreme Court by the

Constitution or to

obstruct the powers

of the court to mak

its appellate juris-

diction effective."

Willey v. W.J. Hodg-

son Corporation, 89

Fla. 446, 105 So.126

(1925) See also, Sky

Lake Gardens Recrea-

tion, Inc. v. Dis-

trict Court of Ap-

peal, Third District,

511 So. 2d 293 (Fla.

1987);

and, the question of whether Petitioners

have been denied their constitutional

right to appeal the issue of their right

to trial by jury, where preparation of

the trial record was blocked by the Trial

Court's Garnishment Order, is an issue of

law relating to the constitutionality of

garnishment when utilized to avoid the

Supreme Court's appellate jurisdiction.

Hess By and Through Hess v. Metropolitan

Dade County, 467 So.2d 297 (Fla. 1985);

Fine v. Firestone, 448 So. 2d 984 (Fla.

FACTS UPON WHICH THE PETITIONERS RELY

On March 28, 1988, the Trial Court,

with the Honorable Daniel T.K. Hurley

presiding, sitting without a jury, en-

tered a final monetary judgment and

memorandum opinion (the "Memorandum

Opinion"), which found that Petitioners

violated (a) § 12(2) of the Securities

Act of 1933, 15 U.S.C. § 771(2), (b)

Chapter 517, § 301(1)(a)3 Fla.Stat. and

On April 15, 1990, Petitioners filed

their Initial Brief and Appendix to

Initial Brief (Composite Exhibit A), to

review the issues raised on appeal which

are not evidentiary, namely whether the

Trial Court erred in denying Petitioners

(a) a jury trial as guaranteed by the

Florida Constitution and (b) judicial

enforcement of a contract.

On June 4, 1990, the Fourth District,

without opinion, dismissed the Appeal

(Exhibit B), apparently based upon the

assertion that "this appeal (should) be

dismissed as a sanction for the appel-

lants' repeated failures to provide a

transcript of the trial." See March 15,

1990 Renewed Motion to Dismiss Appeal

(Exhibit C), March 24, 1990 Response to

Renewed Motion to Dismiss Appeal (Exhibit

D), April 12, 1990 Motion to Enforce Rule

9.200(b)1 (Exhibit E), April 20, 1990

Response to Motion for Enlargement of

Time (Exhibit F), and May 7, 1990 Reply

to Motion to Strike Appellants' Brief and

Motion to Enforce Rule 9.210(f) (Exhibit

G).

On September 5, 1990, the Fourth

District, again without opinion, denied

Petitioners' Motion for Rehearing and

Motion for Rehearing En Banc (Exhibit H).

See June 14, 1990 Motion for Rehearing

and Motion for Rehearing En Banc (Exhibit

I) and July 3, 1990 Reply to Response to

Motion for Rehearing and Motion for

Rehearing En Banc (Exhibit J).

As a result of the Fourth District's

dismissal of the Appeal and denial of

Petitioners' Motion for Rehearing and

Motion for Rehearing En Banc, Petitioners

have been denied the right to trial by

jury and to appellate review since Peti-

tioners were financially unable to post a

supersedeas bond to avoid the surrepti-

tious use of garnishment proceedings to

block the preparation of the record of

appeal, and, in turn, the Appeal itself.

IIt

THE NATURE OF THE RELIEF SOUGHT

The nature of the relief sought by

this Petition is a Writ of Mandamus

compelling the Fourth District to review,

on its merits, Petitioner's Appeal.

ARGUMENT

The Fourth District's (a) dismissal

of the Appeal almost two months after the

filing of the Initial Brief, without

opinion, but apparently based on proce-

dural grounds and (b) denial of the

Motion for Rehearing and Motion for

Rehearing En Banc, also without opinion,

are an attempt by the Fourth District to

avoid its ministerial duty to decide the

Appeal on its merits.

Petitioners have not sought to appeai

the Trial Court's findings in the Memo-

randum Opinion. However, this fact

should not be deemed as acquiescence or

admission to any portion of the Memoran-

dum Opinion since (a) Petitioners recog-

nize that an appeal of the Trial Court's

findings, in a non-jury setting, are

virtually unassailable, and (b) the

Fourth District, in its opinion filed

January 24, 1990, in a related appeal, in

Case No. 88-3012, described its former

member's Memorandum Opinion as "compel-

ling and exhaustive."

Petitioners have, however, sought to

review the Trial Court's denial of Peti-

tioner's right to trial by jury and judi-

cial enforcement of a contract; and, to

permit the Fourth District to avoid the

discharge of its ministerial duty to

decide the Appeal on its merits, is to

deny Petitioners both the right to trial

by jury and to appellate review.

Petitioners contend that (a) the

applicable portion of the record on

appeal has, in fact, been prepared, (b)

the Fourth District has not reviewed the

Initial Brief, which was filed, promptly

after the Fourth District permitted

Petitioners' counsel to withdraw, (c) the

Fourth District has not given Petitioners

an opportunity to supplement the record,

if appropriate and (d) the appropriate

procedure for the Fourth District to have

followed in the discharge of its ministe-

rial duties would have been to review the

Initial Brief and request Appellees, not

Petitioners, to supplement the record

consistent with Rule 9.200(b)1.

Accordingly, the Fourth District

incorrectly exercised discretion over a

matter that should have been treated as a

ministerial function, namely, its deter-

mination of the Appeal on its merits, and

this Court should (a) find that "the

district court improperly dismissed

petitioner's appeal...(and)...the dis-

trict court has a ministerial duty to

consider and decide the appeal." See Sky

Lake Gardens, Supra, and (b) issue a Writ

of Mandamus to correct this error.

Lanny A. Horwitz, Esq.

7000 Central Parkway

Suite 1460

Atlanta, GA 30318

(404) 399 6066

Florida Bar No. 142489

Carl A. Sax, Esq.

6015 N. Ocean Boulevard

Ocean Ridge, FL 33435

(407) 737 9950

Florida Bar No. 202266

Attorneys for Petitioners,

Palm Court, Inc., Carl A. Sax

and Lanny A. Horwitz

CERTIFICATE OF SERVICE

I hereby certify that a copy of the

foregoing Petition for Writ of Mandamus,

and Appendix thereto, has been furnished

to the District Court of Appeal for the

Fourth District of the State of Florida,

P.O. Box A, West Palm Beach, FL 33402 and

to Michael A. Hanzman, Esq., Floyd Pear-

son Richman Greer Weil Zack & Brumbaugh,

P.A. attorneys for Respondents, Vaughn

Durham et al Courthouse Center, 26th

Floor, 175 N.W. First Avenue, Miami, FL

33128-1817 this 20th day of September,

1990.

Lanny A. Horwitz, Esq.

IN THE SUPREME COURT

OF THE STATE OF FLORIDA

PALM COURT, INC., a

Florida corporation,

CARL A. SAX and

LANNY A. HORWITZ, CASE NO.

FOURTH DISTRICT

Petitioners, COURT OF APPEAL

CASE NO. 88-1203

vs.

THE DISTRICT COURT

OF APPEAL FOR THE

FOURTH DISTRICT,

. STATE OF FLORIDA,

Respondent.

and

VAUGHN DURHAM, et al.,

Respondents.

APPENDIX TO PETITION FOR WRIT OF

MANDAMUS

Lanny A. Horwitz, Esq.

7000 Central Parkway

Suite 1460

Atlanta, GA 30318

(404) 399 6066

Florida Bar No. 142489

Carl A. Sax, Esq.

6015 N. Ocean Boulevard

Ocean Ridge, FL 33435

(407) 737 9950

Florida Bar No. 202266

Attorneys for Petitioners,

Palm Court, Inc., Carl A. Sax

and Lanny A. Horwitz

EXHIBIT A

IN THE DISTRICT COURT OF APPEAL

FOR THE FOURTH DISTRICT

STATE OF FLORIDA

PALM COURT, INC., et al.,

Appellants,

Vv. CASE NO. 88-1203

VAUGHN DURHAM, et al.,

Appellees.

APPELLANTS’ INITIAL BRIEF

On Appeal from the Circuit Court of the

Fifteenth Judicial Circuit in and for

Palm Beach County, Florida

Lanny A. Horwitz, Esq.

P.O. Box 5684

Hilton Head Island, SC 29938

(803) 785 5650

Florida Bar No. 142489

Carl A. Sax, Esq.

