Developers: Pay Attention to These Legal Issues

MIAMI—Mitch Widom, a partner and Litigation Practice Group Leader of Bilzin Sumberg Baena Price & Axelrod LLP, turned a suit against the Lennar into a home $14 million victory in Lennar's favor. (You can read more about that in part one of this exclusive interview.)

Now that the dust has settled on this suit he's discussing the implications this decision hold for developers looking to purchase land moving forward. He also told us about some other recently-decided cases that could impact developers.

GlobeSt.com: What implications does this decision hold for developers looking to purchase land moving forward?

Widom: This decision emphasizes the critical importance of performing appropriate due diligence by sophisticated developers in land transactions and such a buyer cannot blindly rely on what a seller says about entitlements for a parcel of property being sold.

GlobeSt.com: Are there any other cases that have been decided recently that the real estate community should know about?

Widom: Two very recent Florida Supreme Court cases are significant to the real estate community.  

First, in Tiara Condominium Association Inc. v. Marsh & McLennan Companies, No.

MIAMI—Mitch Widom, a partner and Litigation Practice Group Leader of Bilzin Sumberg Baena Price & Axelrod LLP, turned a suit against the Lennar into a home $14 million victory in Lennar's favor. (You can read more about that in part one of this exclusive interview.)

Now that the dust has settled on this suit he's discussing the implications this decision hold for developers looking to purchase land moving forward. He also told us about some other recently-decided cases that could impact developers. Read on to make sure you are protected.

GlobeSt.com: What implications does this decision hold for developers looking to purchase land moving forward?

Widom: This decision emphasizes the critical importance of performing appropriate due diligence by sophisticated developers in land transactions and such a buyer cannot blindly rely on what a seller says about entitlements for a parcel of property being sold.

GlobeSt.com: Are there any other cases that have been decided recently that the real estate community should know about?

Widom: Two very recent Florida Supreme Court cases are significant to the real estate community. 

SC10-1022 ( Fla. Sup. Ct. March 7, 2013 ), the Florida Supreme Court held that the economic loss rule is limited to product liability cases. The economic loss rule states that an injured party cannot sue in tort for a breach of contract claim.

Although this rule arose from products liability cases, it had been applied by many courts to eliminate tort claims when the parties had entered into a written contract regarding the subject matter of the litigation. This ruling is significant because it arguably reopens the door for tort claims in real estate disputes despite the existence of a written agreement between the parties , a circumstance almost always present in real estate litigation.

The Florida Supreme Court decided another case in the last few months entitled--Diamond Aircraft Industries Inc. v. Horwitch, No. SC11-1371 ( Fla. Sup. Ct. Jan. 10, 2013). In Diamond Aircraft, the Florida Supreme Court held that Florida's Offer of Judgment statute does not apply to an action where a plaintiff seeks both damages and equitable relief and in which the defendant has served a general offer of judgment that seeks relief of all claims.  

This ruling is significant in real estate litigation because such cases often involve both equitable and legal claims. The Court did not overrule several District court decisions in which equitable claims were characterized by the courts as  “in actuality” seeking money damages. The Court also stated that it was not deciding whether the statute is applicable when a pleading has asserted separate claims for monetary and nonmonetary relief and the defendant serves an offer directed specifically to the monetary claim.

GlobeSt.com: As recovery continues and the cases stemming from the recession get resolved, what issues do you see as coming down the pike for real estate litigation?

Widom: As the recovery continues and more construction occurs, we believe we will see more traditional construction defect litigation and delay damage cases which were prevalent during the height of the last real estate boom market. These cases were not litigated as often in recent years because of their expense (being expert intensive) and less construction was occurring in the down market. As new construction intensifies and the access to qualified labor and materials becomes strained, we believe we will see more circumstances of delay with the attendant claims.

Did you miss part one of this interview? Click here to get the whole story.