National Health Laboratories, Inc. v. Bailmar, Inc., s. 83-1592

• Decision Date: 24 January 1984
• Docket Number: Nos. 83-1592,83-995,s. 83-1592
• Citation: 444 So.2d 1078
• Parties: NATIONAL HEALTH LABORATORIES, INC., Appellant, v. BAILMAR, INC., Appellee.
• Court: Florida District Court of Appeals

Page 1078

444 So.2d 1078

NATIONAL HEALTH LABORATORIES, INC., Appellant, v. BAILMAR, INC., Appellee.

Nos. 83-1592, 83-995.

District Court of Appeal of Florida Third District.

Jan. 24, 1984.

Rehearing Denied Feb. 29, 1984.

Blackwell, Walker, Gray, Powers, Flick & Hoehl and David M. Rogero, Miami, for appellant.

Horton, Perse & Ginsberg and Mallory Horton, Miami, for appellee.

Before SCHWARTZ, C.J., and BARKDULL and JORGENSON, JJ.

SCHWARTZ, Chief Judge.

National Health Laboratories, Inc., which was a business tenant of the appellee, Bailmar, Inc., appeals from an adverse judgment in the principal sums of $101,082.00 for additional rental based upon increases in the cost of living index, and $2,034.15 for increased property taxes. We reverse the former and affirm the latter award.

The operative facts are undisputed. In February, 1972, National's predecessor and Bailmar entered into a lease agreement, prepared by the lessee, for a five-year term commencing April 1, 1972 at a base rent of $1,574.00 per month. Two renewal options were provided; the first, for a three year term beginning April 1, 1977; the second, for an additional two years thereafter. Both options were duly exercised and National Health vacated the premises at the end of the second renewal term on March 31, 1982, having made the specified monthly payments.

The lease provided that Bailmar could receive cost of living increases in the rent as of April 1, 1975 and at the commencement of each of the two renewal terms in proportion to the progressive increases in the Miami Wholesale Price Index for March, 1975, 1977 and 1980, respectively. ¹ It was specifically provided, however, that

In order to effect the aforementioned rental adjustments at the end of the third year of the term hereof and/or in the event of exercise by Lessee of the renewal options, Lessor shall deliver to Lessee within 30 days after publication thereof, a true copy of each specified Index, and shall, as soon as practicable thereafter, compute the rental rate for the period and advise Lessee in writing. Pending determination of the increase, if any, Lessee shall continue to pay rent at the rate in effect for the immediately preceding period, and shall pay any arrearages caused by delays in the computation of such increase upon receiving notice from Lessor of the increase. The existence of any such arrearages shall not constitute any default under any provision of this lease agreement. [e.s.]

The lease also provided:

TWENTY-FIFTH: Lessee shall during the term hereof and any extensions thereof reimburse Lessor immediately upon demand for one fourth of the increase, if any, of the real property taxes applicable to the lots and buildings of which the demised premises constitute a part, over said taxes for the year 1971....

In addition, along with a standard "time of-the-essence" clause, ² the nineteenth clause of the lease stated:

NINETEENTH: The rights of the lessor under the foregoing shall be cumulative, and failure on the part of the lessor to exercise promptly any rights given hereunder shall not operate to forfeit any of the said rights.

The present controversy arose from the fact that Bailmar did not take any action to collect either the cost of living adjustments or the tax payments until July 24, 1981--well-subsequent to the beginning of the final period of renewal--when its attorney wrote a demand letter for those amounts. ³ In the ensuing litigation, the tenant contended among other things, that the landlord's failure to comply with the lease provisions concerning the escalations precluded their recovery; and that its demand for the taxes was untimely. The trial court ultimately ruled otherwise. Based upon the perceived effect of the nineteenth clause of the lease and the application of an identical provision in Philpot v. Bouchelle, 411 So.2d 1341 (Fla. 1st DCA 1982), it held on rehearing that the lessor was entitled both to the cost-of-living increases retroactive to April 1, 1975--when they would first have become operative--and to the tax contributions due from the commencement of the lease in 1972. ⁴

a. Award of Cost of Living Increases Unjustified. We cannot approve that portion of the judgment which allows recovery for the rent escalations attributable to the rises in the pertinent indices of inflation. The lease is explicit in its requirement that "in order to effect" those increases, the lessor "shall" deliver the respective index to the lessee within 30 days of its publication, which would have occurred in April, 1975, April, 1977 and April, 1980; compute, "as soon as practicable thereafter," the consequent supplemental rent due; and thereafter advise the tenant in writing accordingly. Admittedly, the appellee did not comply with these provisions and did not even begin the process of doing so until July, 1981, over a year after the last period began to run. It is clear, particularly in the light of the "time of-the-essence" clause, that the non-compliance with this unequivocally mandatory pre-condition to their entitlement precludes recovery of the escalated amounts under the terms of the lease itself. Of the...