Jenkins v. Eckerd Corp.
| Decision Date | 28 September 2005 |
| Docket Number | No. 1D04-0370.,1D04-0370. |
| Parties | Robert B. JENKINS d/b/a Sandhill Developments, Appellant, v. ECKERD CORPORATION, Appellee. |
| Court | Florida Supreme Court |
William E. Bond, Jr., and Keith L. Bell, Jr., of Clark, Partington, Hart, Larry, Bond & Stackhouse, Pensacola, for Appellant.
Celeste D. Flippen of J.C. Penney Company, Inc., Plano, TX, and Stephen H. Grimes and Susan L. Kelsey of Holland & Knight LLP, Tallahassee, for Appellee.
Robert B. Jenkins, doing business as Sandhill Developments (Sandhill or lessor), appeals a final judgment entered following the granting of a directed verdict in favor of Eckerd Corporation (Eckerd or lessee), appellee, in an action filed by Sandhill for damages resulting from an alleged breach of a shopping center lease by Eckerd. We conclude that the lower court correctly determined that the parties' lease was free from any latent ambiguity that would permit the introduction of extrinsic evidence and that, under the unambiguous provisions of the lease, Eckerd possessed the right to terminate its obligations under the lease when the anchor tenant, Delchamps, Inc., ceased to lease and pay rent for its store in the shopping center. Accordingly, we affirm the judgment entered in favor of Eckerd.
The heart of this controversy concerns language used in a shopping center lease. In January 1991, Sandhill and K & B Florida Corporation (K & B), a pharmaceutical retailer, entered into the subject lease (K & B Lease) providing for the rental of a parcel of real property located in the Gulf Breeze Shopping Center in Gulf Breeze, Florida. Shortly before the execution of the K & B Lease, Sandhill had leased space in the shopping center to Delchamps, Inc., a regional supermarket chain, as a so-called "anchor" tenant in the shopping center. Article 2B of the K & B Lease referred to the Delchamps lease and provided, in pertinent part, as follows:
* * * * * *
B. Lessor represents to Lessee that Lessor has entered into leases with the following named concerns: with Delchamps, Inc. (Delchamps) for a minimum of 45,000 square feet for supermarket grocery store and that Lessor will construct and offer for lease individual retail shops for a minimum of 21,000 square feet for various retail uses, all located and dimensioned shown on the attached Plot Plan, ... Lessor further represents that said Delchamps lease is for leasing and paying rent by Delchamps as designated hereinabove in the Shopping Center, all as shown on the Plot Plan, Exhibit "A", the lease to Delchamps being for a minimum period of 20 years, and said lease obligates Delchamps to initially open for business in the Shopping Center for the use as indicated above and to lease and pay rent for their store substantially to the same extent as is required of Lessee; that Delchamps has not been granted any right or privilege of terminating such lease during the primary 20 year term thereof under any circumstances more favorable to Delchamps than those granted to Lessee herein. The continued leasing and payment of rent for their store in the Shopping Center by Delchamps is part of the consideration to induce Lessee to lease and pay rent for its store, as hereinafter described on the Leased Premises as a part of the Shopping Center. Accordingly, should Delchamps fail or cease to lease and pay rent for its store in the Shopping Center during the Lease Term as hereinafter set out, Lessee shall have the right and privilege of: (a) cancelling this Lease and of terminating all of its obligations hereunder at any time thereafter upon written notice by Lessee to Lessor, and such cancellation and termination shall be effective ninety (90) days after the mailing of such written notice; ... It is specifically understood that Lessor shall be obligated to immediately notify Lessee in writing should Delchamps fail or cease to lease and pay rent for such a store in the Shopping Center during the primary term of this Lease, but any failure of Lessor to notify Lessee thereof shall in no way deprive Lessee of its privilege of cancelling this Lease and terminating all of its obligation hereunder.
(Emphasis added).
Article 29A of the K & B Lease contained an integration clause which provided that "[t]his lease contains all of the agreements made between the parties hereto and may not be modified orally or in any manner other than by an agreement in writing signed by the parties hereto or their heirs, legal representatives, successors, transferees, or assigns." The Delchamps lease included an assignment provision which granted Delchamps "the right, at any time after the commencement of the term hereof, to assign this lease...."