6015 N. Ocean Boulevard

Ocean Ridge, FL 33435

(407) 737 9951

Florida Bar No. 202266

Attorneys for Plaintiff/Appellants,

Palm Court, Inc., Carl A. Sax and

Lanny A. Horwitz

TABLE OF CONTENTS

Table of Citations Pg 1

Statement of the Case and Facts Pg 4

Summary of the Argument Pg 27

Argument

Point One Pg 29

THE TRIAL COURT ERRED IN DENYING PLAIN-

TIFF/APPELLANTS, PCI, SAX AND HORWITZ A

JURY TRIAL AS GUARANTEED BY THE FLORIDA

CONSTITUTION.

(a) The Trial Court erred since the

Action included claims cognizable at law

and Plaintiff/Appellants, PCI, and/or Sax

and Horwitz were entitled to a jury

trial in a note/damage/fraud action.

(b) The Trial Court erred since rescis-

sion was unavailable to Defendants/Appel-

lees, Vaughn Durham, et al. and Plain-

tiff/Appellants, PCI, and/or Sax and

Horwitz were entitled to a jury trial in

a damage action.

Memorandum Opinion and Final Judgment

have predetermined intertwined legal

issues for which Plaintiff/Appellants,

PCI, and/or Sax and Horwitz were other-

wise entitled to a jury trial.

Point Two Pg 46

THE TRIAL COURT ERRED IN DENYING TO

PLAINTIFF/APPELLANTS, PCI, SAX AND HOR-

WITZ JUDICIAL ENFORCEMENT OF A CONTRACT.

The Trial Court erred since PV, as agent

of Defendants/Appellees, Vaughn Durham,

et al. under the Management Agreement,

executed the Transfer Letters which

modified the PPM and obviated the Trial

Court's findings.

Conclusion Pg 53

Appendix Attached

Certificate of Service Attached

TABLE OF CITATIONS

Cases

Adams v. Citizens Bank of Brevard, 248

So.2d. 682 (Fla. 4th DCA 1971)

Adler v. Seligman of Florida, Inc., 492

So.2d. 730 (Fla. 4th DCA 1986)

Beacon Theatres v. Westover, 359 U.S.

500, 79 §.ct. 948, 3 £.Bd. 2G 988

(1959)

Bingham et al v. Taylor, 12 F.2d 15,16

(1926)

Boston Rug Galleries, Inc. v. William

Iselin & Co., 212 So.zd 58 (Fla. 4th DCA

1968)

Cerrito v. Kovitch, 457 So.2d 1021, 1022

(Fla.1984)

Cheek v. McGowan Electric Supply Co.,

404 So,2d 834 (Fla. 1st DCA 1981)

Chenery v.Crans, 497 So.2d 267

(Fla.2nd DCA 1986)

Colon v. Lisk, 13 A.D. 195, 43 N.Y.S.

364, affd, 153 N.Y. 188, 47 N.E. 302

(1897)

Construction Systems, Etc. v. Jennings

Const., 413 So.2d 1236, 37 (Fla. 3rd DCA

1982)

Dairy Queen, Inc. v. Wood, 369 U.S. 469,

82 S.Ct. 894, 8 L.Ed.2d 44 (1962)

David v. Sun Federal Savings & Loan, 461

So.2d 93 (Fla. 1984)

Davis v. McGahee, Fla. 257 So.2d. 62

Eli Lilly Co. v. Generix Drug Sales,

Lnc., 460 F.2d 1096, 1107 (5th Cif.

1972)

Fl. East Coast Railroad v. Thompson, 93

Fla. 30, 111 So. 525 (1927)

General Investment Company of Connecti-

cut, Inc. v. Ackerman, 37 F.R.D. 38

(1964)

Hightower v. Bigoney, 156 So.2d 501

(Fla.1963)

Hobbs v. Florida First Nat. Bank,

480 So.2d 153 (Fla.App. 1 Dist. 1985)

Hollywood, Inc. v. City of Hollywood,

321 So.2d. 65,71 (Fla.1975)

Houston v. Adams, 95 So. 859-860 (1923)

Houston v. Forman, 109 So. 297 (1926)

In Re Forfeiture of 1978 Chevrolet Van,

493 So.2d 433 (Fla. 1986)

Napolitano v. H.L. Robertson and Associ-

ates, inc., 311 So.2d 757 (Fla. 3d DCA

1975)

Padgett v. First Federal Savings & Loan

Association of Sant@ Rosa County, 378

So.2d. 58 (Fla. lst DCA 1979)

Padgett v. First Federal Savings &

Loan Association, 378 So.2d 58 (Fla. 1st

DCA 1979)

People v. One 1941 Chevrolet Coupe, 37

Cal.2d. 283, 231 P.2d 832 (1951)

Phillips v. Kapus, 764 F.2d 807 (ilth

Cir. 1985)

Plimpton v. Town of Somerset, 33 Vt.

283 (1860)], 36 Fla. at 650-51, 653, 18

So. at 863

Ross v. Bank South, N.A., 885 F.2d 723

(11th Cir.1989)

Smith v. Orange County, 497 So.2da

985,986 (Fla. 5th DCA 1986)

Smith v. Barnett Bank of Murray Hill,

Fla.App. 350 So.2d 358,359 (1977)

Southwestern Life Insurance Co. Vs

Gerson 187 So.2d. (Fla.3d DCA 1966)

Spring v. Ronel Refining, Inc., 421 So.2d

46 (3rd DCA 1982)

State Dept. of Natural Resources v.

Estech, Inc., 515 So.2d 758 (Fla.2nd DCA

1987)

State v. 1920 Studebaker, 120 Or. 254,

251 P. 701 (1926)

Swofford v. B & W , Inc., 336 F.2d 406

(Sth Cir. 1964), cert. denied, 379 U.S.

962, 85 s$.Cct. 653, 13 L.Ed.2d 557

(1965)

Thermo-Stitch, Inc. v. Chemi-Cord Proc-

essing Corp., 294 F.2d 486 (5th Cir.

1961) S.Ct. G33, 13 L.Ed.2d 557 (1965)

Waddell v. State ex rel Meeks, 225 Ark.

293, 357 S.W.2d 651 (1962)

Wiggins v. Williams, 36 Fla. 637, 18 So.

859 (1896)

Statutes

Art. I § 22, Fla. Const.

Art. I, §10, U.S. Const.

Declaration of Rights Art. I, §10, Fla.

Const.

Fla.R.Civ.P. 1.430(a)

West F.S.A. Const. Art. 1, § 22

STATEMENT OF THE CASE AND FACTS

This is an appeal from a five (5)

week trial, without a jury, commencing on

February 16, 1988, before the Honorable

Daniel T. K. Hurley, Fifteenth (15th)

Judicial Circuit in and for Palm Beach

County, Florida (the "Trial Court")

resulting in a memorandum opinion (the

"Memorandum Opinion") (R 3543-76) and

final judgment (the "Final Judgment") (R

3578-83), entered by the Trial Court on

March 28, 1988, finding that

Plaintiff/Appellants, Palm Court, Inc.

("PCI"), Carl A. Sax ("Sax") and Lanny A.

Horwitz ("Horwitz") violated (a) §12(2)

of the Securities Act of 1933, 15 U.S.C.

§771(2), (b) Chapter 517, §301(1) (a)3,

rie. Stat. , and (c) Chapter $17,

§301(1)(a)2, Fla.Stat., relating to

Counts III, IV and V, respectively, of

the Revised Second Amended Counterclaim

filed by Defendants/Appellees Vaughn

Durham, et al. (R 2772-2825)

The Trial Court's Memorandum Opinion

tracks Alna Capital Associates v. Wagner

758 F.2d. 562 (11th Cir.1985), where the

Eleventh Circuit held that a trial

court's findings that a defendant had

committed securities fraud would be

affirmed where the trial court made

careful, detailed findings which were

sufficiently supported by the evidence.

Accordingly, even though Plaintiff/-

Appellants, PCI, Sax and Horwitz assert

that the Trial Court's findings are not

sufficiently supported by the evidence,

Plaintiff/Appellants, PCI, Sax and Hor-

witz recognize that an appeal of the

Trial Court's findings, in a non-jury

setting, are virtually unassailable.

Therefore, Plaintiff/Appellants, PCI,

Sax and Horwitz have not sought to appeal

the Trial Court's findings in the Memo-

randum Opinion. However, Plaintiff/-

Appellants, PCI, Sax and Horwitz's fail-

ure to challenge the Trial Court's find-

ings should not be deemed, by this Court,

as acquiescence or admission to any

portion of the Memorandum Opinion.

