Jeffrey Skatoff Prevails in Real Estate Litigation Battle

Spruce River Ventures v. Sandra Cotton et al., (Charlotte County, Florida, 04-1715 CA)

Jeffrey Skatoff prevailed in a real estate and probate litigation, involving one of the largest tracts of undeveloped waterfront land between Naples and Sarasota, in Southwest Florida.  After prevailing on the underlying merits of the case, the law firm was able to collect on a $2 million lis pendens bond, which was used to pay damages to the landowners and to pay attorney fees and costs. 

A woman named Sandra Cotton executed a purported contract to sell the 30 acre waterfront tract, purportedly on behalf of the 12 owners of the property.  The tract was divided into seven different pieces, each with a different set of owners.  Each of the owners had inherited the property from their common grandparents, so the owners were essentially a combination of siblings, cousins, nieces and nephews.  

Of the seven parcels, two were owned by a trust, the beneficiaries of which were one branch of the family.  Two more were owned by another branch of the family, and the final three were owned by a third branch of the family.  

With respect to the trust, Ms. Cotton was one of two co-trustees.  She purportedly signed the contract on behalf of the trust, and the other co-trustee did not sign.  Indeed, he never even saw the contract until some months later.  Ms. Cotton signed on behalf of the remainder of the owners, using powers of attorney, each one of which was defective in some manner.  

Once the second co-trustee was made aware of the contract, he refused to honor the contract, as Florida trust law is clear that both co-trustees must join in any acts on behalf of the trust.   

The buyer under the purported contract then sued, asking for specific performance, contract damages, and similar relief.  The buyer placed a lis pendens on the property, which prevents the sale of the property to another buyer.  As a condition of leaving the lis pendens in place, the trial court required the posting of a $2 million lis pendens bond, also known as a specific performance bond,which would be available to pay attorney fees and damages should the buyer not prevail in the lawsuit.  

In defending the case, the landowners made many arguments, including that each of the landowners was not properly a party to the contract because the powers of attorney were not valid.  They also argued that because the second co-trustee had not executed the contact, the trust was not bound by the contract.   

The trial court held that there was no binding contract, because the owners of the land were not proper parties to the contract.  One of the landowners died during the litigation.  Under Florida law, a motion must be made to substitute in the deceased’s person’s estate, no later than 90 days after a suggestion of death is served on the opponent.  The motion to substitute, made under Rule 1.260(a)(1), was not made the plaintiff within the required time frame, so the trial court dismissed the case against the one deceased landowner.  Although the trial court never reached the issue, it would have been impossible for the plaintiff to have prevailed on the specific performance claim while missing one of the owners of the tract.  

After prevailing on the majority of the underlying merits of the case, the Plaintiff agreed to drop its lawsuit.  The landowners then sought to collect on the $2 million lis pendens bond.  The insurance company that posted the bond did not attempt to stop payment on the bond or otherwise resist paying.  Apparently, through a letter of credit, a bank had made a guarantee to the insurance company, that in the event that the insurance company had to pay out on the lis pendens bond, the bank would reimburse the insurance company.  The bank attempted to intervene in the lawsuit, to stop the payment of the bond.  Eventually, the trial court refused to allow the bank to intervene in the matter and ordered the payout of the full $2 million bond.

Contact attorney Jeffrey Skatoff, at (561) 842-4868, for a free consultation for probate or real estate litigation.