Walters v. Blankenship: Seller's Lawsuit against Neighbors Proceeds

A Florida court has considered whether sellers could seek recovery from neighbors who placed “for sale by owner” signs in front of their units on the day that the sellers were holding an auction for four units, which the sellers claimed caused the auction to receive lower sales prices.

Richard and Roberta Walters (“Sellers”) owned four units in a condominium development. The Sellers listed the units for sale with an auction company. The auction was a “no reserve” auction, meaning that the properties would be sold once the auction began. To participate in the auction, bidders had to deposit a $50,000 cashier’s check. Approximately 20 bidders made the appropriate deposit.

On the day before the auction, fellow unit owner Thomas Klinehofer allegedly told another resident of the development to “wait until the day of the sale and see what we are going to do to Dick Walters”. On the day of the auction, Klinehofer and three other unit owners (collectively, “Defendants”) all placed “for sale by owner” signs in front of their units. Placing a “for sale” sign in front of their units was a violation of the association’s rules. The auction proceeded and the Sellers received auction proceeds totaling $2,066,925. Following the auction, all of the Defendants removed the “for sale” signs in front of their units.

The Sellers filed a lawsuit against the Defendants, alleging that their actions caused them to receive lower sales prices at the auction. The lawsuit alleged that the Defendants’ actions constituted tortious interference with a prospective economic advantage, intentional infliction of emotional distress, and a civil conspiracy. The trial court dismissed the lawsuit, and the Sellers appealed.

The District Court of Appeal of Florida, Fifth District, reversed the trial court and reinstated the Sellers’ lawsuit. Tortious interference with prospective economic advantage claims require the following: first, existence of a business relationship; second, the other party’s knowledge of the relationship; third, the other party’s intentional and unjustified interference with the relationship; and fourth, damages resulting from the subsequent breach of the relationship.

The court found that the Sellers had arguably entered into a business relationship with the bidders by putting their units up for a “no reserve” auction and requiring $50,000 deposits from the bidders. The court rejected the Defendants attempt to argue their behavior was protected by the First Amendment, finding that the case on which the Defendants based this defense involved the disclosure of information which the sellers had been told to provide. Thus, the court reinstated the tortious interference with prospective economic advantage claims.

The court also considered the civil conspiracy allegations. A conspiracy involves two or more individuals agreeing to do an unlawful act, taking an overt action pursuant to the conspiracy, and damage to another individual caused by the conspiracy’s actions. Here, the court found that the appearance of five owners attempting to sell their units at once could support the Sellers’ conspiracy allegations. The number of units for sale suggested a possible problem with the development or at the very least an increase in supply, lowering the market value of the units. The court also reinstated the conspiracy allegations against the Defendants.

One judge wrote a dissenting opinion, arguing that placing a “for sale by owner” sign on one’s property cannot support tortious interference allegations.

Walters v. Blankenship, 931 So. 2d 137 (Fla. Dist. Ct. App. 2006).