Opinion
2D22-120
07-12-2023
VBK SANTOSHI, LLC, Appellant, v. CHICAGO TITLE INSURANCE COMPANY; JAI HANUMAN, INC.; and JITENDRA MAKANJI, Appellees.
Sherman M. Brod of Law Office of Sherman Brod, Tampa, for Appellant. Michele A. Cavallaro of Fidelity National Law Group, Fort Lauderdale, for Appellee Chicago Title Insurance Company.
Appeal from the Circuit Court for Hillsborough County; James M. Barton, II, and Sandra Taylor, Judges.
Sherman M. Brod of Law Office of Sherman Brod, Tampa, for Appellant.
Michele A. Cavallaro of Fidelity National Law Group, Fort Lauderdale, for Appellee Chicago Title Insurance Company.
No appearance by remaining Appellees.
ATKINSON, Judge
VBK Santoshi, LLC, appeals the partial final judgment in favor of Chicago Title Insurance Company as to VBK Santoshi's breach of contract claim against Chicago Title. VBK Santoshi argues that the trial court erred by granting summary judgment in favor of Chicago Title. We affirm.
Jai Hanuman, Inc., owned a property in the City of Tampa (the city) on which Jai Hanuman operated a hotel (the hotel property). Two buildings exist on the hotel property-the hotel itself and another building which Jai Hanuman used for the hotel's office. Nick Refaie, a nonparty, owned the adjacent property on which he operated a gas station (the gas station property).
In 2007, Mr. Refaie applied for a permit to replace the pole sign advertising his gas station. After the city issued the permit, Mr. Refaie discovered that the base of the new sign was too large to fit in the place he had intended to place the sign because of a city culvert. Mr. Refaie returned to the permit office and spoke with an employee. According to Mr. Refaie, the city employee suggested that he lease a small piece of his neighbor's property on which to erect the new sign. Mr. Refaie and Jai Hanuman executed a ninety-nine-year lease, purporting to lease an eighty-seven-square-foot portion of the hotel property to Mr. Refaie as a signage area for the gas station. Mr. Refaie erected the pole sign on the signage area.
In 2008, after VBK Santoshi developed an interest in purchasing Jai Hanuman's hotel property, VBK Santoshi's members observed that there were two signs on the property-one advertising the hotel and one advertising the gas station. VBK Santoshi's members inquired of Jai Hanuman's president, Jitendra Makanji, whether there were any encumbrances-including leases-on the hotel property. VBK Santoshi alleged that Mr. Makanji assured the members of VBK Santoshi that there were no encumbrances or leases on the hotel property.
VBK Santoshi purchased the hotel property. At closing, Mr. Makanji executed an affidavit, in which he stated that there were no leases encumbering the hotel property. Chicago Title issued a title insurance policy to VBK Santoshi concerning the property, which provided in relevant part that "[d]efects, liens, encumbrances, adverse claims, or other matters . . . resulting in no damage to the Insured Claimant" were excluded from coverage under the policy.
For a few years, VBK Santoshi considered itself the owner of the gas station pole sign located on the hotel property. VBK Santoshi alleged that because it had a friendly relationship with Mr. Refaie, it allowed Mr. Refaie to continue using the second pole sign on the hotel property to advertise the gas station without charge. However, in 2014, VBK Santoshi demanded that Mr. Refaie begin paying rent to use the second pole sign. Mr. Refaie informed VBK Santoshi that he held a ninety-nine-year lease to the signage area on the hotel property and refused to pay rent because he had prepaid thirty years' worth of rent to Jai Hanuman.
In 2015, VBK Santoshi sent a written notice of claim to Chicago Title, claiming that the lease for the signage area was a defect in or encumbrance on the title to the hotel property that was covered under the title insurance policy. Chicago Title denied VBK Santoshi's claim. VBK Santoshi subsequently sued Jai Hanuman, Mr. Makanji, and Chicago Title. In count III of its amended complaint, VBK Santoshi sought an award of damages from Chicago Title for breach of the title insurance contract. As an affirmative defense, Chicago Title pled that the lease could not be considered a covered encumbrance under the title insurance policy because it was an illegal, unenforceable lease that violated section 27-289.7, Tampa Code of Ordinances (2021), which prohibits off-site signs, and therefore resulted in no damage to VBK Santoshi.