On November 30, 1989,

Plaintiff/Appellant PCI (and Sax and

Horwitz), entered into a stipulation of

settlement with Defendants/Appellees,

Vaughn Durham, et al. (the "Stipulation

of Settlement") which, "without in any

way conceding to the merits of each

others position," provided, in pertinent

part, that:

"PCI (and Sax and

Horwitz) will not

appeal any aspect of

the Final Judgment or

Memorandum Opinion

with respect to

Counts I and II of

the Revised Second

Amended Counterclain,

but nothing contained

herein shall prohibit

PCI (and Sax and

Horwitz) from contin-

uing the Appeal as

aforesaid, in order

to reverse the Judg-

ment or Memorandum

Opinion with respect

to Counts III, IV and

V of the Revised

Second Amended Coun-

terclaim." (Counts

III, IV and V are

sometimes hereinafter

referred to as Counts

III, XIII and XIV of

the Revised Second

Amended Counter-

clain.)

On March 14, 1990, consistent with the

terms of the Stipulation of Settlement,

Plaintiff/Appellants, PCI, Sax and Hor-

witz filed their Amended Directions to

Clerk (R 3612-18) and Statement of Judi-

cial Acts to be Reviewed (R 3619-20),

limiting the Appeal to all aspects,

including the right to a jury trial, of

the Trial Court's findings in the Memo-

randum Opinion and Final Judgm at relat-

ing to Counts III, IV and V of the Re-

vised Second Amended Counterclaim.

The Stipulation of Settlement also

provided that:

"As to the Final

Summary Judgment (in

favor of those Unit

Owners who were not

party to the bifur-

cated and severed

first wave trial),

all of the ... Stipu-

lations as to the

Final Judgment...

shall apply to the

Final Summary Judg-

ment...."

On February 8, 1989, the Trial Court

entered a final judgment pertaining to

the Final Summary Judgment. (R 3608-09)

Accordingly, for purposes of this

Appeal, the term Final Judgment includes

the final judgment pertaining to the

Final Summary Judgment.

In January, 1985, Plaintiff/Appel-

lant, PCI was formed by Plaintiff/Appel-

lants, Sax and Horwitz, Lawrence Reger

("Reger") and Southern Floridabanc Sav-

ings Association ("SFB") to (a) purchase

ea Palm Beach property (the "Hotel"), and

(b) renovate and syndicate the Hotel

under either a limited partnership or

hotel/condominium offering.

In March, 1985, Plaintiff/Appellants,

PCI, Sax and Horwitz retained the serv-

ices of Sparber, Shevin, Shapo, Heilbron-

ner and Book, P.A. ("Sparber") and Cohen,

Scherer and Cohn, P.A. ("Cohen"), as

securities and real estate counsel,

respectively, and Pannell Kerr Forster

("PKF"), as hotel feasibility consult-

ants.

On June 30, 1985, a private placement

memorandum prepared by Sparber, as amend-

ed by the October 15, 1985 Addendum, and

subscripton documents relating thereto

(the "PPM") (R 3219-3429), was printed

for distribution to broker/dealers li-

censed to sell securities in those states

blue-skyed by Sparber in accordance with

applicable state and federal securities

laws.

In November, 1985, Plaintiff/Appel-

lant, PCI retained the services of Rich-

ard Strother, Strother Investments, and

Frederick Randal, First Hampshire Securi-

ties, Inc., a licensed broker/dealer

("First Hampshire") to sell the Units in

the Hotel.

On December 29 and 30, 1985, at the

offices of Cohen and SFB,

Plaintiff/Appellants, PCI, Sax and Hor-

witz, Andrew Jacobson, Esq. of Cohen's

office, representatives of SFB, Mr.

Strother, Mr. Randal and Geoffrey Chalm-

ers, Esq., Grey and Wendell, Boston, MA,

assembled, in Boca Raton, Florida, to

Close the $13,900,000 hotel/condominium

offering (the "Closing").

Immediately after all parties were

assembled, Mr. Chalmers (a) announced,

after he delivered several million dol-

lars of deposits, notes, and other clos-

ing documents, that he represented De-

fendants/Appellees, Vaughn Durham, et al.

and (b) thereafter, attempted to negoti-

ate a reduction to the purchase price of

the interests in the Hotel (the "Units"),

Since the Hotel, after Mr. Chaimers'

morning inspection, was not, in Mr.

Chalmers opinion, complete, and PV Ho-

tels, Inc., the Hotel Agent ("PV") had

not obtained significant pre-bookings for

the 1986 season.

After Plaintiff/Appellants, PCI, Sax

and Horwitz refused to reduce the pur-

chase price of the Units, Messrs. Stroth-

er and Chalmers, on behalf of Mr. Chalm-

ers' clients, proceeded to close the

purchase of the Units in the Hotel.

At the first wave trial, although

both Plaintiff/Appellants, Sax and Hor-

witz and Mr. Jacobson testified to the

foregoing, the Defendants/Appellees,

Vaughn Durham, et al. asserted that the

Plaintiff/Appellants, PCI, Sax and Hor-

witz knew that Mr. Chalmers, in fact,

represented First Hampshire, and not the

Defendants/Appellees, Vaughn Durham, et

al. and that, in any event, Mr. Chalmers

did not have actual authority to bind

Defendants/Appellees, Vaughn Durham, et

al. to any modification to the PPM.

All Closing documentation was assem-

bled by Mr. Jacobson in consultation with

various partners and/or associates of

Sparber, under the supervision of Mr.

Chalmers.

As is customary in limited partner-

ship offerings, prospective limited

partners did not attend a Closing since

securities and/or real estate counsel,

namely Sparber and Cohen,were required to

opine to compliance with Closing condi-

tions.

Accordingly, Sparber acted as escrow

agent and Cohen acted as sub-escrow agent

to assure Plaintiff/Appellant, PCI's

compliance with Closing conditions set

forth in the escrow agreement contained

in the PPM (the "Escrow Agreement") (R

3058-63), and issued legal opinion let-

ters that the Closing complied with the

PPM.

During the first wave trial, both

Sparber, who had elected not to attend

the closing since Mr. Chalmers was

present, and Defendants/Appellees, Vaughn

Durham, et al. sought to rely upon Plain-

tiff/Appellant, PCI's representations in

an incumbency certificate (the "Incumben-

cy Certificate"). (R 3151-53)

However, (a) the Incumbency Certifi-

cate was a First Hampshire requirement,

(b) Sparber was not delivered a copy of

the Incumbency Certificate until after

the Closing, and (c) Cohen modified the

Incumbency Certificate at the Closing,

prior to its execution by Plaintiff/-

Appellant, PCI and its review by Mr.

Chalmers.

Since Plaintiff/Appellants, PCI, Sax

and Horwitz, and, for that matter, its

counsel, Sparber and Cohen, believed that

Mr. Chalmers represented the Defendants/-

Appellees, Vaughn Durham, et al., certain

agreements were reached at the Closing

with Messrs. Strother and Chalmers, which

were memorialized in two (2) letters

dated December 30, 1985 and December 31,

1985 (R 3073-3138 and R 3147-50), which

were executed, on behalf of the Defend-

ants/Appellees, Vaughn Durham, et al., by

PV, the agent of the Defendants/Appel-

lees, Vaughn Durham, et al. under various

Rental Management Agreements (R 3357-65)

which had been executed and delivered to

Sparber or Cohen on or before the Clos-

ing. (The Transfer Letters are reproduced

in the Appendix. )

Contemporaneously with the Closing,

PV donated the facade of the Hotel to the

Palm Beach Preservation Society (the

"Facade Easement Donation") in order to

secure a multi-million dollar charitable

tax deduction for Defendants/Appellees,

Vaughn Durham, et al.

The Facade Easement Donation was not

part of the offering of Units, and the

tax benefits flowing to the Defendants/-

Appellees, Vaughn Durham, et al. were not

included within the PKF forecasts con-

tained in the PPM (the "Forecasts"). The

donation was, however, part of the

unauthorized investment summary (the

"Investment Summary") prepared and dis-

tributed by Strother Investments and

First Hampshire. (R 3165-98)

Plaintiff/Appellants, PCI, Sax and

Horwitz believe that the Action and the

Revised Second Amended Counterclaim would

not have been filed, but for the follow-

ing; (a) Mr. Strother prepared the In-

vestment Summary, (b) Mr. Strother di-

rectly, or indirectly sold the Units in

the Hotel to Defendants/Appellees, Vaughn

Durham, et al., (c) Messrs. Strother and

Chalmers closed the offering on behalf of

the Defendants/Appellees, Vaughn Durhan,

et al., (da) Messrs. Strother and Chalmers

reviewed and approved the Transfer Let-

ters prior to their execution by PV on

behalf of Defendants/Appellees, Vaughn

Durham, et al., (e) Mr. Strother was

elected president of the condominium

association, (f) Mr. Chalmers was re-

tained as counsel to the condominium

association, (g) the Defendants/Appel-

lees, Vaughn Durhan, et al., in actuali-

ty, purchased the Units under the Invest-

ment Summary and not the PPM, and (h)

Messrs. Strother and Chalmers retained

the firm of Floyd, Pearson, Richman,

Weil, Zack & Brumbaugh to defend the

Action and to bring the securities claims

against Plaintiff/Appellants, PCI, Sax and

Horwitz, among others.

