Association of Golden Glades Condominium Club, Inc. v. Security Management Corp.

• Decision Date: 01 March 1990
• Docket Number: No. 71909,71909
• Citation: 557 So.2d 1350
• Parties: 15 Fla. L. Weekly S99 ASSOCIATION OF GOLDEN GLADES CONDOMINIUM CLUB, INC., Petitioner, v. SECURITY MANAGEMENT CORP., Respondent.
• Court: Florida Supreme Court

Page 1350

557 So.2d 1350

15 Fla. L. Weekly S99

ASSOCIATION OF GOLDEN GLADES CONDOMINIUM CLUB, INC., Petitioner, v. SECURITY MANAGEMENT CORP., Respondent.

No. 71909.

Supreme Court of Florida.

March 1, 1990.

Nancy Schleifer, Miami, for petitioner.

Alan C. Sundberg and Sylvia H. Walbolt of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Tallahassee, and Cypen & Cypen, Miami Beach, for respondent.

OVERTON, Justice.

We have for review Association of Golden Glades Condominium Club, Inc. v. Security Management Corp., 518 So.2d 967 (Fla. 3d DCA 1988), in which the Third District Court of Appeal certified the following question as one of great public importance:

TO WHAT EXTENT DOES SECTION 718.401(8), FLORIDA STATUTES (1985), APPLY TO RENT ESCALATION CLAUSES ENTERED INTO BEFORE THE EFFECTIVE DATE OF THE STATUTE?

Id. at 967. Subsequent to the district court's decision, the legislature enacted section 718.4015, Florida Statutes (Supp.1988), which included the provisions of section 718.401. Further, the legislature amended section 718.4015 in 1989 to clarify its 1988 enactment. We rephrase the certified question as follows:

TO WHAT EXTENT DOES SECTION 718.4015(2), FLORIDA STATUTES, PROHIBIT ENFORCEMENT OF ESCALATION CLAUSES IN LEASES ENTERED INTO PRIOR TO JUNE 4, 1975?

We have jurisdiction pursuant to article V, section 3(b)(4), of the Florida Constitution, and hold that the most recent amendments neither change the effect of the existing case law nor affect the enforceability of a rent escalation clause in a recreation lease entered into prior to June 4, 1975, for rent due from June 4, 1975, to October 1, 1988. We approve the district court's decision, finding that our decision in Cove Club Investors, Ltd. v. Sandalfoot South One, Inc., 438 So.2d 354 (Fla.1983), controls.

The relevant facts reflect that on March 14, 1970, Golden Glades Club Recreation Corporation, the lessor, entered into a long-term lease with the Association of Golden Glades Condominium Club, Inc. The lease included an escalation clause, which provided, in part:

Lessor and Lessee herein covenant and agree that the rental payments provided for in Article III. above, shall be adjusted higher or lower, based upon the Cost of Living Index, as hereinafter defined and provided in this Paragraph, at five (5) year intervals, commencing January 1st, 1975, and continuing each five (5) years thereafter throughout the term of this Lease.

That same day, Golden Glades Building Corporation, the developer, entered into a declaration of condominium with the Association of Golden Glades Condominium Club, Inc. Golden Glades Club Recreation Corporation, the lessor, was not a party to the declaration of condominium. On November 30, 1981, more than eleven years after the date of the lease and the declaration of condominium, Security Management Corporation became the successor by merger to Golden Glades Club Recreation Corporation, Golden Glades Building Corporation, and other corporate entities.

As the successor to Golden Glades Club Recreation Corporation, Security Management Corporation sued the Association of Golden Glades Condominium Club, Inc. seeking the rent due from July 1980 through January 1987 pursuant to the escalation clause. The trial court found that the escalation provision was still valid. It determined that neither Security Management Corporation nor Golden Glades Club Recreation Corporation signed the declaration of condominium or agreed to be bound by the Condominium Act or the provision in the declaration of condominium concerning the Condominium Act "as the same may be amended from time to time." Relying on Cove Club Investors, the trial court concluded that the declaration of condominium could not bind Security Management Corporation or Golden Glades Club Recreation Corporation to subsequent amendments to the Condominium Act, specifically the prohibition of escalation clauses in recreation leases.