In 2020, during the pendency of VBK Santoshi's lawsuit, the city sent a code enforcement notice to VBK Santoshi. The notice advised VBK Santoshi that an inspector found that the gas station pole sign on the hotel property violated the city code's prohibition of off-site signs. According to the notice, off-site signs are defined as any "sign upon which commercial advertising or any other matter may be displayed, advertising goods, services or other things not sold or available upon the parcel (or zoning lot, if a signage plan is approved for the entire zoning lot) or only incidentally available where the sign is located." The city later sent VBK Santoshi a notice of public hearing as to the alleged violation scheduled for February 3, 2021. VBK Santoshi would later allege that it had mistakenly calendared the code violation hearing for December 3, 2021, and for that reason did not appear at the code violation hearing in February. The magistrate entered an order finding the gas station pole sign to be an illegal off-site sign in violation of the city code and ordered its removal.
After the time for rehearing of the magistrate's ruling had expired, VBK Santoshi learned of the code violation hearing and discovered its calendaring mistake. VBK Santoshi brought a separate lawsuit against the city (the due process lawsuit), alleging that VBK Santoshi was deprived of due process in the code enforcement proceedings because it has no recourse to seek review of the magistrate's order because the city code-unlike the Florida Rules of Civil Procedure-does not provide a procedure through which an aggrieved party can seek relief from an order entered as the result of excusable neglect. The due process lawsuit remains pending in the trial court.
Cf. Fla. R. Civ. P. 1.540(b)(1) ("On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, decree, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect ....").
In the underlying lawsuit, Chicago Title filed a motion for summary judgment as to count III, the breach of contract count against it. VBK Santoshi filed a motion to consolidate the underlying lawsuit with the due process lawsuit. The trial court denied the motion to consolidate. VBK Santoshi then moved to continue the hearing on Chicago Title's motion for summary judgment, arguing that the hearing should be continued until the trial court ruled on its claims in the due process lawsuit because Chicago Title relied upon the magistrate's determination that the gas station sign was an illegal off-site sign in its motion for summary judgment. The trial court denied the request for continuance.
In support of its motion for summary judgment, Chicago Title presented the magistrate's finding that the gas station pole sign was an illegal off-site sign, in violation of section 27-289.7, Tampa Code of Ordinances (2021). At the time the lease was entered into, the off-site sign prohibition was materially the same as section 27-289.7, which prohibited "[o]ff-site signs," Tampa, Fla. Code § 20.5-15(a)(15) (2007), which were defined as
any sign upon which commercial or noncommercial advertising or any other matter may be displayed, advertising goods, services or other things not sold or available upon the parcel (or zoning lot, if a signage plan is approved for the entire zoning lot) or only incidentally available where the sign is located.Tampa, Fla., Code § 20.5-4 (2007).
After a hearing, the trial court granted Chicago Title's motion for summary judgment. The trial court entered judgment disposing of the entire case as to Chicago Title. See Fla. R. App. P. 9.110(k) (providing that a partial final judgment can include a judgment which "totally disposes of an entire case as to any party"). VBK Santoshi timely appealed.
"Appellate courts review orders granting summary judgment de novo." Greeley v. Wal-Mart Stores E., LP, 337 So.3d 478, 480 (Fla. 2d DCA 2022) (citing Acevedo v. R.J. Reynolds Tobacco Co., 318 So.3d 593, 593 (Fla. 3d DCA 2021)). Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fla. R. Civ. P. 1.510(a). "Genuine disputes are those in which 'the evidence is such that a reasonable jury could return a verdict for the nonmoving party.' "Ibarra v. Ross Dress for Less, Inc., 350 So.3d 465, 467 (Fla. 3d DCA 2022) (quoting In re Amends. to Fla. R. of Civ. P. 1.510, 309 So.3d 192, 194 (Fla. 2020)); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The magistrate determined that the gas station pole sign was an illegal off-site sign and ordered its removal. It is undisputed that at the time Mr. Refaie and Jai Hanuman entered into the lease agreement, the sole purpose of the lease was for Mr. Refaie to erect a pole sign on the hotel property to advertise the gas station. The only reasonable conclusion that may be drawn from this fact is that the lease was extinguished by the magistrate's findings in the code enforcement proceeding. Cf. Griffin v. ARX Holding Corp., 208 So.3d 164, 171 (Fla. 2d DCA 2016) ("[A]n agreement that is violative of a provision of a constitution or a valid statute, or an agreement which cannot be performed without violating such a constitutional or statutory provision, is illegal and void." (quoting Local No. 234 of United Ass'n of Journeymen &Apprentices of Plumbing &Pipefitting Indus. of U.S. &Canada v. Henley &Beckwith, Inc., 66 So.2d 818, 821 (Fla. 1953))). Thus, the lease is not an encumbrance on the hotel property or a defect in VBK Santoshi's title because it is unenforceable, and the only right created by the lease is extinguished by the city's determination in the code enforcement proceeding which prohibits that use.