Indeed, this opinion was shared by

Carteret in commenting on the necessity

of Mr. Strother's trial appearance (he

did not appear since the Trial Court

denied Plaintiff/Appellants, PCI, Sax and

Horwitz's motion to include Mr. Strother

within the class of ten (10) purchasers

selected, over Plaintiff/Appellants, PCI,

Sax and Horwitz's objection (R 196) by

Defendants/Appellees, Vaughn Durham, et

al. to appear at the first wave trial):

"Judge, you can't

because Mr. Stroth-

er's testimony in

this case is so

relevant. You have

to understand what he

was. Not, only, was

he the seller of the

deal, whatever, he

became the president

of the condo associa-

tion. He was the one

who made the decision

to close this hotel.

He was the one who

made the decision to

retain Mr. Richman

(counsel to Defend-

ants/Appellees,

Vaughn Durham, et

al.), and he was the

;

one who in my opinion

started the whole

ball rolling.” (R

207-08)

As part of the documentation delivered by

Mr. Chalmers at the Closing, Defendants/-

Appellees, Vaughn Durham, et al. execut-

ed, inter alia, first mortgages (the

"Mortgages") and first mortgage notes

("Notes"), representing eighty (80%) per

cent of the purchase price of the Units,

in favor of SFB, and two (2) additional

promissory notes, representing ten (10%)

and three (3%) per cent of the purchase

price of the Units, in favor of Plain-

tiff/Appellant, PCI (the "10% Note" and

"3% Note").

As an accommodation to both Plain-

tiff/Appellant, PCI and SFB, Plain

tiff/Appellant, PCI, SFB and Carteret

entered into (1) a Substitution of Col-

lateral and Collateral Assignment and

Security Agreement (the "Collateral As-

signment") and (2) Buy - Sell and Tri-

Party Agreement (R 3541-42) (the "Tri-

Party Agreement"), under which (a) Car-

teret substituted its first mortgage

encumbering the Hotel by accepting a

collateral assignment of the Notes and

Mortgages, and (b) SFB unconditionally

agreed to purchase the Notes and Mort-

gages from Carteret approximately one (1)

year after the Closing.

As partial payment for fee and other

expense reimbursements, Plaintiff/Appel-

lant, PCI, at the Closing, assigned the

3% Notes to Strother Investments.

In addition, at the Closing, Plain-

tiff/Appellant, PCI disbursed, as sales

commissions, to First Hampshire and other

broker dealers the 7% down payment re-

ceived from Defendants/Appellees, Vaughn

Durham, et al.

In order to close the sale of the

hotel/condominium offering, each of the

four (4) participants in Plaintiff/Appel-

lant, PCI, namely, Plaintiff/Appellants,

Sax and Horwitz, Reger and SFB, advanced

$225,000, or $900,000 in the aggregate,

and Reger, on Plaintiff/Appellants, PCI,

Sax and Horwitz's behalf, arranged for a

$938,250 letter of credit (the "Letter of

Credit"), one of the requirements of the

PPM.

Plaintiff/Appellants, PCI, Sax and

Horwitz believe that the Trial Court's

findings are not sufficiently supported

by the evidence, in part, since it is not

logical to find fraud where the sponsors

go out of pocket nearly $2 million at

Closing.

Before Defendants/Appellees, Vaughn

Durham, et al. defaulted on either the

Notes or the 10% Notes,’ Plaintiff/Appel-

lant, PCI sold the 10% Notes to SFB to

defray unpaid costs to either complete

the renovation of the Hotel or satisfy

the terms of the PPM.

In early 1986, Plaintiff/Appellant,

PCI turned over control of the condomini-

um association to Defendants/Appellees,

Vaughn Durham, et al., subject to the

Rental Management Agreements with PV,

under which PV continued to operate the

Hotel for the benefit of Defendants/-

Appellees, Vaughn Durham, et al.

Almost immediately thereafter, De-

fendants/Appellees, Vaughn Durham, et al.

(a) ceased making payments under the

Notes and 10% Notes, (b) canceled the

insurance for the Hotel and (c) undertook

to close and abandon the Hotel.

After various meetings with both

Carteret (collateral assignee of the

Notes and Mortgages under the Collateral

Assignment) and SFB (purchaser of the 10%

Notes), Plaintiff/Appellant, PCI filed,

on April 24, 1986, an action (the "Ac-

tion") seeking foreclosure of the Mort-

gages, and collection upon the Notes.

The Action, which was filed by Botos

& Oliver, P.A. ("Botos"), provided that

Plaintiff/Appellant, PCI owned the Mort-

gages and Notes.

On April 25, 1986, at Plaintiff/-

Appellant, PCI's request, the Trial Court

appointed Michael Scheinvold, a Fort

Lauderdale attorney, as receiver of the

Hotel.

In April, 1986, the Defendants/Appel-

lees, Vaughn Durham, et al. attempted to

draw down the Letter of Credit, which had

niin

been provided to subsidize, in part,

Plaintiff/Appellant, PCI's Forecasts.

In April, 1986, with Plaintiff/Appel-

lant, PCI's cooperation and consent, the

Letter of Credit was drawn down by Mr.

Scheinvold in order for the Hotel to

continue its operations.

On June 26, 1986 the Action was

amended by the filing of an amended

complaint (the “Amended Complaint"). (R

2228-75)

On July 25, 1986, the Defendants/-

Appellees, Vaughn Durham, et al. filed a

Counterclaim (R 2276-2316) against Plain-

tiff/Appellant, PCI, and its officers,

directors and principal shareholders, Sax

and Horwitz, and Cohen, among others,

Claiming, inter alia, that Plaintiff/-

Appellants, PCI, Sax and Horwitz violated

(a) §12(1) and (2) of the Securities Act

of 1933, 15 U.S.C. §771(1) and (2), and

(b) Chapter 517, Fla.Sta. §301(1)(a)2 and

3, entitling Defendants/Appellees, Vaughn

Durham, et al. to rescission, damages and

attorney's fees.

Sparber was added as a party by the

November 15, 1986 Amended Counterclaim.

(R 2333-79); and, PKF and Carteret were

added as parties at a later date. fThe

claims against such parties are set forth

in the December 31, 1987 Revised Second

Amended Counterclaim. (R 2772-2825)

On September 12, 1986, Plaintiff/-

Appellant, PCI entered into a stipulation

with Defendants/Appe)]lees, Vaughn Durhan,

et al. in order to operate the Hotel

pending resolution of the Action.

On September 26, 1986, Carteret

brought separate actions to foreclose on

the Mortgages only, one of which was Case

No. 86-9123-C(L)F. (R 3621-45)

Carteret brought its separate ac-

tions, notwithstanding (a) the filing of

the Initial Actions by Botos, common

counsel to both Plaintiff/Appellant, PCI

and Carteret, (b) the preparation of a

redelivery agreement dated April, 1986

(the "Redelivery Agreement") by Botos,

Redelivery Agreement by Plaintiff/Appel-

lants, PCI, Sax and Horwitz and Reger,

(d) the authority under the Redelivery

Agreement for Plaintiff/Appellant PCI to

commence the Action, and (e) the unavail-

ability of the Statute of Frauds as a

defense to the binding nature of the

Redelivery Agreement.

On December 24, 1986, Carteret moved

to intervene in the Action (the "Motion

to Intervene"). (R 2380-82)

On February 12, 1987, the Trial Court

bifurcated the Action by its Order on

Case Management Conference (the "Bifurca-

tion Order") by limiting the initial wave

to issues raised between Plaintiff/Appel-

lant, PCI (as later defined, at the

Pretrial Conference, to include Sax and

Horwitz) and Defendants/Appellees, Vaughn

Durham, et al., thereby severing Plain-

tiff/Appellants, PCI, Sax and Horwitz's

and Defendants/Appellees, Vaughn Durhan,

et al.'s claims, cross-claims and coun-

terclaims against SFB, Sparber, Cohen,

and PKF among others, from the first wave

trial.