On appeal, the Third District Court of Appeal affirmed, indicating that the case presented the identical issue as that presented in Condominium Association of Plaza Towers North, Inc. v. Plaza Recreation Development Corp., 514 So.2d 381 (Fla. 3d DCA 1987), and Golden Glades Club Recreation Corp. v. Association of Golden Glades Condominium Club, Inc., 385 So.2d 103 (Fla. 3d DCA), review denied, 392 So.2d 1374 (Fla.1980). Relying on those two decisions, it held that "section 718.401(8), Florida Statutes (1985), previously section 711.231, Florida Statutes (1975), which invalidate[s] rent escalation clauses in condominium recreation leases cannot be applied retroactively to invalidate the rent escalation clause at issue here." 518 So.2d at 967. In Condominium Association of Plaza Towers North, the district court held that the lessor neither signed the declaration of condominium nor bound itself in the lease to amendments to the Condominium Act, stating:

There is no specific provision in the lease which expressly adopts the above-stated provision of the declaration of condominium, and in the absence of same, we will not turn the general language of the lease on its head so as to incorporate by incorporation future amendments to the Condominium Act--especially where, as here, the result of such an interpretation is to void specific rental provisions in the lease. We think such a drastic result should only be accomplished by clearly expressed lease terms which expressly adopt the Condominium Act, as amended. This being so, it is plain that the parties by contract did not agree to be bound by future amendments to the Condominium Act, including Section 711.231, Florida Statutes (1975). Cove Club Investors, Ltd. v. Sandalfoot South One, Inc., 438 So.2d 354 (Fla.1983).

514 So.2d at 382.

The petitioner argues that (1) the reference in the lease to the definition section in the condominium document binds the lessor to future amendments to the Condominium Act and (2) the merger effectively makes the provisions of the condominium document part of the lease.

To resolve the issues presented, we find it necessary to examine the legislative history pertaining to rent escalation clauses in condominium leases of recreation properties. In 1975, the legislature, by chapter 75-61, Laws of Florida, declared void these rent escalation clauses. This statute, section 711.231, Florida Statutes (1975), was subsequently renumbered as section 718.401. Section 718.401, Florida Statutes (1985), provided, in pertinent part:

(8)(a) It is declared that the public policy of this state prohibits the inclusion or enforcement of escalation clauses in land leases or other leases or agreements for recreational facilities, land, or other commonly used facilities serving residential condominiums, and such clauses are hereby declared void for public policy.

In 1988, the legislature created section 718.4015 to modify what was previously set forth in section 718.401(8). Section 718.4015, Florida Statutes (1988), provided, in pertinent part:

(1) It is declared that the public policy of this state prohibits the inclusion or enforcement of escalation clauses, in land leases or other leases or agreements for recreational facilities, land, or other commonly used facilities serving residential condominiums, and such clauses are hereby declared void for public policy....

(2) ... However, the provisions of subsection (1) apply to contracts entered into prior to, on, and after June 4, 1975, if the lessor is not the Government of the United States or this state or any political subdivision thereof or any agency of any political subdivision thereof. The application of subsection (1) to contracts entered into prior to June 4, 1975, may not divest the parties of any benefits or obligations arising from the escalation of fees prior to October 1, 1988, but only prohibits further escalation of fees pursuant to the escalation clauses, on or after October 1, 1988.

(Emphasis added.) In 1989, the legislature amended section 718.4015 by chapter 89-164, Laws of Florida, to clarify its 1988 amendment. It provides, in relevant part:

(1) It is declared that the public policy of this state prohibits the inclusion or enforcement of escalation clauses in land leases or other leases or agreements for recreational facilities, land, or other commonly used facilities serving residential condominiums, and such clauses are hereby declared void for public policy....

(2) This public policy prohibits the inclusion or enforcement of such escalation clauses in leases related to condominiums for which the declaration of condominium was recorded on or after June 4, 1975; it prohibits the enforcement of escalation clauses in leases related to condominiums for which the declaration of condominium was recorded prior to June 4, 1975, but which have been refused enforcement on the grounds that the parties agreed to be bound by subsequent amendments to the Florida Statutes or which have been found to be void because of a finding that such lease is unconscionable or which have been refused enforcement on the basis of the application of former s. 718.401(8) or s. 711.231; and it prohibits any further escalation of rental fees after October 1, 1988, pursuant to escalation clauses in leases related to condominiums for which the declaration was recorded prior to June 4, 1975.

(Emphasis added.) The legislature explained its reasons for the 1989 amendment as follows:

WHEREAS, sections 718.4015 and 719.4015, Florida Statutes, were adopted in the 1988 session of the Legislature, and

WHEREAS, it was the intent of the Legislature in adopting said legislation to afford protection to condominium and cooperative associations and their unit owners whose leases predated the initial passage of similar legislation on June 4, 1975, and

WHEREAS, it was not the intent of the Legislature in adopting said legislation so as to affect escalations that have been rendered void by virtue of the operation of former sections 718.401(8),...