VBK Santoshi does not dispute that the magistrate's order would have the effect of eliminating the alleged defect or encumbrance. Instead, it argues that the trial court erred by granting summary judgment in favor of Chicago Title because VBK Santoshi presented sufficient evidence from which a reasonable jury could conclude the gas station pole sign was a legal sign and therefore an encumbrance covered by the insurance policy. VBK Santoshi argues that the magistrate's conclusion that the gas station pole sign was an illegal off-site sign had not been finally determined-and therefore cannot be the basis for entry of summary judgment in favor of Chicago Title-because VBK Santoshi failed to appear at the code enforcement hearing due to excusable neglect and only discovered the magistrate's finding after the time for rehearing and appeal had expired.
On appeal VBK Santoshi impugns the final summary judgment with two arguments. First, it argues that a material issue of fact precluded summary judgment because the finding that the lease was invalid because its purpose was for an off-site sign was prematurely determined. VBK Santoshi concludes that the off-site-sign question was prematurely answered because the magistrate's decision on which that finding was based was not final when the trial court entered summary judgment in favor of Chicago Title; VBK Santoshi asserts that the off-site sign determination is subject to change by way of VBK Santoshi's collateral litigation seeking to have it overturned on due process grounds. Second, VBK Santoshi argues that the magistrate's finding was incorrect on the merits and that VBK should have had the opportunity to present its interpretation of the off-site sign analysis to a jury, which could have returned a verdict for VBK Santoshi based on the facts and the law.
However, in both its appellate arguments, VBK Santoshi misidentifies the material fact that is the gravamen of Chicago Title's defense against the breach of contract claim. The relevant question is not whether the magistrate's determination that the sign was an illegal off-site sign was based on a proper construction of the applicable code provision. Rather, the material fact is that the city-albeit based on the magistrate's determination-concluded that the sign that was the subject of the lease must be removed because it is an illegal off-site sign, thereby rendering the lease that would otherwise constitute a coverable encumbrance under the title policy invalid and of no force or effect.
In other words, this court need not and should not reach the legal question of whether the magistrate's interpretation and application of the off-site-sign code provision was correct because the facts at the time of the summary judgment were such that VBK Santoshi could not prove its case of breach of the title policy. VBK Santoshi argues that there is a dispute as to whether the sign constituted an off-site sign under the code. But the sign had already been declared illegal and subject to removal, rendering the lease invalid. Of that fact, there is no dispute. As such, nothing encumbered the property as of the time of summary judgment. Of that fact, there is also no dispute.
The question to be answered in VBK Santoshi's lawsuit was whether Chicago Title failed to perform its obligation under the title policy. In its amended complaint, VBK Santoshi alleged that Chicago Title breached the title insurance policy, which "insured [VBK Santoshi] against loss or damage sustained by reason of any defect in or lien or encumbrance on the Title," by failing to pay VBK Santoshi's claim based on the "Refaie Lease." VBK Santoshi alleged that the lease "constitutes a defect in or lien or encumbrance on the title to the Property," for which Chicago Title was obliged under the policy to pay VBK Santoshi claim's "or to cure the defect in or lien or encumbrance on the title to the Property."
The title policy "insures . . . against loss or damage . . . sustained or incurred by the Insured by reason of . . . [a]ny defect in or lien or encumbrance on the Title," including "[a]ny encroachment, encumbrance, violation, variation, or adverse circumstances affecting the title that would be disclosed by an accurate and complete land survey of the Land." The defect alleged in VBK Santoshi's complaint, however, did not constitute a defect in or lien or encumbrance on the title to the property because the lease had been invalidated by the city's determination that its sole purpose-the sign-must be removed. The undisputed facts at the time of the summary judgment order that is the subject of this appeal include the fact that the lease-the title defect alleged by VBK Santoshi-had been rendered void by virtue of a determination of the city that the tenant's sign situated on the leased property is illegal and must be removed.