In early 1987, Carteret exercised its

right, under the Tri-Party Agreement, to

cause SFB to purchase the Notes and Mort

gages, which were then in default. SFB,

however, refused to comply with the Tri-

Party Agreement, which later became the

subject of ancillary litigation which was

disposed of as part of the Mid-Trial

Settlement (as hereinafter defined).

Thereafter, Plaintiff/Appellant, PCI

filed a Chapter 11 petition before the

United States Bankruptcy Court for the

District of South Carolina. However, the

bankruptcy court refused to take juris-

diction, after Defendants/Appellees,

Vaughn Durham, et al. succeeded in vili-

fying Plaintiff/Appellants, Sax and

Horwitz.

On June 16, 1987, the Trial Court

granted Plaintiff/Appellants, PCI, Sax

and Horwitz's Emergency Motion to Rein-

state Receiver, after which Plaintiff/-

Appellant, PCI delivered the Hotel to Mr.

Scheinvold, who, in turn, redelivered

the Hotel to Defendants/Appellees, Vaughn

Durham, et al., who closed the Hotel

immediately thereafter.

On July 28, 1987, Plaintiff/Appel-

lants, PCI, Sax and Horwitz and Carteret

entered into a stipulation (the "Stipula-

tion") (R 2544-45) to dispose of a motion

regarding redelivery of the Notes, which,

inter alia, substituted Carteret for

Plaintiff/Appellant, PCI in the foreclo-

sure counts of the Action, and provided

that:

"Carteret and my

clients, PCI, Sax and

Horwitz, have agreed

to dispose of ... the

motion regarding

redelivery of the

notes by withdrawing

same without preju-

dice to our right to

refile in the event

the settlement agree-

ment to be announced

hereafter becomes

untenable and agree-

ing that Carteret

shall be permitted to

pursue and enforce the

foreclosure case

against the unit

owners, and Holland «

Knight at Carteret's

expense, shall act as

lead counsel for both

Carteret and PCI, Sax

and Horwitz in the

prosecution of the

foreclosure

SGEION «cc: (R 2544-

45)

Neither Carteret nor

Holland & Knight

shall have a right to

compromise or preju-

dice the foreclosure

action against the

unit owners and/or

the balance of the

recovery otherwise

due PCI without the

consent of PCI, Sax

and Horwitz" (R 2545-

46).

In August, 1987, Carteret sought to

declare the Stipulation untenable.

On August 28, 1987, Carteret amended

and consolidated its foreclosure cases by

filing an amended complaint. (R 2646-

3704) (R 2763-64)

Carteret's amended complaint request-

ed a foreclosure sale in its claim for

relief, and was not an action on the

Notes. (R 3703-04)

On October 5, 1987, the Trial Court

consolidated Carteret's foreclosure

action into the Action (the "Substitution

Order"). (R 2763-64)

Although the Substitution Order

resulted from the Stipulation, the Trial

Court, after Carteret sought to declare

the Stipulation untenable, did not (a)

unwind the Substitution Order and permit

Plaintiff/Appellant, PCI to pursue its

foreclosure case against the Defendants/-

Appellees, Vaughn Durham, et al. under

the terms of the Redelivery Agreement or

(b) permit Plaintiff/Appellant, PCI to

try the Note Counts (as hereinafter

defined) as requested under the Plain-

tiff/Appellant, PCI's Motion to Try

Certain Counts of Palm Court's Complaint

(R 3013-15), which was never ruled upon

by the Trial Court.

On December 31, 1987, Defendants/-

Appellees, Vaughn Durham, et al. filed

the Revised Second Amended Counterclaim

(R 2772-2825), upon which the Trial Court

based its Memorandum Opinion and Final

Judgment.

On January 20, 1988, the Trial Court,

by its Order on Palm Court, Inc.'s Motion

and Renewed Motion to Compel Redelivery,

denied Plaintiff/Appellant, PCI's demand

that Carteret redeliver the Notes in

accordance with the terms of the Redeliv-

ery Agreement.

On February 3, 1988, at the Pretrial

Conference and on the first day of the

first wave trial, the jury/non-jury issue

——

was discussed among counsel to

Plaintiff/Appellants, PCI, Sax and Hor-

witz, Defendants/Appellees, Vaughn Dur-

ham, et al. and Carteret (R 6, 7, 72-76,

78, 84, 102, 104-06, 110-13, 115-25, 172,

222, 225-26, 231, 257-58, 260-61).

Carteret supported Plaintiff/Appel-

lants, PCI, Sax and Horwitz's request for

a jury trial, albeit for different rea-

sons.

Initially, Carteret was a conterde-

fendant under Count VII of Defendants/-

Appellees, Vaughn Durham, et al.'s Re-

vised Second Amended Counterclaim, which

alleged that Carteret aided and abetted

Plaintiff/Appellants, PCI, Sax and Hor-

witz's securities violations. (R 3729-

30)

In addition, at the Pretrial Confer-

ence, Defendants/Appellees, Vaughn Dur-

ham, et al. dismissed, by Motion to Amend

Revised Second Amended Counterclaim, all

Counts of the Revised Second Amended

Counterclaim, except for Counts I, II,

III, XIII, XIV and XxII.

On February 16, 1988, the first day

of the first wave trial, after Carteret

stated:

"in order to resolve

all the matters at

this time pending

against my client,

we'll waive the trial

by jury on that

count" (R 258),

and Defendants/Appellees, Vaughn Durham,

et al. stated:

"We are willing to

waive (trial by

jury)" (R 259),

the Trial Court found, over Plain-

tiff/Appellants, PCI, Sax and Horwitz's

renewed request for a jury trial, and

objection to a bench trial, that:

"IT am relying on

Judge Wiggington's

Opinion, the 1972

opinion by the First

District Court of

Appeals where the

Court indicated that

rescission is an

equitable remedy and

that when equity

takes a proceeding

that the Court has

the ability then to

resolve all other

issues that are

involved. There is,

too, the Federal

Circuit Court of

Appeals' opinion from

the Eleventh Circuit,

I believe, that

reviewed Judge Arono-

vitz's decision where

he tried a rescission

Claim in a securities

fraud case and the

Court again indicated

that that was an

equitable action and

that under federal

law rescission is to

be tried by the Court

and not a jury, so

for all of the cases

that were submitted

and which support

that proposition and

which I will dictate

into the record at a

later time, I will

deny Palm Court,

Inc.'s objection to

having the case tried

without a jury and I

will try those Counts

before the Court." (R

261).

In addition, on the first day of the

first wave trial, the Trial Court denied

Plaintiff/Appellants, Sax and Horwitz's

request that they be excluded from the

first wave trial. (R 265)

On the first day of the first wave

trial, the following counts were pending

in Plaintiff/Appellants, PCI, Sax and

Horwitz's Amended Complaint, and De-

fendants/Appellees, Vaughn Durham, et

al.'s Revised Second Amended Counter-

claim:

Amended Complaint

Counts 67-103 Judgment on Adjustable Rate

Notes (the "Note Counts (R 2240-44)

Count 141 Cancellation of Reinstatement

Rights (R 2243)

Count 142 Cancellation of Puts (R 2243)

Count 145 Improper Interference with

Hotel Management (R 2246)

Count 146 Tortious Interference with

Contractural Rights (R 2247)

Count 149 Improper Drawings on Escrow

Fund (R 2249-50) (collectively "Counts

141-149")

Revised Second Amended Counterclaim

Count I Rescission Based Upon Non-

Registration (R 3711-13)

Count II Violation of §12(1) of the

Securities Act of 1933, 15 U.S.C. §771(1)

(R 3713-14)

Count III Violation of §12(2) of the

Securities Act of 1933, 15 U.S.C. §771(2)

(R 3714-22)

Count XIII First Violation of Florida

Statutes §517, et seq. (R 3737-38)

Count XIV Second Violation of Florida

Statutes §517.301 (R 3739-40)

Count XXII Declaratory Relief (R 3750-51)

The Trial Court, (a) in the Bifurca-

tion Order, severed from the first wave

trial, Plaintiff/Appellants, PCI, Sax and

Horwitz's claims against Sparber, Cohen,

PKF, among others, (b) in the Substitu-

tion Order, consolidated Carteret's

amended complaint with the Action, there-

by substituting Carteret's foreclosure

counts for Plaintiff/Appellant, PCI's

Counts 104-140 - Foreclosure of Mortgages

for Non-Payment (R 2241-43, 2763-64), and

granted Defendants/Appellees, Vaughn

Durham, et al.'s motion to dismiss all

Counts of the Revised Second Amended

Counterclaim which unequivocally required

a trial by jury (the "Dismissal Motion").

