In a recent Third District Court of Appeal decision, a South Florida commercial tenant secured a reversal of a lower court’s ruling in favor of its landlord. The appeals court sent the two sides back to the lower court to present more evidence about what their true intent was regarding the rent provision in their agreement. The problem with the contract that led the appeals court to order additional action was that the lease contract’s rent provision was not clear and unambiguous on its face.
Whether you are a seller or a buyer of commercial property in Florida, it is very important to understand every aspect of your sales contract, including any damages term. In a recent South Florida case in which this provision was at issue, a seller was able to keep a buyer’s deposit money after the buyer breached the agreement. The Fourth District Court of Appeal ruled that the contract’s liquidated damages clause was flawed but that, by doing everything in its power to consummate the sale, the seller “cured” this defect and was entitled to receive the benefit of liquidated damages in this case.
During his investigation and impeachment, President Bill Clinton once famously stated that the accuracy of the answer he provided “depends upon what the meaning of the word ‘is’ is.” While such fine distinctions may seem foreign to many people, lawyers and others who deal with contracts know that victory or defeat in a contract dispute can sometimes come down the smallest of linguistic details. In a recent dispute between a Southwest Florida condo association and an LLC that owned several units, the case came down to the 2d District Court of Appeal‘s accepting the owner’s interpretation of the word “a” over that offered by the association.
The property at issue was a condominium outside Naples. The condominium had 94 units, 38 of which were owned by The Retreat at Port of the Islands, LLC. Retreat ran its units as a resort hotel. In March 2014, the Port of the Islands Resort Hotel Condominium Association, Inc. held an election for three of the five seats on its board of directors. Three of the managing members of Retreat ran for the board seats. Although the three Retreat members secured the highest vote totals, the condo association declared that only one of them could serve on the board.
The renewal of a lease on a commercial space in Polk County ultimately led to litigation between the property’s owners and the New York broker who allegedly brokered the renewal. The 3d District Court of Appeal ruled that the out-of-state broker’s assertions that it co-brokered the deal alongside a Florida broker were good enough to defeat the owners’ request for a summary judgment in the case.
The case centered around the leasing of a commercial property owned by GCCFC 2005-GG5 Route 33 Industrial, LLC and Miami Beach-based LNR Partners, LLC. The property, which was located in Lakeland, had a tenant. At some point, the tenant signed a lease extension. Phoenix Asset Management, LLC, which was doing business as Realta Group, negotiated that lease extension. After the property owners refused to pay it a commission on its brokerage of the lease extension, the broker sued the property owners.
For commercial landlords, evicting a tenant can require proving many things. In the case of one Florida landlord, even if it had enough proof that its tenant committed the sort of transgressions that were valid grounds to permit an eviction, it might still not be entitled to force the tenant out. The 2d District Court of Appeal reversed a summary judgment in the landlord’s favor, in part because the tenant raised a viable defense that an eviction would lead to an unfair and unjust forfeiture on the tenant’s part.
The commercial lease in question involved Atria Group, the tenant, and One Progress Plaza, II, LLC, the landlord. The two sides completed a commercial lease agreement in 2010 for Atria to rent a pair of spaces within the landlord’s high-rise tower in downtown St. Petersburg. From its spaces, Atria planned to run a restaurant and nightclub. By the fall of 2013, the business relationship had deteriorated, and the landlord sought to evict Atria. In its court filing, the landlord accused the tenant of several violations of the lease, none of which were related to paying rent. The alleged misdeeds included damage to the property, illegal activity, and cleanliness issues.
A would-be purchaser of the Walgreens store on Lincoln Road in South Beach successfully persuaded the 3d District Court of Appeal to keep a lis pendens in place upon the property in dispute. The purchaser, who claimed that it held a right of first refusal on the purchase of the four units that the pharmacy occupied, succeeded because it was able to establish that its underlying lawsuit related to the sale of the units was based upon a duly recorded document — the condominium’s declaration document. The appeals court described the case as one that highlighted “the difference between (a) a condominium association’s right to consent to or reject a proposed unit sale or transfer and (b) the association’s right to exercise a right of first refusal.”
The centerpiece of the suit was a group of four units in the Decoplage Condominium in South Beach, where Walgreens operated a pharmacy store. In 2014, 100 Lincoln Rd SB, LLC sought to purchase the four highly coveted, street-level commercial units for $28 million. Lawyers for the seller sent a notice to the condo association, informing the association of the transaction and asking the association to waive its right of first refusal. Instead, the condo association designated Daxan 26 (FL), LLC as a non-unit owner that was willing to purchase the four units for the same terms as 100 Lincoln had offered, essentially assigning the association’s first-refusal rights to Daxan. Without the knowledge of the association or Daxan, the seller and 100 Lincoln moved the closing up to an earlier date. They also changed the terms of their arrangement, again without notifying the association or Daxan.
A Palm Beach County tenant successfully appealed a decision that would have forced it to pay $2 million to its commercial landlord for failing to remove one of the subtenants on the property. The 4th District Court of Appeal concluded that the tenant had no legal obligation, since its lease with the landlord did not make any mention of removing that subtenant.
The dispute centered around a Palm Beach County parcel of land that Michael Anthony Company owned. A flea market, parking lot, and billboard were situated on the 14.6-acre parcel. The billboard was leased to a tenant named AK Media Group, Inc.
Sometimes, commercial lease contracts are very straightforward. In other situations, though, commercial leases can be complicated and murky. In the case of one rent dispute between a South Florida landlord and its tenant, the 3d District Court of Appeal concluded that a trial court wrongfully denied the tenant an evidentiary hearing to prove that some payments to cover maintenance and taxes actually qualified as rent under the lease terms.
When Double Park LLC entered into an agreement to lease a parking lot from Kaine Parking 125, LLC, the parties agreed to a “triple net” lease that required the tenant, as part of its rent obligation, to pay for maintenance and repairs, insurance, and one-half of the property taxes. The lease also stated that, if the tenant subleased the lot at a rental rate greater than what Double Park was paying Kaine, the tenant owed that excess to the landlord.
A commercial tenant emerged victorious in a dispute pertaining to the exclusivity provision in the tenant’s lease agreement because it had a reasonable basis for the restrictive term’s inclusion in the contract. The 1st District Court of Appeal concluded that a legitimate business interest existed to justify allowing the tenant to insist on a lack of direct competition for the entire duration of its five-year lease and three five-year renewal options.
Omni Amelia Island, LLC owned and operated the Shops of Amelia Island Plantation, a “shopping village” within Omni’s Amelia Island Plantation Resort. Omni leased a space within the Shops to PLaE, the only full-service restaurant inside the shopping village. The lease contained an exclusivity term preventing the landlord from bringing in any tenants who would operate a full-service restaurant within the village.
When a commercial landlord breaches under the terms of the lease it executed with a tenant, the tenant has a variety of legal options available to it in order to recover its damages. In a recent Broward County case before the 4th District Court of Appeal, the tenant achieved a partial victory but lost some of its claims because they were too speculative.
Victoriana Building LLC was a commercial landlord leasing space in Fort Lauderdale. A Victoriana tenant sued the landlord for a breach of the lease. The tenant sought to recover damages for its lost business value and its out-of-pocket expenses. The trial court found the landlord liable for breaching the lease, but it did not award the tenant damages for either its lost business value or its out-of-pocket expenses. On each basis for recovery, the trial court concluded that the tenant’s proof was too speculative to justify an award.