Rhode Island Hosp. Trust Bank v. Coastal Winds South, Inc.

• Decision Date: 20 July 1988
• Docket Number: No. 87-1340,87-1340
• Citation: 528 So.2d 1257,13 Fla. L. Weekly 1687
• Parties: 13 Fla. L. Weekly 1687 RHODE ISLAND HOSPITAL TRUST BANK, as Trustee of the property and Estate of James H. Readyhough, individually and as Trustee, and Hedwig Seldner, Appellants/Cross Appellees, v. COASTAL WINDS SOUTH, INC., a cooperative association, Appellee/Cross Appellant.
• Court: Florida District Court of Appeals

Page 1257

528 So.2d 1257

13 Fla. L. Weekly 1687

RHODE ISLAND HOSPITAL TRUST BANK, as Trustee of the property and Estate of James H. Readyhough, individually and as Trustee, and Hedwig Seldner, Appellants/Cross Appellees, v. COASTAL WINDS SOUTH, INC., a cooperative association, Appellee/Cross Appellant.

No. 87-1340.

District Court of Appeal of Florida Fourth District.

July 20, 1988.

Rehearing Denied Aug. 25, 1988.

Brian C. Deuschle of Spear & Deuschle, P.A., Fort Lauderdale, for appellants/cross appellees.

Harvey K. Mattel, Fort Lauderdale, for appellee/cross appellant.

STONE, Judge.

This is an appeal from a judgment holding the rent escalation provisions of a ninety-nine-year lease to be unconscionable. The trial court granted relief to the plaintiff cooperative association by declaring all present and future rent escalations to be void. The lease has been in effect for over twenty years.

The trial court fixed future rent at a specified permanent figure. The court additionally reduced the overall term of the lease from ninety-nine to fifty years, and declared that the fee simple ownership interest of the lessor be transferred without compensation to the lessee at the time the final payment of rent is made. We affirm in part and reverse in part.

In 1980 Congress enacted the Federal Condominium and Cooperative Abuse Relief Act, 15 U.S.C. § 3608, granting the trial courts wide latitude in fashioning appropriate relief upon a finding of unconscionability. The remedies may include rescission or reformation of the lease and damages.

Here, the court found that the plaintiff established that the requirements of the federal statute had been met and that the escalation clause provisions of the lease were unconscionable.

We reject appellant's contention that the application of the Act to a lease already in existence, by interfering with the enforcement of an unconscionable provision of that lease, deprives appellant of due process of law. Bay Colony Condominium Owners Ass'n v. Origer, 586 F.Supp. 30 (N.D.Ill.1984). In Bay Colony, the court held that due process is not violated where an unconscionable, and therefore invalid, provision in a lease is the object of the remedy:

[T]he Condominium Act interferes with no contractual rights, vested or otherwise ... [T]he Condominium Act does provide for judicial review of leases entered into before the Act itself was passed. A court reviewing a lease under the Condominium Act is granted wide latitude in fashioning remedies to cure any unconscionability in the lease. However, these remedies are directed solely to unconscionable lease provisions, so there is no interference with any valid contract rights. It is axiomatic that a court may refuse to enforce a contract which was unconscionable at the time it was made. [Defendant's] payments under the lease will thus be affected only if the Court determines that the lease is unconscionable--and in such a case [defendant] would have no enforceable right to the payments. There can be no claim of denial of due process absent deprivation of either a liberty or property right. Webster v. Redmond, 599 F.2d 793, 801-02 (7th Cir.1979), cert. denied sub nom. Webster v. Board of Education of City of Chicago, 444 U.S. 1039, 100 S.Ct. 712, 62 L.Ed.2d 674 (1980).

Furthermore, the Condominium Act provides ample opportunity to defendants to show that the lease is not unconscionable. The statute sets forth certain characteristics which lead to a rebuttable presumption of unconscionability, but it does not purport to invalidate per se any particular lease .... (citations omitted)

Id. at 33-34. See also Ballstaedt v. Amoco Oil Co., 509 F.Supp. 1095 (N.D.Iowa 1981). We also agree with appellee's position that the defense of estoppel should not be used to bar an attack on transactions contrary to public policy. See Steinhardt v. Rudolph, 422 So.2d 884 (Fla. 3d DCA 1982), rev. denied, 434 So.2d 889 (Fla.1983). See also Sherba Bros. v. Campbell, 361 So.2d 814 (Fla. 4th DCA 1978); Wash Bowl Vending Co. v. No. 3 Condominium Association, Village Green, Inc., 485 So.2d 1307 (Fla. 3d DCA), rev. denied, 492 So.2d 1336 (Fla.1986).

However, we conclude that the trial court did err in reducing the term of the lease and divesting appellant of ownership of the land. This drastic remedy was not necessary in order to enforce the Act, and is unreasonably punitive. There is insufficient support in the record for such relief, notwithstanding the invalid provision for rent escalation. Appellee argues that this...