Rnr Investments Ltd. Partnership v. Peoples First Community Bank

812 So. 2d 561 (Florida, 2002)

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Nature of the Case

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Facts

RNR is a Florida limited partnership formed pursuant to chapter 620, Florida Statutes, to purchase vacant land in Destin, Florida, and to construct a house on the land for resale. Bernard Roeger was RNR's general partner and Heinz Rapp, Claus North, and S.E. Waltz, Inc., were limited partners. The agreement of limited partnership provides that in no event, without Limited Partner Consent, shall the Approved Budget be exceeded by more than five percent (5%), nor shall any line item thereof be exceeded by more than ten percent (10%), . . .The agreement also restricts the general partner's ability to borrow, spend partnership funds and encumber partnership assets, if not specifically provided for in the Approved Budget. The General Partner was not to incur debts, liabilities or obligations of the Partnership which will cause any line item in the Approved Budget to be exceeded by more than ten percent (10%) or which will cause the aggregate Approved Budget to be exceed by more than five percent (5%) unless the General Partner shall receive the prior written consent of the Limited Partner. RNR, through its general partner, entered into a construction loan agreement, note and mortgage in the principal amount of $990,000. From June 25,1998 through Mar. 13, 2000, the bank disbursed the aggregate sum of $952,699, by transfers into RNR's bank account. All draws were approved by an architect, who certified that the work had progressed as indicated and that the quality of the work was in accordance with the construction contract. RNR failed to make payments due in July 2000 and all monthly payments due thereafter. The Bank (P) filed a complaint seeking foreclosure. RNR (D) filed an answer and affirmative defenses. D alleged that P had failed to review the limitations on the general partner's authority in D's limited partnership agreement. D reasoned that because P negligently failed to investigate and to realize that the general partner had no authority to execute notes, a mortgage and a construction loan agreement and was estopped from foreclosing. P filed a motion for summary judgment with supporting affidavits attesting to the amounts due and owing and the amount of disbursements under the loan. D filed the affidavit alleging that the limited partners understood and orally agreed that the general partner would seek financing in the approximate amount of $650,000. Further, a written consent was never memorialized, and P either through its employees or attorney, . . . never requested the same from any of the limited partners at any time prior to [or] after the closing on the loan. The partners learned in the spring of 2000 that, instead of obtaining a loan for $650,000, Roeger had obtained a loan for $990,000, which was secured by D's property. The limited partners did not consent to Roeger obtaining such a loan. There was no evidence that a copy of RNR's partnership agreement or any partnership budget was given to the Bank or that any notice of the general partner's restricted authority was provided to P. The trial court entered a summary final judgment of foreclosure in favor of P. The foreclosure sale has been stayed pending the outcome of this appeal.