Law School Case Brief
DK Arena, Inc. v. EB Acquisitions I, LLC - 112 So. 3d 85 (Fla. 2013)
Pursuant to the rule stated in Tanenbaum v. Biscayne Osteopathic Hospital, Inc., a written contract falling within Florida's Statute of Frauds, § 725.01, Fla. Stat. (2004), cannot be orally modified through the operation of promissory estoppel.
The property belonged to petitioner DK Arena, Inc., a Delaware corporation wholly owned by celebrity boxing promoter, Don King. King originally acquired the property in 1999 with the intent of converting it into a boxing arena. When that use was found to be infeasible, the property was made available for sale. EB entered into a written contract with DK Arena in which EB agreed to purchase the fronton property. The contract required EB to place an initial deposit of $1 million into an escrow account. The contract also called for a due diligence period of sixty days from the date of the contract's signing. The parties' real estate contract and addendum provided for a due diligence period of 60 days (later extended in writing by 14 days), during which the seller could conduct inspections of the property; either party could cancel the contract within that time period. EB alleged that the Don King agreed to hold the due diligence period in indefinite "abeyance" until a joint venture agreement could be completed. The intermediate appellate court found that the buyer had changed its position in reliance on this oral agreement; accordingly, the "doctrine of estoppel" prevented the seller from relying on Florida's Statute of Frauds, § 725.01, Fla. Stat. (2012), to avoid the extension to which it had agreed.
Petitioner DK Arena, Inc. sought a review of the decision of the Fourth District Court of Appeal in DK Arena, Inc. v. EB Acquisitions in which the district court held that an oral agreement to modify the parties' contract for the sale of real property was valid and enforceable, notwithstanding the Statute of Frauds, under "the doctrine of estoppel."
Was it proper to rely on the doctrine of promissory estoppel as an exception to the Statute of Frauds?
The Supreme Court of California quashed the decision of the Fourth District in DK Arena to the extent that it is inconsistent with the instant opinion and remanded the case to the district court for further proceedings.
Though the intermediate appellate court used the term "doctrine of estoppel," it was actually applying promissory estoppel. The intermediate appellate court erred in failing to follow Tanenbaum v. Biscayne Osteopathic Hospital, Inc., in which the high court had held that a written contract falling within the Statute of Frauds, such as the real estate contract at issue, could not be orally modified through the operation of promissory estoppel. The question that arose in Tanenbaum was whether the doctrine of promissory estoppel should be adopted as an exception to the Statute of Frauds.
EB argued that its failure to release the deposit after the contractually called-for date, was justified under the doctrine of "waiver" or "waiver and estoppel. The waiver doctrine does not support the district court's holding. The instant case did not involve a simple delay in performance, but rather concerned an agreement which created an extended due diligence period under which EB held an unqualified right to terminate the contract. This modification was unenforceable due to operation of the Statute of Frauds.
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