# Petition for Writ of Certiorari — Palm Court, Inc. v. District Court of Appeal of Florida > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_1699%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1991 - **Citation:** 499 U.S. 938 ## Text 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 (c) Lanny A. Horwitz 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. I, § 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." I, § 22, ey 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) ey 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. 10 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 11 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) 12 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). 13 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 15 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 16 APPENDIX, EXHIBIT 2 SEPTEMBER 5, 1990 FOURTH DISTRICT DENIAL OF MOTION FOR REHEARING AND MOTION FOR REHEARING EN BANC 17 ’ 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 18 APPENDIX, EXHIBIT 3 STATE SUPREME COURT DENIAL OF PETITION FOR WRIT OF MANDAMUS 19 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. 20 APPENDIX, EXHIBIT 4 PETITION FOR WRIT OF MANDAMUS AND APPENDIX 21 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 22 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. I BASIS FOR INVOKING JURISDICTION This Court has jurisdiction to issue 23 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 24 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. 25 II 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 (c) Chapter 517, § 301(1)(a)2 Fla.Stat. 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 26 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 27 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 28 this Petition is a Writ of Mandamus compelling the Fourth District to review, on its merits, Petitioner's Appeal. IV 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- 29 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 30 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 31 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 32 Floor, 175 N.W. First Avenue, Miami, FL 33128-1817 this 20th day of September, 1990. Lanny A. Horwitz, Esq. 33 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 34 Attorneys for Petitioners, Palm Court, Inc., Carl A. Sax and Lanny A. Horwitz EXHIBIT A 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 36 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. (c) The Trial Court erred since its 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 37 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 38 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) 39 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) 40 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 41 (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") 42 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 43 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, 44 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 45 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 46 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 47 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 48 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"). 49 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 50 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- 51 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- 52 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 53 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 54 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, 55 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 56 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 57 ; : : 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 58 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 59 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 60 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. 61 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 62 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 63 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 64 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, (c) the execution and delivery of the 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 65 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, 66 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 67 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 68 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) 69 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- 70 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 71 —— 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- 72 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: 73 "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 74 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) 75 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 76 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 (c) during the Pretrial Conference, 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- 77 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 78 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. . 79 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 80 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 81 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” 82 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 83 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, 84 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 85 : 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 86 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. 87 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 88 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. 89 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 90 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 91 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 92 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 93 3 4 : 3 a 3 3 ¢ j % 4 4 ae ee ites » PEF Ao ia ania OC Secs ad, cal! wien tia Santee Se eS aoe dhe T lie We ow Seivraey ise: : : x sf 7 x 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 94 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- 95 : 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 96 (Cheek v. 404 So,2d of Murray Hill, Fla.App. 350 Sc.2d 358,359 (1977); and, (c) “"(W)hether or not 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, 97 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, 98 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 99 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. See also Eli Lilly 110 Co. v. Generix Drug Sales, Inc., 460 F.2d 1096, 1107 (5th Cir. 1972); Swofford v. B & W, Inc., 336 F.2d 406 (5th Cir. 1964), cert. denied, 379 U.S. 962, 85 Thermo- Chemi-Cord Processing Corp., 294 F.2d 486 (5th Cir. 1961)." Therefore, the court's findings in Phillips v. Kapus' that: "plaintiff venturers did not seek return of ownership in the buildings on land which the partnership had purchased but merely sought resto- ration to their position as joint venturers and an accounting." Phil- lips, supra at 812-13 do not support the Trial Court's refusal to impanel a jury in the instant case and, in fact, mandate same, since the findings of the Trial Court have effec- tively defeated Plaintiff/Appellants, PCI, Sax and Horwitz's right to a jury 111 8 ke nal trial in subsequent waves of the Action. Third, the Trial Court's observation that incidental damages were all that were demanded by Defendants/Appellees, Vaughn Durham ina "rescission" setting, is not the case since Defendants/Appel- lees, Vaughn Durham, et al.'s claims were not for damages incidental to rescission, but were, rather, for damages because rescission was not available. Furthermore, even assuming, for the sake of argument, that rescission was possible on the first day of the first wave trial, as a result of the Mid-Trial Settlement, the Defendants/Appellees, Vaughn Durham, et al. were unable to return Plaintiff/Appellant, PCI to the status quo ante since the Hotel had been conveyed to Carteret and the Defendants/Appellees, Vaughn Durham, et 112 al. were only suing for "damages in lieu of rescission." See General Investment Company of Connecticut v. Ackerman, supra at page 40. Therefore, the subsequent event of the Mid-Trial Settlement indisputably removed the counterclaims of Defendants/- Appellees, Vaughn Durham, et al. from a "rescission" setting, afforded Defend- ants/Appellees, Vaughn Durham, et al. a claim for monetary damages only, and Clearly entitled Plaintiff/Appellants, PCI, Sax and Horwitz a trial by jury. "We cannot ignore the fact that these damages proceeded from events subse- quent to the pleading and trial of the initial claim and that, of course, these damages are substantial. Accord- ingly, we hold that appellants were en- 113 1987), at MFR 13-14, and Kaufman v. Baker, 392 So.2d 13, 14-15 (Fla. 4th DCA 1981), and Stark v. Lareau, 433 So.2d 66, 67 (Fla. 4th DCA 1983), MFR 1£&-16, we adopt these authorities as if set forth herein in support of this Court's order of June 4, 1990, and the dismissal of Appellants' Motions for Rehearing. WE HEREBY CERTIFY that a true and correct copy of the foregoing was deliv- ered by mail this 3rd day of July, 1990 to Carl A. Sax, 6015 South Ocean Boule- vard, Ocean Ridge, Florida 33435 and Lanny A. Horwitz, WatersEdge at Shelter Cove, Suite 201, P.O. Box 5684, Hilton Head Island, S.C. 29938. 278 SP neers ores 6 - = Respectfully submitted, FLOYD PEARSON RICHMAN GREER WEIL ZACK & BRUM- BAUGH, P.A. Attorneys for Appellees CourtHouse Center, 26th Floor 175 N.W. First Avenue Miami, Florida 33128-1817 Telephone: (305) 373-4000 By: MICHAEL A. HANZMAN By: BERTHA CLAIRE LEE Florida Bar No. 510637 Florida Bar No. 045953 279 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_1699%3A1. Public record. Not legal advice.