Sans Souci v. Division of Florida Land Sales and Condominiums, Dept. of Business Regulation, AG-137

• Decision Date: 21 October 1982
• Docket Number: No. AG-137,AG-137
• Citation: 421 So.2d 623
• Parties: SANS SOUCI, a Florida general partnership, Appellant, v. DIVISION OF FLORIDA LAND SALES AND CONDOMINIUMS, DEPARTMENT OF BUSINESS REGULATION, State of Florida, appellee; 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 623

421 So.2d 623

SANS SOUCI, a Florida general partnership, Appellant, v. DIVISION OF FLORIDA LAND SALES AND CONDOMINIUMS, DEPARTMENT OF BUSINESS REGULATION, State of Florida, appellee; 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. AG-137.

District Court of Appeal of Florida,

First District.

Oct. 21, 1982.

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

Helen C. Ellis, Staff Atty., Div. of Florida Land Sales and Condominiums, Tallahassee, for appellees.

ERVIN, Judge.

Appellant Sans Souci seeks review of final agency action by the Division of Florida Land Sales and Condominiums ("Division") in the form of a declaratory statement determining the rights of various condominium unit owners. Specifically, the Division determined that Sans Souci, the holder of a condominium land lease, did not have the right to exercise a rent escalation clause, thereby raising the unit owners' rent. On appeal, Sans Souci contends that the Division did not have the authority to enter such an order, in that the Division's order effectively violates the constitutional prohibition against the impairment of contractual obligations. We affirm the authority of the Division to enter the underlying order, but because we find the record inadequate to permit review of the constitutional issue, we remand jurisdiction to the Division for further proceedings, including development of a record permitting review of such issue on either of two alternative grounds.

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 Sans Souci, a partnership. In late 1980, Sans 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 Sans Souci from raising the rent by exercising the escalation clause in the sublease. The Division granted Sans 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 Sans Souci was assigned its interest in the lease as sublessor; that by virtue of the assignment, Sans Souci took subject to all Florida laws then existing, including Section 718.401(8), and that there could be no unconstitutional impairment of Sans Souci's contractual obligation, since Section 718.401(8) was in effect prior to the assignment of any interest in the lease to Sans Souci.

As to the jurisdictional problem, appellant asserts that a Section 120.565 declaratory statement is an improper vehicle to use in this case, because the appellant's constitutional rights are at stake, to wit: the application of Section 718.401(8) unconstitutionally impairs the appellant's contractual We disagree. It is well established that the mere assertion "of a constitutional issue should not excuse a failure to exhaust administrative remedies." Gulf Pines Memorial Park, Inc. v. Oaklawn Memorial Park, Inc., 361 So.2d 695, 699 (Fla.1978). We find nothing in the record to suggest that this court will not be able ultimately to accord the appellant a determination of its constitutional rights. Cf. Key Haven Associated Enterprises, Inc. v. Board of Trustees of the Internal Improvement Trust Fund, 400 So.2d 66 (Fla. 1st DCA 1981), rev. docketed, no. 61,027 (Fla. orally argued April 14, 1982); Rice v. Department of Health & Rehabilitative Services, 386 So.2d 844 (Fla. 1st DCA 1980). Certainly, the appellant has not yet been able to make a convincing showing that the Administrative Procedure Act's "impressive arsenal of varied and abundant remedies" is inadequate to achieve that aim. State ex rel. Department of General Services v. Willis, 344 So.2d 580, 590 (Fla. 1st DCA 1977). The appellant has shown no reason for, nor even sought, circuit court intervention seeking a declaration of the Division's lack of jurisdiction to rule on this matter, or of the facial invalidity of Section 718.401(8).

rights and appellee's obligations under the escalation clause. It is appellant's view that an administrative body has no authority to determine one's constitutional rights under a Florida law in instances whereby application of the law will prove to be unconstitutional.

In essence, the Division has merely determined the applicability and interpretation to be placed upon Section 718.401(8), Florida Statutes (Supp.1976). This is a task for which the Division, given its regulatory responsibility over condominiums, has special expertise. Agency determinations with regard to a statute's interpretation and applicability will normally be accorded great deference, unless there is clear error or conflict with the intent of a statute. See State, Department of Health & Rehabilitative Services v. Hall, 409 So.2d 193, 195 (Fla. 3d DCA 1982); Harris Corp. v. Department of Revenue, 409 So.2d 91, 93 (Fla. 1st DCA 1982) (Ervin, J., specially concurring); ABC Liquors v. Department of Business Regulation, 397 So.2d 696, 697 (Fla. 1st DCA 1981). "In such a case, the constitutional question is not independent of the agency's actions on the merits, but is inseparable from it, and the constitutional question is necessarily phrased, ingeniously or ingenuously, as a variation of the affected party's original position on the nonconstitutional question." Key Haven Associated, at 71.

The agency has acted properly under Section 120.565, Florida Statutes (1979), since that statute manifests the legislature's intent that, when invoked, agency declaratory statements "shall state the agency's opinion of how a specified statute applies to a particular individual in his particular circumstances." State of Florida, Department of Environmental Regulation v. Falls Chase Special Taxing District, 424 So.2d 787, (Fla. 1st DCA, 1982) (Robert Smith, C.J., dissenting). Further, Section 120.565, when read together and harmonized with Section 718.401, Florida Statutes (1981), providing that condominiums may be created on lands held under lease for no less than 50 years, evinces the logical deduction that the legislature wisely perceived that problems of precisely the type involved in the case at bar would arise. In order to ensure that condominium leases comply with the provisions of Chapter 718, Florida Statutes, Section 718.501(1) affords the Division the power to (1) determine whether any person has violated Chapter 718; (2) interpret the chapter, and (3) issue annually to condominium associations a summary of its declaratory statements. ⁴ By rule, as required by Section 120.565, ⁵ the Division, as a sub-agency of the Department of Business Regulation, has the power to issue declaratory statements to any party "who is affected or substantially affected by any Division's statutory provisions ...." Fla.Admin.Code Rule 7-3.01. The condominium unit owners sought a declaratory statement as to the applicability of Section 718.401(8) to their sublease escalation clauses, and we find that the Division properly issued a Section 120.565 declaratory statement. As such, the declaratory statement constitutes final agency action that is properly before this court for direct review, and this court may confront "the inseparable" constitutional issue. Key Haven Associated at 71.

Turning to the Division's conclusions of law, we observe they state that the challenged escalation clauses relate to ground or land leases. The appellant contends that the leases do not fall within the regulatory perimeters of Section 718.401(8), because the master sublease refers to a condominium unit, not land. We reject this argument. The master sublease by its own terms subleases to the purchaser of a condominium unit his or her own unit. We are unable to understand how or why someone would purchase a unit from a developer and at the same time agree to lease the same unit from the developer until the year 2069.

This ambiguity is one that may be unraveled by the agency as a matter of law, since the parties' intent can be ascertained from the terms of the written master sublease. Cf. State Department of Health and Rehabilitative Services v. Framat Realty, Inc., 407 So.2d 238 (Fla. 1st DCA 1981); Key Haven Associated, at 71; Peacock Construction Co. v. Modern Air Conditioning, Inc., 353 So.2d 840, 842 (Fla.1977), see also 11 Fla.Jur.2d Contracts § 102 (1979). Because the master sublease was drafted by the appellant's predecessor in interest, Gulf Florida, the ambiguity should be construed most...