Avila South Condominium Ass'n, Inc. v. Kappa Corp.

• Decision Date: 31 March 1977
• Docket Number: No. 48753,48753
• Citation: 347 So.2d 599
• Parties: AVILA SOUTH CONDOMINIUM ASSOCIATION, INC., a Florida non-profit Corporation, in its own interest and behalf of its members, et al., Petitioners, v. KAPPA CORPORATION, a Florida Corporation, et al., Respondents.
• Court: Florida Supreme Court

Page 599

347 So.2d 599

AVILA SOUTH CONDOMINIUM ASSOCIATION, INC., a Florida non-profit Corporation, in its own interest and behalf of its members, et al., Petitioners, v. KAPPA CORPORATION, a Florida Corporation, et al., Respondents.

No. 48753.

Supreme Court of Florida.

March 31, 1977.

As Corrected on Denial of Rehearing June 13, 1977.

Alan S. Becker and Jeffrey E. Streitfeld of Becker & Poliakoff, P. A., Miami Beach, for petitioners.

Gerald F. Richman and James D. Little, of Frates, Floyd, Pearson, Stewart, Richman & Greer, Miami, for respondents.

HATCHETT, Justice.

Petitioners stated several counts in a complaint, which was met with a motion to dismiss. The trial court dismissed with prejudice the first, fifth, seventh, and eighth counts, and ordered the class action allegations stricken as to the remaining counts. In striking the class action allegations, the trial court ruled Section 711.12(2), Florida Statutes (1975), ¹ unconstitutional. In dismissing Count I, which was grounded on Section 501.204, Florida Statutes (1975), ² the trial court declared Section 501.204 unconstitutional. An appeal was taken from the trial court's order, but on motion of the appellants, the cause was remanded as to Count I, after Section 501.204, Florida Statutes (1975), withstood constitutional attack in Department of Legal Affairs v. Rogers, 329 So.2d 257 (Fla.1976). Still pending here after this partial remand are the questions whether Counts V, VII, and VIII should have been dismissed; whether the class action allegations should have been stricken; and certain other matters raised by cross-assignments of error.

Insofar as the trial court's order dismissed Counts V, VII, and VIII with prejudice, it was a final order, properly appealable to the District Court of Appeal, unless appealable here on account of "initially and directly passing on the validity of a state statute or a federal statute or treaty, or construing a provision of the state or federal constitution." Art. V, Section 3(b)(1), Florida Constitution. In granting the motion to dismiss as to Count V, the trial court ruled that Section 711.66(5)(e), Florida Statutes (1975), did not operate retroactively and stated as one reason for this ruling that "retroactive application would be unconstitutional under both the Florida and Federal Constitutions as an impairment of the obligations of contracts." Because of this constitutional construction, which also touches on the validity of a statute, cf. Deltona Corp. v. Bailey, 336 So.2d 1163 (Fla.1976), we have jurisdiction of the appeal from those portions of the trial court's order which constitute final orders. Division of Beverage v. Foremost-McKesson, Inc., 330 So.2d 143 (Fla.1976); Metropolitan Dade County Trans. Auth. v. State Dept. of Highway Safety & Motor Vehicles, 283 So.2d 99 (Fla.1973); Williston Highlands Development Corp. v. Hogue, 277 So.2d 260 (Fla.1973). Insofar as the order appealed is interlocutory in nature, we have treated the appeal papers as a petition for certiorari. Harris v. Beneficial Finance Co., 338 So.2d 196 (Fla.1976); Rogers v. Johnson, 326 So.2d 185 (Fla.1976); Burnsed v. Seaboard Coastline Railroad Co., 290 So.2d 13 (Fla.1974). Because of the importance of the class action question, and because the trial court ruled Section 711.12(2), Florida Statutes (1975), unconstitutional, we granted certiorari in an unreported order entered September 21, 1976.

The complaint below was filed by Avila South Condominium Association, Inc. (the Association), in its own right and on behalf of the Association members. Membership in the Association, which is a nonprofit corporation charged with managing the Avila South Condominium in Dade County, is limited to owners of the 196 condominium units which comprise the Avila South Condominium. Also named as plaintiffs were four individual members of the Association, who sued in their own right and on behalf of all other persons similarly situated. The three corporate defendants were alleged to have been "owners and developers of the tract, building, and appurtenances submitted to condominium as the Avila South Condominium," and the same corporations were alleged to own certain recreational facilities which they leased to the Association. The complaint alleged that the individual defendants Wolofsky and Schuster had been the "original incorporators and directors of the Association" and had contracted the recreational lease with the corporate defendants on behalf of the Association, but also that Wolofsky and Schuster were officers and directors of the corporate lessors. In eight counts, the complaint assailed the legality of the recreational lease. Of the various theories underlying the several counts of the complaint, half were rejected by the trial court and appealed here; and the defendants cross-assigned as error the failure to dismiss the remaining counts. Before us for decision are questions touching the sufficiency of the entire complaint with the exception of the first count, which has been remanded to the trial court.

