In June 2021, Francisco Lagos Marmol and Fernando Van Peborgh agreed to sell their 50 percent ownership interests in Best Peacock Inn, LLC, to Kalonymus Development Partners, LLC, for $5,450,000. The closing was scheduled for October 2021, but the sellers failed to close, claiming a mortgage provision prevented them from paying off the loan until the following year. Kalonymus sued for specific performance and damages. The district court granted summary judgment to Kalonymus, ordering the parties to close. The sellers appealed, arguing that Kalonymus had materially breached the contract by refusing to accept the property at the original price after the sellers offered to close later. However, before the appeal was resolved, the sellers withdrew their motion to stay the judgment and closed on the sale in November 2023, assigning the property to third-party entities. The sellers then argued on appeal that the sale did not moot the specific performance claim and that Kalonymus was not entitled to any damages.
The court addressed two primary issues: specific performance and damages. Regarding specific performance, the court applied the doctrine of mootness under Article III of the Constitution. The court found that the issue was no longer a live controversy because the sellers had voluntarily closed on the sale and assigned the property to non-party entities, 3667 Poinciana, LLC, and Poinciana, LLC. The court rejected the sellers' argument that the sale could be set aside, noting that the current owners were not parties to the appeal and the court could not compel them to return the property. Furthermore, the sellers had initially sought a stay of the judgment to preserve their appeal but withdrew that motion and proceeded with the sale, effectively forfeiting their right to challenge the specific performance order. Regarding damages, the court reviewed the district court's award de novo for legal errors and for clear error regarding factual findings. The court found that Kalonymus, as the buyer, suffered actual damages including increased costs of capital due to rising interest rates, lost cash flow, and duplicate administrative expenses. The court rejected the sellers' argument that these damages belonged to other entities, finding that Kalonymus was the contracting party that incurred the costs. However, the court reversed the award of lost tax savings damages, reasoning that a limited liability company cannot claim individual tax depreciation benefits; those benefits belong to the individual members, not the entity itself.
The specific performance judgment stands as the sellers voluntarily complied with it, but the damages award is vacated and remanded for recalculation. The sellers must pay damages for cost of capital, lost profits, and duplicate expenses, but the $14,217 tax savings award is removed. The decision clarifies that voluntary compliance with a judgment pending appeal can render the appeal moot regarding that specific relief, and that LLCs cannot claim individual tax depreciation damages.