Harkless v. Laubhan

• Decision Date: 21 December 2016
• Docket Number: Case No. 2D15–5385
• Citation: 219 So.3d 900
• Parties: David L. HARKLESS, Appellant, v. David A. LAUBHAN and Susan W. Laubhan, Appellees.
• Court: Florida District Court of Appeals

219 So.3d 900

David L. HARKLESS, Appellant,

v.David A. LAUBHAN and Susan W. Laubhan, Appellees.

Case No. 2D15–5385

District Court of Appeal of Florida, Second District.

Opinion filed December 21, 2016.

Rehearing Denied January 30, 2017

Glenn N. Siegel, of Glenn N. Siegel, P.A., Port Charlotte, for Appellant.

Warren R. Ross, of Wotitzky, Wotitzky, Ross & McKinley, P.A., Punta Gorda, for Appellees.

BADALAMENTI, Judge.

David L. Harkless appeals the trial court's final summary judgment entered in favor of David and Susan Laubhan. The crux of this dispute is whether Mr. Harkless reserved the right to receive rent from a parcel of land that he used to own and that the Laubhans eventually came to own.

We reverse the grant of summary judgment. Mr. Harkless reserved his right to receive rent in a sales contract with an intermediate purchaser. That reservation did not merge into any subsequent deed. Nevertheless, there remains a genuine issue of material fact as to whether the Laubhans were bona fide purchasers for value and without notice, rendering summary judgment inappropriate. Our reversal extends to any relief the trial court provided to the Laubhans on their counterclaim.

I. STATEMENT OF FACTS & PROCEDURAL POSTURE

Mr. Harkless owned land in DeSoto County. In 2008, he entered into a land lease agreement (the Lease) with Verizon Wireless. Under the Lease, Mr. Harkless leased a 100– by 100–foot parcel of his land (the Parcel) to Verizon, along with an accompanying easement for Verizon to build a cell tower. In return, Verizon agreed to pay Mr. Harkless $13,800 a year in rent. Verizon did not commence construction of the tower until May 2012.

In 2011, Mr. Harkless sold ten acres of his land to Reed and Beth Lolly, who planned to operate a blueberry farm. Those ten acres contained the Parcel. Paragraph 18 of the sales contract between Mr. Harkless and the Lollys (the Harkless–Lolly contract) contains a handwritten addendum entitled "Additional Terms." The addendum states, "The Easement for the said Verizon Cell Tower location is 115 ft x 115 ft in which the seller David L. Harkless shall continue and remain owner of said easement and Verizon cell tower lease."¹ However, the subsequent warranty deed from Mr. Harkless to the Lollys (April 2011 Deed) did not contain a similar provision specifically memorializing Mr. Harkless's right to receive rent.

Three months later, after deciding that market conditions for blueberries were unfavorable, the Lollys sold the ten acres to the Laubhans—retirees who owned a small ranch on adjoining land. The sales contract between the Lollys and the Laubhans (the Lolly–Laubhan contract) made no express mention of Mr. Harkless's remaining interest in the Parcel. Unlike paragraph 18 of the Harkless–Lolly contract, paragraph 18 of the Lolly–Laubhan contract provides, "Buyer is aware of Verizon tower lease and has received a copy of the survey and lease." The warranty deed from the Lollys to the Laubhans (the July 2011 Deed) contained no language addressing Mr. Harkless's right to receive rent under the Lease.

Both the April 2011 Deed and the July 2011 Deed stated that they were "subject to a (Verizon Wireless) Easement as described in Instrument # 200814009062, DeSoto County, Florida." That instrument, entitled "Amended Memorandum of Lease Agreement," is essentially an abridged version of the Lease. The Amended Memorandum is silent as to Mr. Harkless retaining his right to receive rent.

Shortly before Verizon began construction of the tower in May 2012, Mr. Harkless gave Communications Capital Group, LLC, the option to purchase his interest in the Lease for $175,000. Communications Capital thereafter sent the Laubhans a letter asking them to sign and notarize documents which purported to memorialize Mr. Harkless's continued right to receive rent under the Lease. The Laubhans responded that they owned the Parcel free and clear of Mr. Harkless's right to receive rent. As a result of this claim, Communications Capital did not exercise its option.

Mr. Harkless then filed a two-count complaint against the Laubhans. He sought a declaratory judgment that he had the right to receive rent under the Lease. He also sought reformation of both the April 2011 Deed and July 2011 Deed to reflect this right. The Laubhans moved for summary judgment. They argued that the April 2011 Deed and the July 2011 Deed failed to expressly reserve Mr. Harkless's right to receive rent. Accordingly, the Laubhans maintained that the right to receive rent was presumptively conveyed from Mr. Harkless to the Lollys and ultimately from the Lollys to the Laubhans.

In support of their summary judgment motion, the Laubhans filed a Statement of Undisputed Facts. This Statement provides that "the language of the [two real estate sales] contracts was different in paragraph 18" and the Laubhans "were not aware before this litigation of the contractual agreement between Mr. Harkless and the Lollys by which the Lollys specifically agreed that Mr. Harkless was to receive the Verizon lease payments."

