de novo review

What Constitutes an Enforceable Contract?

Posted by David Adelstein on November 17, 2016
Appeal / Comments Off on What Constitutes an Enforceable Contract?

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An enforceable or valid contract requires an offer, acceptance of that offer, consideration, and sufficient specification of material terms. Jericho All-Weather Opportunity Fund, LP v. Pier Seventeen Marina, 41 Fla. L. Weekly D2565a (Fla. 4th DCA 2016). Whether a contract actually constitutes an enforceable contract is subject to a de novo standard of appellate review; this is the same appellate standard of review pertaining to an appeal of a trial court’s interpretation of a contract. See id.

The case in Jericho All-Weather Opportunity Fund exemplifies a party suing on the wrong contract and, thus, an appellate court reversing a judgment in favor of a plaintiff and remanding for the trial court to enter judgment in favor of the defendants. As you can imagine, this is a harsh outcome in an appeal – winning a trial only for the appellate court to reverse and mandate judgment for the party that lost during the trial.

In this case, the plaintiff (borrower) was seeking a construction loan. It entered into a second loan commitment with the defendant (lender) whereby the defendant agreed to loan the plaintiff money for the refinancing of property and constructing the project. The court explained that a loan commitment is “a lender’s binding promise to a borrower to lend a specified amount of money at a certain interest rate, usually within a specified period and for a specific purpose (such as buying real estate).” Jericho All-Weather Opportunity Fund, supra, quoting Armstrong Bus. Servs., Inc. v. AmSouth Bank, 817 So.2d 665, 673-74 (Ala. 2001).

The plaintiff and defendant then entered into a construction loan. The loan agreement was contingent on the actual closing of the loan—the closing of the loan was the consideration for the loan agreement. The loan agreement did not require the defendant to fund the loan as the agreement was predicated on the funding having occurred. However, the loan never closed and the plaintiff sued the defendant for breach of the loan agreement. The plaintiff prevailed at trial. The defendant appealed arguing that the loan agreement was not an enforceable contract as it never became a valid contract because the funding never occurred. The appellate court agreed stating that the plaintiff should have sued for breach of the second loan commitment and not the loan agreement. (Notably, the plaintiff had strategic reasons for not suing on the second loan commitment since it precluded the plaintiff from pursuing certain damages based on a waiver of consequential damages provision.  Unfortunately, by not suing under the second loan commitment, the plaintiff did not sue on an enforceable contract.)

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Statutory Construction Subject to De Novo Standard of Appellate Review

Posted by David Adelstein on February 07, 2016
Appeal, Standard of Review / Comments Off on Statutory Construction Subject to De Novo Standard of Appellate Review

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Oftentimes, courts are required to engage in statutory construction and this statutory construction becomes a driving issue in the dispute. Statutory construction is the process of a court interpreting law and then applying that law to a set of facts. For example, if your case turns on the interpretation of a particular Florida statute applied to your facts, this would be statutory construction. 

On appeal, the issue of statutory construction is subject to a de novo standard of appellate review. Taylor Morrison Services, Inc. v. Ecos, 163 So.3d 1286, 1289 (Fla. 1st DCA 2015). A de novo standard of review means the appellate court is going to review the trial court’s record anew without giving deference to the trial court.

I discussed the facts in Taylor Morrison Services here. The issue on appeal was whether a homebuilder (contractor) was unlicensed at the time of contract with the homeowners (per Florida Statutes Chapter 489). The trial court declared that the homebuilder was unlicensed by interpreting Florida’s licensing law and applying that law to the facts before it. In reviewing this issue on appeal (and ultimately reversing the trial court’s statutory construction), the First District stated:

The correctness of the trial court’s order turns on an issue of statutory construction, which is subject to de novo review. Proper statutory analysis begins with the plain language of the statute, which is to be considered in context, and not construed in a way that renders any portion of the statute meaningless. When the [statutory] language is unclear or ambiguous, it is appropriate to apply established principles of interpretation to discern the meaning of the governing text.

Taylor Morrison Services, 163 So.3d at 1289 (internal citations omitted).

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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