Natural Kitchen, Inc. v. American Transworld Corp.
| Citation | 449 So.2d 855 |
| Decision Date | 13 April 1984 |
| Docket Number | No. 83-1146,83-1146 |
| Parties | The NATURAL KITCHEN, INC., Appellant/Cross-Appellee, v. AMERICAN TRANSWORLD CORPORATION, Appellee/Cross-Appellant. |
| Court | Florida District Court of Appeals |
Jack M. Larkin of Spicola & Larkin, P.A., Tampa, for appellant/cross-appellee.
John R. Lawson, Jr., of Lawson, McWhirter, Grandoff & Reeves, Tampa, and Jerry Sarbo of Jerry Sarbo, P.A., Tampa, for appellee/cross-appellant.
This appeal involves a dispute concerning the refusal of a lessor to consent to a lessee's assignment of a lease.
Commencing in 1976, The Natural Kitchen, Inc. (Natural Kitchen) leased space located on the ground floor of a Tampa office building from Regents Park, a joint venture, for a term of five years. The lease contained a provision that the lessee could not assign the lease without the prior written consent of the lessor. Michael Herstone and Robert Rutenberg, the two stockholders of Natural Kitchen, operated a natural foods restaurant on the leased premises. In 1979, Regents Park sold the building to American Transworld Corporation (Transworld). Thereafter, Natural Kitchen renewed its lease for an additional five years.
In January of 1981, Herstone and Rutenberg contracted to sell Natural Kitchen to certain buyers for $76,000. The sales contract provided that the buyers approve the lease. Natural Kitchen requested Transworld to approve the assignment of its lease to the buyers, advising that "we'd be willing to stay on as co-signers and make sure the rent got paid if anything happened." The prospective buyers had prior business experience and were well financed. They intended to change the name of the restaurant to The Slim Gourmet and to expand the menu so as to make it appealing to a broader range of customers.
After several meetings and an exchange of correspondence, Transworld advised Natural Kitchen in May of 1981 that it refused to consent to the assignment of the lease to The Slim Gourmet. The stated reason for the refusal was the concern that the new restaurant might not succeed or have a favorable impact on the building as a whole. Transworld noted, however, that it would enter into a lease with any prospective restaurant operator for a three year term at current market rates and payment by the lessee of "additional electrical usage." The current market rate was approximately $4.50 per square foot above the rate then being paid by Natural Kitchen under its existing lease. When the buyers balked at these terms, Natural Kitchen offered to lower its selling price to $65,000. Notwithstanding, the buyers felt that they could not economically operate under the proposed new lease and broke off negotiations for the purchase. They ultimately acquired another site for their new restaurant.
Natural Kitchen sued Transworld for damages resulting from its unreasonable refusal to approve the assignment of the lease to The Slim Gourmet. Natural Kitchen also sought a declaratory judgment concerning Transworld's insistence that the lease obligated Natural Kitchen to pay for additional electrical usage and for sales taxes on its payment of ad valorem taxes to Transworld. Before the case went to trial, Natural Kitchen entered into a contract to sell its assets to Ron Pruett for $36,000, but this transaction also fell through because Transworld refused to consent to the assignment of the lease. At the trial, the jury returned a verdict in favor of Natural Kitchen for $37,200. The court entered judgment in this amount, reserving jurisdiction to enter its declaratory judgment relative to the legal disputes over the interpretation of the lease. Thereafter, the court entered an order granting a new trial upon the following grounds:
1. Certain equitable issues requiring a declaratory judgment should have been, but were not, decided by the Court prior to submitting factual issues to the jury. This resulted in prejudicial error to the defendant on the issue of liability.
2. The plaintiff should have pled special damages with particularity. It failed to do so.
3. The plaintiff's claim for damages necessitated proving each and every element of special damages by a preponderance of the evidence. At trial, the plaintiff presented little or no credible evidence to meet this burden of proof. As such, the jury's verdict was contrary to the manifest weight of the evidence.
4. The plaintiff was required to prove its damages with "reasonable certainty." To fulfill this requirement, the jury should have been given a legally supportable "measure of damages" or "yardstick" to guide them in assessing the plaintiff's alleged damages. This was not done. Instead, the jury's verdict was based upon speculation, and a legally inadequate response was given to one of the questions asked by the jury on this subject.
5. The plaintiff was required to prove that its alleged damages were proximately caused by the defendant's refusal to assign, and not from some unrelated cause. At trial, the plaintiff presented no credible evidence to establish this required element of damages.
6. The plaintiff was required to prove that its alleged damages were reasonably foreseeable by the defendant on the date that the 1976 lease was executed. In order to establish this required element of damages, the plaintiff would have had to prove that the defendant knew, or should have known, that the plaintiff would suffer the kind of lost profits claimed if the landlord did not consent to assignment. At trial, the plaintiff presented no credible evidence to establish this required element of damages.
7. The plaintiff, The Natural Kitchen, Inc., did not prove any damages against the defendant arising out of the subject matter of its complaint because it was not a party to the January 28, 1981 Purchase Agreement between Messrs. Herstone and Rutenberg and the principals of The Slim Gourmet, Inc.
The court later entered declaratory judgment in favor of Transworld on the two disputed legal issues. Natural Kitchen appealed the order granting new trial and the final declaratory judgment. Transworld has cross-appealed, asserting that the court erred in failing to grant its motion for directed verdict.
At the outset it should be noted that the unreasonableness of Transworld in refusing to consent to the assignment of the lease is not an issue on this appeal. Pursuant to the rationale of Fernandez v. Vazquez, 397 So.2d 1171 (Fla. 3d DCA 1981), the trial court instructed the jury that a lessor may not arbitrarily refuse to consent to an assignment of a commercial lease which provides, even without limiting language, that a lessee shall not assign or sublease the premises without the written consent of the lessor. The jury resolved this issue favorably to Natural Kitchen, and Transworld has not asserted error on this point.
Appellate review of an order granting a new trial must be directed to the reasons set forth in the trial judge's order. Ortega v. Perrini & Sons, Inc., 371 So.2d 203 (Fla. 2d DCA 1979). Since ground one refers to the two issues encompassed by the declaratory judgment, it is appropriate to address these matters first. The dispute over the payment of additional electrical usage came about as a result of certain provisions in the lease. Paragraph 10A(4) of the printed form of lease provided:
10. Utilities and Services. A. Lessor agrees to furnish or cause to be furnished to the Demised Premises, in common with other lessees where appropriate, the following services,
....
(4) Electricity for normal office usage, it being agreed that all additional electricity costs stemming from such causes as, but not limited to Lessee's operation of special equipment and from Lessee's extraordinary usage of heating and air conditioning shall be paid by Lessee; ...
Two typewritten paragraphs appear at the end of the lease which read as follows:
37. Lessor agrees rent shall be inclusive of hot water, electricity, and air conditioning charges.
38. In the event electrical charges are determined to be less than Lessor has projected, an appropriate credit will be applied to the Lease.
James Freedman, the building architect and original principal of Regents Park, testified that the printed portion of its lease applied to all tenants but that paragraph 37 was separately negotiated between Regents Park and Natural Kitchen. He stated that in setting the rent to be charged, he took into consideration the amount of electricity he thought that Natural Kitchen would use. When asked on cross-examination why no portion of paragraph 10A(4) had been deleted, he responded that this provision had been modified "in the back." We believe the court erred in concluding that Natural Kitchen was obligated to pay for the additional electrical usage.
Mr. Freedman explained how paragraphs 37 and 38 were added to the contract. These paragraphs reflected a clear intent that the stated rental...
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