Yet, VBK Santoshi complains that it is entitled to oblige the court and Chicago Title to wait and see whether it can undo the final determination that eliminated the encumbrance that it sued Chicago Title for failing to detect and remove. But this appeal is not about whether VBK Santoshi could be successful in revivifying the now dead encumbrance in its collateral proceeding. Cf. Brevard County v. Obloy, 301 So.3d 1114, 1117 (Fla. 5th DCA 2020) ("A party dissatisfied with an enforcement board special magistrate's order can either appeal that order or choose to be bound by it. However, it cannot initiate a collateral attack on that order by commencing a new action in circuit court."). This appeal is from a summary judgment in which VBK Santoshi sued its title insurer for a covered defect, and the material fact was whether the property was encumbered in such a way as to harm VBK Santoshi. The undisputed facts indicate that it was not. There is no defect or encumbrance, much less one "resulting in . . . damage to" VBK Santoshi as required by the title policy. As such, the underlying basis for the city's determination that the sign must be removed is not this court's concern because its ordered removal eliminated the gravamen of VBK Santoshi's cause of action-that it has been damaged by a defect or encumbrance covered by the policy-and justified the summary judgment order entered by the trial court.
VBK Santoshi is left only to attempt to argue that it was harmed by not having use of the additional sign that was the subject of the lease- which is the explanation provided by VBK Santoshi in its reply brief for its parallel battle to reencumber its property with the very defect by which it alleges it was being harmed as support for its policy coverage suit against Chicago Title. VBK Santoshi explains that it is injured by the title defect because when it purchased the property it hoped to use both signs-the sign that was the subject of the lease in addition to the other sign that exists on the property.
But any alleged harm from the removal of the sign cannot be blamed on Chicago Title, just as any contention that VBK Santoshi has been injured by its unawareness of the existence of the now-extinguished lease cannot establish a breach of the title policy. This is for two reasons. First, in VBK Santoshi's formulation, the lease was the encumbrance that prevented VBK Santoshi from using the sign, and that lease is now gone due to the magistrate's finding that the sign is an illegal off-site sign that must be removed.
Second, VBK Santoshi could never have used the sign anyway because the city code at all times prohibited more than one sign per parcel. VBK Santoshi avers that it bought the property thinking there was an extra sign it could utilize if and when the need arose at some point in the future. However, that is undermined by the argument it made in the trial court, which relied in part on the premise that any one parcel in the city is only permitted one sign. VBK Santoshi argued in the trial court that the sign could not have been an off-site sign because the sign was part of the gas station property owner's "parcel"; in service of that argument, VBK Santoshi pointed out that by ordinance each parcel can only have one sign-that the sign could not have been part of the hotel parcel, which already had a sign, and therefore was not an off-site sign advertising goods or services offered on the adjoining gas station parcel. At all relevant times, the Tampa Code of Ordinances provided that each parcel was only allowed to erect one pole sign to advertise goods or services provided on that parcel. See Tampa, Fla. Code § 20.5-13(c)(1) (2007) ("One (1) ground or pylon sign is permitted for each parcel having frontage on a public street."); Tampa, Fla. Code § 27-289.3 (2021) ("One (1) Freestanding sign is permitted for each parcel having street frontage."). Thus, VBK Santoshi-regardless of the lease-never had the right to use the second pole sign on the hotel property because it violated the Tampa Code of Ordinances. Therefore, on appeal VBK Santoshi cannot now successfully argue that it is injured by the encumbrance on the basis that it wanted to use the sign in addition to its other sign. In other words, the undisclosed title defect-the lease of which Chicago Title failed to alert VBK Santoshi-would not have ultimately frustrated the purpose for which VBK Santoshi would like to have used the sign, but rather an unrelated ordinance which made such use illegal at all times relevant. It is not the now-extinguished lease itself that is the source of VBK Santoshi's inability to utilize the second sign on the hotel property. The source of the alleged injury is VBK Santoshi's mistaken belief that it ever could use the second sign. And that is not something that could be attributed to a breach of the Chicago Title policy, even if such a theory had been adequately alleged in VBK Santoshi's amended complaint.
Because the magistrate found the gas station pole sign to be an illegal off-site sign in violation of the Tampa Code of Ordinances and ordered its removal, the lease providing Mr. Refaie the right to erect the sign on the hotel property was void. Therefore, there was no enforceable encumbrance on the hotel property covered by the title insurance policy at the time of the final summary judgment. Further, any injury VBK Santoshi has allegedly suffered due to the gas station pole sign's presence or its unavailability for use by VBK Santoshi is the result of VBK Santoshi's mistaken belief that it could ever use the second sign on its property-not the result of the unenforceable lease. Therefore, because the lease and sign are not covered defects or encumbrances- those "resulting in . . . damage to" VPK Santoshi-under the title insurance policy, the trial court properly granted Chicago Title's motion for summary judgment as to VBK Santoshi's breach of contract claim. Therefore, we affirm the judgment for Chicago Title.
Affirmed.
MORRIS, J., and CASE, JAMES R., Associate Senior Judge, Concur.
Opinion subject to revision prior to official publication.