In August 1997, Rite Aid, Incorporated (Rite Aid), another drugstore operator, acquired K & B and continued to operate the drugstore in the shopping center under the K & B Lease as a Rite Aid store. In September 1997, Jitney Jungle Stores of America, Inc. (Jitney Jungle), another grocery store operator, acquired the capital stock of Delchamps and continued the operation of the Delchamps grocery store in the shopping center. In 1998, Eckerd acquired certain drugstore properties from Rite Aid, including the drugstore in the shopping center. The K & B Lease was assigned to Eckerd, which began operating an Eckerd drugstore in the leased premises. In October 1999, Jitney Jungle, and its affiliates, including Delchamps, filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. Thereafter, an order was entered in the bankruptcy proceeding approving Delchamps' assignment of its lease in the shopping center to Bruno's Supermarkets, Inc. (Bruno's). Since the assignment, Bruno's has occupied the leased premises under the assigned Delchamps lease and has operated a Bruno's grocery store there. Sandhill failed to provide notice to, or obtain consent from, Eckerd of this assignment.
On June 14, 2001, Eckerd notified Sandhill that Eckerd intended to close the drugstore it operated in the leased premises and that it had retained the services of an agent to locate a suitable subtenant for the space. Eckerd indicated that its agent would be available to negotiate should Sandhill be interested in early termination of the lease. On June 22, 2001, Eckerd notified Sandhill that, because Delchamps had ceased to lease and pay rent for its store in the shopping center, pursuant to article 2B of the K & B Lease, Eckerd was cancelling its lease effective September 20, 2001. Eckerd continued to pay rent due under the lease through October 2001.
In December 2001, Sandhill filed suit against Eckerd for an alleged breach of the shopping center lease, seeking damages for rent, taxes, and common-area maintenance (CAM) charges for the period of November 2001 to the date of trial. In its answer, Eckerd alleged that it terminated its lease obligations pursuant to article 2B of the lease promptly upon learning that Delchamps no longer leased the grocery store in the Gulf Breeze Shopping Center. Eckerd counterclaimed for return of rent and CAM charges it paid to Sandhill for the period of July 2001 through October 2001. The case proceeded to nonjury trial.
At trial, Sandhill sought to introduce testimony relating to its negotiations of the K & B Lease to explain the parties' intent in drafting the allegedly ambiguous language of article 2B. The trial court sustained Eckerd's parol evidence and relevancy objections to the admission of extrinsic evidence pertaining to the parties' intent when entering into the original agreement. Sandhill then proffered testimony of a real estate developer who was involved in the 1991 lease negotiations between K & B and Sandhill.
The developer testified that prior to the mid-1980s, as a general rule, anchor tenants had agreed to operating covenants which obligated the tenant to continue operation of the store during the entire lease term. By the mid-1980s, however, most anchor tenants had refused to sign operating covenants. Rather than agree to operate continuously, anchor tenants agreed to pay rent as the fulfillment of their lease obligation, even if they ceased operation.
Sandhill also proffered the testimony of Virginia Besthoff, who negotiated the subject lease on behalf of K & B, and Mr. Jenkins who negotiated the lease on behalf of Sandhill. Besthoff testified that the purpose of article 2B
was to protect us as the tenants from being in a shopping center where we did not have a co-anchor operating the shopping center with us, to help attract traffic to the center, and to pay rent to the landlord, which would result in the landlord not keeping the center maintained, and we felt that that was very important for us to have a driving, busy shopping center.
On cross-examination of Besthoff, the following ensued:
Q. ... Now, typically when you negotiate that provision [article 2B], does the landlord ask that you include language that broadens the definition of the cotenant beyond the mere name to Delchamps?
A. Frequently.
* * * * * *
Q. Frequently the landlord will say, Ms. Besthoff, after the word Delchamps in 2(b), we want to insert, or successors and assigns; isn't that right?
A. That's absolutely accurate.
Q. And that didn't happen in this case, did it?
A. No.
Q. And therefore, the wording was just as it appears today?
A. Yes.
Jenkins' proffered testimony that his family had owned the Gulf Breeze Shopping Center since 1969 and had leased premises to Delchamps under a lease with a continuous occupancy clause. When Jenkins' family expanded the shopping center and built Delchamps a new store, Delchamps refused to agree to a continuous occupancy clause in the new lease. Delchamps indicated that under any new lease it would reserve the right to not continuously operate and to "go dark." Jenkins explained the intent of article 2B in the K &...
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