Sans Souci v. Division of Florida Land Sales and Condominiums, AV-106

• Decision Date: 03 April 1984
• Docket Number: No. AV-106,AV-106
• Citation: 448 So.2d 1116
• Parties: SANS SOUCI, a Florida general partnership, Appellant, v. DIVISION OF FLORIDA LAND SALES AND CONDOMINIUMS, Department of Business Regulation, State of Florida, La Plaza Condominium Association, Inc., a Florida corporation not for profit, on behalf of itself and all other condominium unit owners at Sans Souci, a Condominium, Fort Pickens Road, Pensacola Beach, Florida, similarly situated, Appellees.
• Court: Florida District Court of Appeals

Page 1116

448 So.2d 1116

SANS SOUCI, a Florida general partnership, Appellant, v. DIVISION OF FLORIDA LAND SALES AND CONDOMINIUMS, Department of Business Regulation, State of Florida, La Plaza Condominium Association, Inc., a Florida corporation not for profit, on behalf of itself and all other condominium unit owners at Sans Souci, a Condominium, Fort Pickens Road, Pensacola Beach, Florida, similarly situated, Appellees.

No. AV-106.

District Court of Appeal of Florida,

First District.

April 3, 1984.

Charles L. Hoffman, Jr., of Shell, Fleming, Davis & Menge, P.A., Pensacola, for appellant.

Daniel J. Bosanko, Staff Atty., Dept. of Business Regulation, Tallahassee, for appellees.

WIGGINTON, Judge.

The issue for our review is whether there was sufficient documentary evidence presented to the Division of Florida Land Sales and Condominiums for the division to find that an assignment of a master sublease effected a novation, thereby making section 718.401(8), Florida Statutes (Supp.1976), applicable to the sublease to bar the sublessor's attempted exercise of a rent escalation clause contained in the sublease. ¹ We hold that there was not sufficient evidence presented, and reverse.

This appeal follows division proceedings on remand from an earlier appeal to this Court reported at 421 So.2d 623 (Sans Souci I). To clarify the issue, we shall set forth in full the statement of the facts and case as appear in Sans Souci I:

In 1970, Vista Deluna Condominiums leased property from the Santa Rosa Island Authority, a political entity. Some time later, Gulf Florida Development Corp. received an assignment of Vista Deluna's interest. Gulf Florida then moved forward with the development of the Sans Souci condominiums project. Although the date is uncertain, Gulf Florida filed its declaration of condominium and, as exhibit H to the declaration, a master copy of a sublease.

The master sublease was the model copy of subleases to be executed between Gulf Florida and each purchaser of a condominium unit at Sans Souci. The literal wording of the lease reflects that Gulf Florida, the sublessor, agreed to lease a condominium unit and an indoor parking space to the unit purchaser.1 This sublease contained a rent escalation clause, permitting a periodic escalation of the rent based on the U.S. Department of Labor Consumer Price Index. The sublease provided for a term ending in the year 2069. A number of the units had been subleased by Gulf Florida, when on June 2, 1977, Gulf Florida assigned its interest in the subleases to San Souci, a partnership. In late 1980, San Souci determined to exercise its contractual right to raise the rent on its subleases.

The condominium unit owners, through their condominium association, sought a Section 120.565, Florida Statutes (1979),2 declaratory statement from the Division in order to preclude San Souci from raising the rent by exercising the escalation clause in the sublease. The Division granted San Souci's motion to intervene. On the merits the Division determined that Section 718.401(8), Florida Statutes (Supp.1976),3 bars the use of escalation clauses in condominium land leases; that this section was applicable to the facts of this case; that this section went into effect on January 1, 1977, well before the June 2, 1977 date on which San Souci was assigned its interest in the lease as sublessor; that by virtue of the assignment, San Souci took subject to all Florida laws then existing, including Section 718.401(8), and that there could be no unconstitutional impairment of San Souci's contractual obligation, since Section 718.401(8) was in effect prior to the assignment of any interest in the lease to San Souci.

421 So.2d at 625 (footnotes omitted). On appeal, we affirmed in part and reversed in part, ultimately concluding that the record before us was insufficient to sustain the division's finding that the law in effect at the time Gulf Florida assigned the lease and subleases to San Souci controlled the question of whether San Souci was permitted to escalate the rents. Specifically, we noted that the record was silent as to precisely what date the declaration of condominium and the master sublease were filed, that date being the controlling factor as to the applicability of section 718.401(8). Since we considered it reasonable to conclude that the date of filing was prior to 1974 and 1975, the years that many of the individual subleases between Gulf Florida and the condominium unit owners were consummated, id., at 628, we remanded the cause for further proceedings directed to the following two alternative issues:

First, did the superior declaration of condominium or its master sublease, incorporate the "automatic amendment theory", permitting the declarations to be amended from time to time, by later amendments of the Condominium Act? If so, there would be both a legal and evidentiary basis for the Division's finding, now necessary for the Division to consider. If not, the Division would next be required to determine whether the lease assignment between San Souci and Gulf Florida was a novation.

Id. (footnote omitted).

In its order on remand, the division concluded from the documentary evidence presented that the declaration of condominium, with its exhibit H, the master sublease, was filed on June 25, 1974, but contained no automatic amendment clause to permit the declaration to be amended by section 718.401(8). That conclusion is not contested. However, the division did find that an assignment to San Souci of the lease and sublease effected a novation of the obligation owed by the previous sublessor, Gulf Florida, to the sublessees, condominium unit owners. Resulting was a new obligation owed by San Souci, and the applicability of section 718.401(8) to the lease and sublease. Accordingly, the division declared, pursuant to section 120.565, that by virtue of section 718.401(8), San Souci could not exercise its escalation clause.

On appeal, San Souci raises six points for our review. Point I challenges the jurisdiction of the division in a section 120.565 declaratory proceeding to determine the issue of novation. ² San Souci argues that section 120.565 grants the division the authority to interpret statutory provisions only, and not to involve itself in assignments of leases between private parties. On the contrary, we point out that section 120.565 contemplates the division's determining whether a particular statutory provision applies to the particular petitioner. As we recognized in our earlier opinion, and as we reiterate here, the issue of whether section 718.401(8) applies to the instant circumstances to void the escalation clause is inextricably tied to the issue of whether a novation was effected by the earlier assignment. Absent a finding of a new contract, the application of section 718.401(8), effective January 1, 1977, to San Souci's original contractual obligation would constitute an unconstitutional impairment of that obligation. That is, an assignment normally involves only the assignee's acquiring the rights of the assignor and not necessarily the obligations, unless it is found that the assignment was also a novation. San Souci, 421 So.2d at 629. Consequently, in order for the division to have rendered an accurate declaratory statement, it was necessary for it to have determined first the issue of novation.

Accordingly, in response to San Souci's Point III, the division was required by virtue of our direction in San Souci I, to consider the issue of novation, despite its not having been raised in the original declaratory statement proceedings. Unique to this area of the law, section 120.68(13)(a), Florida Statutes (1981), authorizes a reviewing court to provide whatever relief is appropriate "irrespective of the original form of the petition." Our ultimate task in the prior appeal was to review the division's action and to determine whether the division erred in applying section 718.401(8) to San Souci's sublease. Rice v. Department of Health and Rehabilitative Services, 386 So.2d 844 (Fla. 1st DCA 1980). That review and concomitant determination, to be complete, necessarily entailed consideration of whether the assignment created a new contract. As the record's posture was insufficient from which ...