(R 3000-05)

The Trial Court did not, however,

strike Plaintiff/Appellants, PCI, Sax and

Horwitz's Note Counts or Counts 141-149.

Just prior to the Mid-Trial Settle-

ment (as hereinafter defined), the Trial

Court, at its suggestion, over Carteret's

objectién, permitted Defendants/Appel-

lees, Vaughn Durham, et al. to amend, ore

tenus, their Revised Second Amended

Counterclaim (the “Order Amending Com-

plaint"), to (a) include Carteret as a

co-defendant in the other Counts of the

Revised Second Amended Counterclaim, and

(b) subject Carteret, in the event of an

unfavorable verdict, to a multi-million

dollar judgment clain.

As a‘direct result of the Order

Amending Complaint, Carteret, SFB and the

Defendants/Appellees, Vaughn Durham, et

al., on March 8, 1988, entered into a

mid-trial settlement (the "Mid-Trial

Settlement"), under which Defendants/-

Appellees, Vaughn Durham, et al. exer-

Cised dominion and control over the Hotel

by deeding their Units to a wholly owned

subsidiary of Carteret in exchange for

(a) satisfaction of the Mortgages, and

(b) cancellation of a portion of the

Notes equal to the outstanding balance

due under Plaintiff/Appellant, PCI's

construction loan note to Carteret.

Plaintiff/Appellants, PCI, Sax and

Horwitz strenuously objected to the Mid-

Trial Settlement, and caused the follow-

ing motion to be read into the record, at

that time:

"We move to dismiss

the remaining Unit

Owner claims against

Palm Court, Inc., Sax

and Horwitz being

Goumte i, 2, 3, 13,

14 and 22.

All those counts

except count 22 seek

rescission and dam-

ages related to

rescission if grant-

ed. .

It is clear that the

Unit Owners and

Carteret have made a

binding agreement on

record enforceable by

this Court under

which the Unit Owners

are conveying title

to the Hotel property

to Carteret and that

Carteret has agreed

to pay certain con-

sideration for the

deeds acceptable to

the Unit Owners. It

is also clear that

Palm Court, Inc., Sax

and Horwitz have not

consented to the

transaction.

Under these circum-

stances it is clear

the rescission de-

manded by the Unit

Owners is no longer a

legal possibility.

There is no way they

can tender title to

the Hotel back to

Palm Court, Inc. and

restore the parties

to their status

before 12/31/85. The

Unit Owners’ have

knowingly made an

election to transfer

their title to the

Hotel property to

Carteret in return

for the elimination

of all their risk on

the Notes and Mort-

gages to the extent

Carteret held then,

plus an additional

$50,000.

This being so and

since the Unit Owners

can no longer tender

title to the Hotel

property to Palm

Court, Inc., in the

event they succeeded

in the Action here,

their counts’ for

rescission and dam-

ages related to

rescission must fail

and require dismiss-

al.

The remaining count

against Palm Court,

Inc, Sax and Horwitz,

Count > seeks

declaratory relief

contending that

certain conditions

precedent to the

closing of the deal

in December, 1985

were not met. The

count further argues

that by reason there-

of no deal was con-

summated and that the

Unit Owners have no

obligation to pay the

Notes. Count 22

further claims there

is a justiciable

controversy because

of the doubt as to

whether the transac-

tion was consummated

and the counter

Claimants are enti-

tled to have their

rights declared.

By electing to sell

or transfer the

property to Carteret

without our consent

in return for the

consideration they

have accepted, the

Unit Owners’ most

certainly have recog-

nized and asserted

ownership of the

property. They are

therefore hardly in a

position to claim

that no deal was

consummated in Decem-

ber, 1985. They have

exercised dominion

and control over the

title they acquired

in a transaction in

which they themselves

have now affirmed and

there is nothing left

fer tais court to

determine under Count

sas”

The Trial Court summarily denied all

of Plaintiff/Appellants, PCI, Sax and

Horwitz's requests (the "Mid-trial Set-

tlement Order").

The Hotel remained closed and under

possession of Defendants/Appellees,

Vaughn Durham, et al. until the Mid-Trial

Settlement thie it was transferred by the

Defendants/Appellees, Vaughn Durham, et

al. to Carteret Palm Court, Inc., a

wholly owned subsidiary of Carteret.

On March 28, 1988, the Trial Court

handed down the Memorandum Opinion and

Final Judgment, finding, as a matter of

fact and law, that Plaintiff/Appellants,

PCI, Sax and Horwitz violated (a) §12(2)

of the Securities Act of 1933, 15 U.S.C.

§771(2), -(B) Chapter 5817, Fia.Sta.

§301(1)(a)3, and (c) Chapter 517 Fla.

Sta. §301(1)(a)2, relating to Counts

III, IV and V, respectively, of the Re-

vised Second Amended Counterclain.

On April 8, 1988, Plaintiff/Appel-

lants, PCI, Sax and Horwitz filed (a) a

Motion for Stay of Execution of Final

Judgment (R 3584-85), (b) a Motion for

Stay of Second Wave Trial Pending Appeal

(R 3586-87), (c) a Motion to Set Aside

Final Judgment (R 3588-89), and (d) a

Motion for New Trial or for Rehearing (R

3590-98), and oon April 18, 1988 Plain-

tiff/Appellants, PCI, Sax and Horwitz

filed a Motion for Stay of Settlement,

Motion for Reduction of Final Judgment

and Motion to Off Set Against Final

Judgment, all of which were summarily

denied by the Trial Court on April 25,

1988. (R 3602-07)

This Appeal was timely filed on May

3, 1988, to review Counts I, II, III,

VIII, XIV and XXII of the Revised Second

Amended Counterclaim filed by

Defendants/Appellees, Vaughn Durham, et

al., as limited, by the Stipulation of

Settlement, to Counts III, IV and V of

the Revised Second Amended Counterclaim.

SUMMARY OF THE ARGUMENT

The Appeal involves two (2) questions

of constitutional dimension, namely, (a)

whether the Trial Court denied

Plaintiff/Appellants, PCI, and/or Sax and

Horwitz the right to trial by jury, and

(b) whether the Trial Court denied Plain-

tiff/Appellants, PCI, Sax and Horwitz's

right to judicial enforcement of a con-

tract.

Point One

The Trial Court Erred in Denying Plain-

tiff/Appellants, PCI, and/or Sax and

Horwitz a Jury Trial as Guaranteed by the

Florida Constitution.

Plaintiff/Appellants, PCI, and/or Sax

and Horwitz were denied a jury trial

since:

(1) The Trial Court failed to proper-

ly consider the claims of Plaintiff/-

Appellants, PCI, Sax and Horwicz under

the Note Counts and Counts 141-149 of the

Amended Complaint, since (a) Plaintiff/-

Appellant, PCI, (i) brought the Action

under the authority of the Redelivery

Agreement, (ii) entered into the Stipula-

tion and did not prosecute the foreclo-

Sure case against the Defendants/Appel-

lees, Vaughn Durham, et al. as a result

of the Substitution Order, and (iii) did

not waive its claims under the Note

Counts and/or Counts 141-149 of the

Amended Complaint, which were pending

throughout the first wave trial, and (b)

the Trial Court did not strike the Note

Counts under either the Substitution

Order or the Motion to Try Certain Counts

of Palm Court's Complaint. Accordingly,

Plaintiff/Appellants, PCI, and/or Sax and

Horwitz were denied a jury trial ina

note, damage and fraud action.

(2) The Trial Court failed to proper-

ly determine whether rescission was

available to Defendants/Appellees, Vaughn

Durham, et al. under the Revised Second

Amended Counterclaim either (a) at the

beginning of the first wave trial or (b)

after the Mid-Trial Settlement, since

Plaintiff/Appellant, PCI could not be

returned to the status quo ante if re-

scission was granted by the Trial Court,

in which event, the claims of the Defend-

ants/Appellees, Vaughn Durham, et al.

were, in fact, for monetary damages.

Accordingly, Plaintiff/Appellants, PCI,

and/or Sax and Horwitz were denied a jury

trial in a damage action.