At the summary judgment hearing, the Laubhans contended that the only relevant documents for the trial court to consider were the April 2011 Deed, the July 2011 Deed, and the Amended Memorandum of Lease Agreement mentioned in both Deeds. Because none of those documents explicitly reserved Mr. Harkless's right to receive rent, the Laubhans maintained that Mr. Harkless necessarily conveyed that right away, along with the rest of his rights to the Parcel. The Laubhans asserted that the trial court should disregard any other documents which might indicate otherwise as inadmissible parol evidence. Seemingly, they acknowledge that the Harkless–Lolly contract reflected an intent that Mr. Harkless retain the right to receive rent under the Lease. The Laubhans conceded that their theory of the case would result in an "unintended consequence" for Mr. Harkless and the Lollys. Seizing on this concession in opposing the motion, Mr. Harkless pointed to the deposition testimony of himself and the Lollys which reflected that every party to the April 2011 Deed understood that Mr. Harkless retained the right to receive rent. The Laubhans countered that intent was irrelevant because the intent was never "put in a document" recorded in the public records.

Ultimately, the trial court granted the Laubhans' motion for summary judgment.

II. DISCUSSION

Mr. Harkless argues that the trial court improperly granted summary judgment in favor of the Laubhans. More specifically, he asserts that genuine issues of material fact exist as to whether he reserved his right to receive rent and whether the Laubhans were bona fide purchasers for value without notice. "If the record reflects the existence of any genuine issue of material fact ... summary judgment is improper." Alderman v. BCI Eng'rs & Scientists, Inc. , 68 So.3d 396, 399 (Fla. 2d DCA 2011) (quoting Holland v. Verheul , 583 So.2d 788, 789 (Fla. 2d DCA 1991) ). Whether or not a party is a bona fide purchaser for value without notice is an issue of material fact which may prompt the reversal of a summary judgment. See McCoy v. Love , 382 So.2d 647, 649 (Fla. 1979).

A. Reservation of Mr. Harkless's Right to Receive Rent

We interpret contracts in accordance with their plain and ordinary meaning when the contractual language is clear and unambiguous. See Bioscience W., Inc. v. Gulfstream Prop. & Cas. Ins. Co. , 185 So.3d 638, 640 (Fla. 2d DCA 2016). Similarly, "[w]hen the language of a deed is clear and certain in meaning and the grantor's intention is reflected by the language employed, there is no room for judicial construction of the language nor interpretation of the words used." Rogers v. United States , 184 So.3d 1087, 1095 (Fla. 2015) (quoting Saltzman v. Ahern , 306 So.2d 537, 539 (Fla. 1st DCA 1975) ).

Neither the April 2011 Deed nor the July 2011 Deed contains language specifically reserving Mr. Harkless's right to receive rent pursuant to the Lease. Yet, in their Statement of Undisputed Facts, the Laubhans concede that Mr. Harkless and the Lollys "specifically agreed that Harkless was to receive the Verizon lease payments." We likewise agree that the "Additional Terms" section of the Harkless–Lolly contract reserved Mr. Harkless's right to receive rent. See Gray v. Callahan , 143 Fla. 673, 197 So. 396, 398–99 (1940) ("The transferor of [a] reversion may ... in the transfer expressly reserve the rent for part [or] all of the term granted by the lease ...." (quoting 16 Ruling Case Law, Landlord and Tenant § 128 (William M. McKinney & Burdett A. Rich eds., 1917))); 1 Herbert Thorndike Tiffany, The Law of Real Property and Other Interests in Land § 53(a) (1920) (explaining that, when a lessor uses language referring to the "transfer of a lease," they are ordinarily referring to transfer of the right to receive rent, as opposed to the transfer of some reversionary interest).

B. Extrinsic Evidence, Merger by Deed, and the Intent of the Parties

Because Mr. Harkless reserved his right to receive rent in the Harkless–Lolly contract, we must reckon with the Laubhans' arguments concerning ambiguity and merger by deed. At the hearing on their summary judgment motion, the Laubhans asserted that even if Mr. Harkless reserved his right to receive rent in the Harkless–Lolly contract, that right merged into the April 2011 Deed without specific reservation and was then conveyed to the Laubhans in the July 2011 Deed. Accordingly, the Laubhans believe that the Harkless–Lolly contract is inadmissible parol evidence and cannot be used to construe the otherwise unambiguous language of conveyance in the April 2011 Deed and July 2011 Deed.

It is axiomatic that preliminary agreements concerning the sale of property merge into the deed executed pursuant to the sale. Morton v. Attorneys' Title Ins. Fund, Inc. , 32 So.3d 68, 72 n.3 (Fla. 2d DCA 2009) (quoting Engle Homes, Inc. v. Jones , 870 So.2d 908, 910 (Fla. 4th DCA 2004) ). This axiom encompasses real...