5D10-764 Black Diamond v. Haines

SUPREME COURT CASES

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State: Florida

Court: Florida Fifth District Court

Docket No: 5D10-764

Case Date: 09/19/2011

Preview:IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FIFTH DISTRICT JULY TERM 2011

BLACK DIAMOND PROPERTIES, INC., ET AL., Appellants, v. CHARLES S. HAINES, KATHY HAINES, ET AL., Appellees. ________________________________/ Opinion filed September 23, 2011 Appeal from the Circuit Court for Citrus County, William T. Swigert, Judge. Edward A. Marod, of Gunster Yoakley & Stewart, P.A., West Palm Beach, and Anne S. Mason, of Mason Law, P.L., Clearwater, for Appellants. John C. Bell, Jr., of Bell & Brigham, Augusta, Georgia, and Steve A. Rothenburg, Ocala, for Appellees. Case No. 5D10-764

SAWAYA, J. Defendants, Black Diamond Properties, Inc. ("Properties, Inc."), Black Diamond Realty ("Realty, Inc."), and Stanley C. Olsen, appeal a final judgment based upon a jury verdict awarding damages for misleading advertising to Plaintiffs, Charles and Kathy Haines, Angelo and Brenda Masut, Tom Howell, and Richard Conboy. The issues we will address are whether the misleading advertising claims are barred by the statute of

limitations and whether the trial court erred in denying Defendants' motion for new trial based on erroneous jury instructions.1 This case involves a subdivision, Black Diamond Ranch ("Black Diamond"), and a private golf club, Black Diamond Club ("the Club"), which are located in Lecanto, Florida. The Club includes two golf courses, a clubhouse, and a driving range ("golf courses and facilities"). Olsen, who developed both Black Diamond and the Club, sold lots in Black Diamond through his wholly-owned company, Realty, Inc. Memberships in the Club were marketed as "equity memberships" to those who owned lots in Black Diamond. Despite this marketing ploy, those who purchased memberships actually received a 1/750th ownership in a not-for-profit corporation called Black Diamond Club, Inc. ("Club, Inc."). Club, Inc., in turn, has an option to purchase the golf courses and facilities from Properties, Inc., which is wholly-owned by Olsen. The option is part of the Club

Purchase Agreement ("the Agreement"). The nature of the Agreement was a matter of dispute in the lower court proceedings, with Plaintiffs arguing that the Agreement was merely an illusory option since Olsen could prevent the golf courses and facilities from ever being transferred to Club, Inc. The terms of the Agreement specify that revenues from the sale of memberships and dues paid by members flow through Club, Inc. into Properties, Inc. as nonrefundable option payments and are used to cover the cost of operating the Club. The Agreement further provides that the option is triggered by the sale of the 750th membership in Club, Inc. Club, Inc. can exercise its option at an earlier date only at the Defendants' other arguments on appeal are directed to issues involving plaintiffs Lawrence Laukka and Jackson Randolph, in addition to the already named plaintiffs. These arguments are without merit. Accordingly, we affirm all other aspects of the final judgment without further discussion. 2
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discretion of Properties, Inc. Properties, Inc. has complete authority to set the price of memberships, and Olsen has complete discretion to appoint members to the board of directors for Club, Inc. The premise of this suit is that Olsen and his employees led those who purchased memberships to believe that they were actually getting a fractional ownership interest in the golf courses and facilities, when, in fact, they only received fractional ownership in a not-for-profit corporation that did not own the golf courses or the facilities. This not-for-profit corporation only held an option to purchase the golf courses and facilities at some time in the future. That option could only be triggered by the sale of the 750th membership in Club Inc. Olsen held the sole discretion to set the price for those memberships and thereby controlled all future events that could lead to the exercise of that option. In essence, despite the fact that Plaintiffs were sold equity memberships, all they purchased was an interest in a corporation that owned nothing more than an option contract that could only be exercised at the discretion of Olsen, who was the owner of the legal entity that owned the golf courses and facilities. Plaintiffs alleged that the actions of Defendants constituted false and misleading advertising under section 817.41, Florida Statutes (1997). Defendants argue that Plaintiffs, with the exception of the Haineses, were barred by the applicable statute of limitations found in section 95.11(3)(f), Florida Statutes, which provides for a limitation period of four years for "an action founded on a statutory liability."

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