(3) The Trial Court failed to proper-

ly consider the effect of its Bifurcation

Order Since Plaintiff/Appellants, PCI,

Sax and Horwitz have been denied a jury

trial on their claims against Sparber,

Cohen, PKF, and others.

Point Two

The Trial Court Erred in Denying to

Plaintiff/Appellants, PCI, Sax and Hor-

witz Judicial Enforcement of a Contract.

Plaintiff/Appellants, PCI, Sax and

Horwitz were denied judicial enforcement

of their contract with Defendants/Appel-

lees, Vaughn Durham, et al., since the

Trial Court ignored the legal effect of

the Transfer Letters.

ARGUMENT

Point One

The Trial Court Erred in Denying Plain-

tiff/Appellants, PCI, and/or Sax and

Horwitz a Jury Trial as Guaranteed by the

Florida Constitution.

Plaintiff/Appellants, PCI, and/or Sax

and Horwitz's right to trial by jury, as

guaranteed by the Florida Constitution,

was denied.

The Florida Constitution provides

that: "The right of trial by jury shall

be secure to all and remain inviolate."

Art. I § 22, Fla. Const. (1968). See

also, the Florida Rules of Civil Proce-

dure which provide that: "The right of

trial by jury as declared by the Consti-

tution or by statute shall be preserved

to the parties inviolate." Fla.R.Civ.P.

1.430(a).

Although a trial by jury is constitu-

tionally guaranteed, however, "the right

to a jury trial, in the absence of a

specific statutory authorization, depends

upon whether the nature of the cause of

action is legal or equitable." Cerrito v.

Kovitch, 457 So.2d 1021, 1022 (Fla.1984).

Therefore, the threshold question is

whether or not the Action was legal or

equitable.

In order to answer the foregoing

question, it is necessary to review the

Counts of both the Amended Complaint and

the Revised Second Amended Counterclaim,

pending throughout the first wave trial.

Plaintiff/Appellants, PCI, Sax and

Horwitz's Amended Complaint contained the

Note Counts and Counts 141-149, since the

Substitution Order substituted Carteret's

foreclosure counts and did not strike the

Note Counts brought under the Redelivery

Agreement, and Plaintiff/Appellant, PCI

did not waive the right to bring claims

under the Note Counts by virtue of the

Stipulation, which only enakled Carteret

to pursue and enforce the foreclosure

case against the Defendants/Appellees,

Vaughn Durham, et al., without prejudice

to Plaintiff/Appellants, PCI, Sax and

Horwitz's recovery against the Defend-

ants/Appellees, Vaughn Durham, et al.

In addition, the Trial Court, during

the Pretrial Conference, said: "My intent

was to try everything that involves the

first wave parties" (R 7) and "I think we

agreed that all of the claims among the

parties would be resolved." (R 137)

In Spring v. Ronel Refining, Inc.,

421 So.2d 46 (3rd DCA 1982), a case

clearly analogous to the instant case,

where responderit brought an action seek-

ing to foreclose a mortgage, petitioners

filed an answer, affirmative defenses,

and a counterclaim seeking damages for

fraud, misrepresentation and cancellation

of the note and mortgage, a writ of

certiorari was granted because the trial

court denied the petitioner a jury trial:

"In setting the cause

for non jury trial,

the trial court

departed from the

essential requirement

ef law. Foreclosure

is a traditicnal

equitable remedy as

is the counterclaim

for cancellation. It

is equally unassail-

able that the coun-

terclaim for fraud

and misrepresentation

presents a legal

claim for which the

petitioners were

entitled to a jury

trial. The mixture

of equitable and

legal claims in the

same case cannot

deprive a party of

its right to a jury

trial of issues

traditionally triable

to a jury. Padgett v.

First Federal Savings

& Loan Association of

Santa Seas County,

378 So.2d. 58 (Fla.

lst DCA 1979) and the

cases cited therein.

The more difficult

question, however, is

the order in which

these issues must be

tried. In Adams v.

Citizens Bank of

Brevard, 248 So.2d.

682 (Fla. 4th DCA

1971), the court

held:

"(I)f a compulsory

legal counterclaim

entitles the counter-

claimant to a jury

trial on issues which

are not common to any

issues which are not

common to any issue

made by the equitable

complaint, the trial

court should proceed

to try the equitable

issue nonjury with

appropriate provision

made for a jury trial

as to the law issues

if disposition of the

equitable issues does

ae ee

ites »

PEF Ao ia ania OC Secs ad, cal! wien tia Santee Se eS aoe dhe T lie

We ow Seivraey ise:

not conclude the

case. Southwestern

Life Insurance Co. v.

Gerson [187 So.2d.

(Fla.3d DCA 1966)]}.

But where the compul-

sory counterclaim

entitles the counter-

claimant (upon timely

demand) to a jury

trial on issues which

are sufficiently

Similar or related to

the issues made by

the equitable claim

that a determination

by the fact finder

would necessarily

bind the latter one,

such issues may not

be tried nonjury by

the court since to do

so would deprive the

counterclaimant of

his constitutional

right to trial by

jury. 248 So.2d at

684.'

Moreover,

"where both legal and

equitable issues are

presented in a single

case ‘only under the

most imperative

circumstances... can

the right to a jury

trial of legal issues

be lost through prior

determination of

equitable claims...

(and), (w)hat is

essentially an equi-

table cause of action

cannot be transformed

into a legal cause of

action simply by the

use of legal termi-

nology in the conm-

plaint." Cerrito,

supra, at 1022-23

In the present case,

we find that the

issues in the fraud

claim are sufficient-

ly similar to the

issues in the fore-

closure action so as

to first require a

jury trial of the

legal claim. rt,

after the jury ver-

dict, there are

unrelated equitable

issues remaining, the

trial court may then

consider those

claims. Padgett,

supra, at 64; Adams,

supra, at 685."

Under the foregoing authority,

Plaintiff/Appellants, PCI, and/or Sax and

Horwitz had an unequivocal right to

trial by jury since the legal and equita-

ble issues were intertwined"

McGowan Electric Supply Co.,

lst DCA 1981), and the Action

834 (Fla.

involved:

(a) “an action on a

note executed in

connection with a

mortgage (which is)

an action at law as

to which defending

parties are entitled

to a trial by jury as

a matter of right.

West F.S.A. Const.

Art. 1, § 22." Hobbs

v. Florida First Nat.

Bank, 480 So.2da 153

(Fla.App. 1 Dist.

1985): and,

(b) “an action for

the recovery of money

as damages was among

the class of cases in

which common law

afforded a right of

jury trial. Dairy

Queen, Inc. v. Wood,

369 U.S. 469, 82

S.Ct. 894, 8 L.Ed.2d

44 (1962); Waddell v.

State ex rel Meeks,

235 Ark. 293, 357

S.W.2d 651 (1962) "

Smith v. Barnett Bank

(Cheek v.

404 So,2d

of Murray Hill,

Fla.App. 350 Sc.2d

358,359 (1977); and,

a fraud has been

shown to exist in a

given case is, as a

general rule, a

question of fact for

the jury." Fl. East =

Coast Railroad v.

Thompson, 93 Fla. 30,

111 So. 525 (1927).

Since the equitable claims pending on

the first day of the first wave trial, if

any, determined the pending legal claims

both in the Amended Complaint and the

Revised Second Amended Counterclaim, the

Trial Court should have tried all counts

in the same action before a jury (see

General Investment Company of Connecti-

cut, Inc. v. Ackerman, 37 F.R.D. 38

(1964)), and this Court should find

that:

The Trial Court failed to properly con-

sider the claims of Plaintiff/Appellants,

Gace NASA needs elie ioral vasa binant tasteaitisiesnirrnsnies manne a ennnmmciaeslillll

PCI, Sax and Horwitz under the Note

Counts and Counts 141-149 of the Amended

Complaint, since (a) Plaintiff/Appellant,

PCI, (i) brought the Action under the

authority of the Redelivery Agreement,

(ii) entered into the Stipulation and did

not prosecute the foreclosure case

against the Defendants/Appellees, Vaughn

Durham, et al. as a result of the Substi-

tution Order, and (iii) did not waive its

claims under the Note Counts, and/or

Counts 141-149 of the Amended Complaint,

wnich were pending throughout the first

wave trial, and (b) the Trial Court did

not strike the Note Counts under either

the Substitution Order or the Motion to

Try Certain Counts of Palm Court's Conm-

plaint.