In Count II the plaintiffs sought a declaratory judgment as to the ownership of the condominium units, which are leased by the corporate defendants to the Association for recreational purposes. Although when a proper party brings suit, "declaratory judgment is . . . an appropriate means for resolution of such a controversy," State v. Florida National Properties, Inc., 338 So.2d 13, 20 (Fla.1976) (separate opinion of Hatchett, J.), it is a well-established rule that lessees are estopped from denying their lessors' title, during the existence of the relationship of landlord and tenant. See Annot.,87 A.L.R.2d 602 (1963); Annot., 51 A.L.R.2d 1238 (1957).

(A) tenant is estopped to assert that a better title than the landlord's is outstanding in some third person or is in himself. This doctrine, although traceable to the feudal tenures, when the connection between landlord and tenant was much more intimate than it is at present, is not merely technical, but is founded in public convenience and policy, because it tends to encourage honesty and good faith between landlord and tenant. As has been said in this connection, a person entrusted with the possession of property shall not betray that possession.

The doctrine of estoppel of a tenant to deny his landlord's title extends to all species of tenancy, including tenancies at will, and is fully recognized in courts of equity as well as in courts of law. It applies where an agent executes a lease in his own name as lessor, and the lessee is estopped to deny the agent's title. 49 Am.Jur. Landlord and Tenant § 109 (1970) (footnotes omitted).

The property in controversy is leased by the corporate defendants to the plaintiff Association. Without regard to the merits of the dispute as to title, therefore, the second count of the complaint was dismissed as to the Association, on the ground that the Association lacked standing to question the defendants' ownership. See Reibel v. Rolling Green Condominium Association, Inc., 311 So.2d 156 (Fla.3d DCA 1975); Commodore Plaza At Century 21 Condominium Association, Inc. v. Saul J. Morgan Enterprises, Inc., 301 So.2d 783 (Fla.3d DCA 1974).

The Association, which is a corporation not for profit, cannot confer on its members any greater rights as against third parties than the Association itself has. Where a lessee has no standing to sue, any sub-lessee must also lack standing, a fortiori. Just as the rights of stockholders in derivative actions are coextensive with those of the corporation, so here the members' derivative claim for declaratory relief in Count II must fail, because the Association is estopped to deny the defendants' title. The named, individual plaintiffs sued not only as members of the Association, but also in their capacity as unit owners. When viewed as third party beneficiaries under the recreational lease, the unit owners are in no better position, however, because their rights under the recreational lease still flow from the Association's rights. Accordingly, we affirm the dismissal of count two.

The trial court decided that counts three and four stated a cause of action as to the named, individual plaintiffs but ruled that "a class action is not appropriate for the counts (III and IV) sounding in fraud and deceit." Appellees-respondents maintain that Counts III and IV should have been dismissed altogether because the "(p)laintiffs affirmatively accepted the premises" and because it was not alleged in either count that anybody was "precluded from seeing the actual premises prior to closing the purchase." Brief for Respondents, p. 36. The contention that the premises were "affirmatively accepted" goes to the question whether the contracts were subsequently ratified, even if their inducement was fraudulent. Ratification is an affirmative defense to a contract action, however, and should be pleaded as such; it need not be negatived in the complaint. It is also unnecessary, in alleging fraud in the inducement, for the plaintiff to plead that he was "precluded" from discovering the truth as to the misrepresented facts, so long as the complaint alleges reasonable reliance on material misrepresentations of existing fact. ³ We therefore reject these challenges to the sufficiency of Counts III and IV, and we also conclude that count four, in alleging that the defendants perpetrated a fraud "with willful and wanton disregard of the rights of the (p)laintiffs," pleaded an adequate predicate for punitive damages.

The fifth count of the complaint is grounded on Section 711.66(5)(e), Florida Statutes (1975), and the complaint sets forth this portion of the statutory language:

Any grant or reservation made by a declaration or cooperative document, lease, or other document, and any contract made by an association prior to assumption of control of the association by unit owners other than the developer, shall be fair and reasonable.

Plaintiff...