Additionaliy, although rescission is

an equitable remedy, and is to be tried,

together with all other issues, by the

court, rescission was not an available

remedy on the first day of the first wave

trial since (a) all parties required for

the Trial Court to grant rescission, were

not, in fact, before the Trial Court or,

for that matter, joined as counterdefend-

ants in the appropriate counts of the

Revised Second Amended Counterclaim, and

(b) the Defendants/Appellees, Vaughn

Durham, et al. were not capable of rede-

livering the Hotel in the condition it

was in on the day of Closing since the

Defendants/Appellees, Vaughn Durham, et

al., by and through their agent PV, had

exercised dominion and control over the

Hotel, on the day of Closing, by making

the Facade Easement Donation.

First, SFB, the holder of the 10%

Notes, and Strother Investments, the

holder of the 3% Notes, were not first

wave parties.

Additionally, Carteret was not joined

in the "rescission" Counts, aS a co-

counterdefendant, until the Order Amend-

ing Complaint.

As Carteret stated at the Pretrial

Conference:

"The thing that the

Court ~ Mr. Hanzman

(attorney for the

Defendants/Appellees,

Vaughn Durham, et

al.) is not telling

and the court doesn't

seem to get is that

they want rescission,

but Palm Court, Inc.

doesn't own those

notes anymore, Car-

teret does. Southern

Floridabanc owns the

other purchasers'

notes. They want to

come and tell you,

your Honor, hat we

want total rescis-

Sion. You can't get

it from Mr. Sax or

Mr. Horwitz or Palm

Court, ine. They

100

can't get it because

Southern Floridabanc

now has a separate

lawsuit and is hold-

ing ten percent notes

and Carteret is

holding the mortgage

notes. Their remedy,

Judge, and they don't

want to admit it to

you, is damages

because Palm Court,

Inc. can't put them

back to where they

were at the beginning

of the , trans-

action...(w)e're all

here under (a) mirage

and that mirage is

that they can rescind

this total transac-

tion through trial

with you. That is

not the case...you

have (to have) all

the parties before

you. All you (do is

to) give them money

damages to make them

whole...so you can't

give them rescission.

That can't get it,

Judge...their real

remedy is rescission-

ary damages. That's

the only thing left

to put them back

whole, and that seems

to be the thing

that's missed ...

101

rescission is putting

people back to where

they were before the

deal uncorked...' (R

123-24) (See also R

321-33)

Second, the cases relied upon by the

Trial Court (R251-52) in justifying a

non-jury trial ina "rescission" setting

are inapplicable and distinguishable.

The first case relied upon by the

Trial Court, Davis v. McGahee, Fla. 257

So.2d. 62, 63, involves a claim where

issues raised by an original and first

amended complaint for rescission were

amended after the case had been set for

non-jury trial by the filing of a second

amended complaint claiming compensatory

and punitive damages.

In that case the court found that:

"It is undisputed

that the issues

raised by the origi-

nal and first amended

complaint filed by

102

petitioners, as

joined by the answers

and counterclaims

thereto filed by

respondents, were

equitable in nature

and required the

application of equi-

table principals in

order to grant the

basic relief prayed

for by the respective

parties." Id. 63

In making its determination that once

having taken jurisdiction of a case for

one purpose, equity will retain jurisdic-

tion and finally dispose of litigation

even though purely legal remedies are

involved, the Court held that:

"If it was the pur-

pose and intent of

petitioners to con-

vert their cause of

action from one in

equity to one at law

by the filing of

their second amended

complaint, their

effort to do so was

not made until after

the case had been set

for non-jury trial on

the equitable issues

103

raised by the first

amended complaint and

respondents' answer

and counterclaim

thereto. At that

point it would have

been improper for the

trial court to have

treated the case as

one at law instead of

one in equity." Id 64

The court's findings in Davis v.

McGahee were based on a last minute

amendment after the case had been set for

a non-jury trial, and, therefore, the

judicial findings therein have been

erroneously applied by (a) the Defend-

ants/Appellees, Vaughn Durham, et al.

(see R 225-26) and (b) the Trial Court,

Since the same circumstances do not exist

in the instant case.

Indeed, since the instant case had

been set for a jury trial, and, presuma-

bly, the Trial Court would not have been

able to even consider denying Plaintiff/-

104

Appellants, PCI, Sax and Horwitz's right

to a jury trial had the other Counts of

the Second Amended Counterclaim not been

dismissed by the Trial Court's granting

the Dismissal Motion, the circumstances

of the instant case mandate, using the

rationale of Davis v. McGahee, the impan-

eling of a jury by the Trial Court, since

a last minute dismissal, after the case

had been set for a jury trial, should not

enable the Trial Court to treat the case

as one at equity and not at law.

In addition, under Florida law, the

Trial Court should have, as a result of

its findings, awarded title to the Hotel

to Plaintiff/Appellant, PCI since valid

title could not have been vested in

Defendants/Appellees, Vaughn Durham, et

al. and, in turn, Carteret, if the deeds

were delivered from escrow in violation

105

of the terms of the Escrow Agreement.

"Tt is well settled

that a deed delivered

in violation of the

conditions under

which it is deposited

in escrow vests no

title in the grantee,

or in even an inno-

cent third person to

whom he subsequently

transfers." Bingham

et al v. Taylor, 12

F.2d 15,16 (1926).

"The law recognizes

the right of a person

to execute a deed and

place it in escrow,

to be delivered only

upon the happening of

certain contingencies

and where such deed

is obtained from the

escrow holder by

fraud or by theft,

the grantor is no

more liable to be

deprived of his

property by such

wrongful act than he

would if he had

deposited the deed in

an iron safe which

had been broken into

and the deed stolen."

Houston v. Adams, 95

So. 859-860 (1923).

106

"Even though a deed

fraudulently procured

from an escrow holder

has been placed on

record, and such

record shows an

apparent title in the

one having possession

of the land, in the

absence of an estop-

pel upon the owner

thereof, such record-

ing does not effect

the true title, and a

mortgage executed by

such person in pos-

session to another

who has no actual

notice of the defect

of title creates no

lien upon such land,

as against the holder

of the actual legal

title." Houston v.

Forman, 109 So. 297

(1926).

The second case relied upon by the

Trial Court, Phillips v. Kapus, 764 F.2d

€07 (11th Car. 1985) to deny

Plaintiff/Appellants, PCI, Sax and Hor-

witz a jury trial, is also inapplicable

and distinguishable.

In Phillips v. Kapus, plaintiff joint

107

Foi de 5 telbtatisntnntis 23 penal Laas

venture partners sued defendant fellow

venturers for traditional equitable

relief, namely, rescission of a sale of

their partnership interest, reformation

of that partnership and a subsequent

winding up and accounting of partnership

affairs.

In that case the court held that:

"(R)escissionary re-

lief was available

and was properly

tried without a jury,

notwithstanding that

a previous tenant had

exercised its option

‘to buy the subject

property; (and a)

request for account-

ing was not tanta-

mount to a legal

claim for damages and

was triable by the

court."

In the instant case, in order for

Defendants/Appellees, Vaughn Durham, et

al. to seek rescission, the Plaintiff/-

Appellants, PCI, Sax and Horwitz had to

108

be returned to the status quo ante,

namely, title to the Hotel; and, it was

not possible for Defendants/Appellees,

Vaughn Durham, et al., either at the

beginning of the first wave trial or

after the Mid-Trial Settlement, to re-

store Plaintiff/Appellants, PCI, Sax and

Horwitz to the status quo ante.

Indeed, since:

"(r)escission is an

‘equitable remedy that

restores the parties

to a transaction to

their status quo

ante...(t)his remedy

is available, howev-

er, only against

parties to a con-

tract--a court may

not order rescission

in a buyer's action

against a defrauding

party who is not a

party to the contract

of sale....thus, in

the context of Rule

10b-5, where buyers

often sue parties

that are not in

privity of contract

109

with the buyer,

rescission is una-

vailable...." Ross v.

Bank South, N.A., 885

F.2d 723 (11th

Cir.1989).

the equitable remedy of rescission was

never available, at the very least, as

against Plaintiff/Appellants, Sax and

Horwitz, who were, at all times during

the first wave trial entitled to their

constitutional right to trial by jury in

this action for damages.

Additionally, as the court itself

said in Phillips v. Kapus:

"The seminal case of

Beacon Theatres v.

Westover, 359 U.S.

500, 79 S.Ct. 948, 3

L.Ed.2d 988 (1959),

and its progeny

recognized that a

jury trial predicated

on a legal cause of

action is not to be

defeated or impaired

by a prior proceeding

without a jury on

other issues involved

in the same case.