Taco Nacho, Inc. v. Hasty House Restaurants, Inc., AM-178

• Decision Date: 19 August 1983
• Docket Number: No. AM-178,AM-178
• Citation: 436 So.2d 403
• Parties: TACO NACHO, INC., Appellant, v. HASTY HOUSE RESTAURANTS, INC., Appellee.
• Court: Florida District Court of Appeals

Page 403

436 So.2d 403

TACO NACHO, INC., Appellant, v. HASTY HOUSE RESTAURANTS, INC., Appellee.

No. AM-178.

District Court of Appeal of Florida,

First District.

Aug. 19, 1983.

Louise Stanton Warren and Carol Wind Donnelly, Jacksonville, for appellant.

Daniel D. Akel of Blalock, Holbrook & Akel, P.A., Jacksonville, for appellee.

ERVIN, Chief Judge.

Taco Nacho, Inc. (Taco), appeals from a final judgment, entered following a non-jury trial, awarding plaintiff/appellee Hasty House Restaurants, Inc. (Hasty), damages for failure of Taco to make payments to Hasty on a promissory note. Taco also appeals from that portion of the final judgment relating to Taco's counterclaim for breach of a lease agreement by Hasty, contending that the trial court erroneously computed the damages awarded for the breach. We affirm in part and reverse in part.

The promissory note and sublease agreement were executed on December 15, 1978, by Taco to Hasty for the purpose of Taco's operating a new restaurant in Jacksonville. Hasty sold Taco certain restaurant equipment, and, after having paid $5,000 down in cash, Taco gave Hasty a note in the amount of $15,000 in payment. The principal and interest were payable in thirty-six monthly installments of $484, commencing on February 1, 1979. The note provided Hasty the option of accelerating the entire indebtedness upon Taco's default. It further provided that "a default under the sublease executed this date by Maker to Hasty House Restaurants, Inc. shall be a default hereunder."

The sublease was executed on the same date as the note. Under its provisions, Taco was required to pay rent in the sum of $1,000 per month, commencing on February 1, 1979. Taco had the option to renew for an additional five-year term under the same provisions as the original lease-term, which was to expire on December 31, 1982. Although Taco, as sublessee, agreed generally to comply with the conditions of the leases between Hasty and Grace Company, the owner of the premises, it was Hasty's responsibility to continue making its periodic rentals to Grace Company, as required by the main lease agreement with Grace. And, in the event that Hasty failed to pay such amounts, Taco, as sublessee, had "the right to pay ... rental[s] directly to the Lessor and to deduct same from the rent due [Hasty] ..." There was an additional clause which provided that "a default under the promissory note in the amount of $15,000 executed this date by sublessee and payable to sublessor shall be a default under the sublease." (e.s.)

After approximately eight months, or on October 20, 1979, Hasty defaulted on its lease agreement with Grace by failing to pay the monthly rental amounts required; as a consequence of which Grace terminated its lease with Hasty and notified Taco of the termination, advising that all future rentals, in a sum excess of that Taco had agreed to pay to Hasty, should be paid by Taco directly to Grace. Taco was permitted by Grace to continue in possession of the premises on a month-to-month basis. Citing Hasty's default, Taco stopped making payments on the note to Hasty, which then accelerated the indebtedness remaining unpaid, and filed suit against Taco, claiming entitlement to judgment for the balance due, as well as reasonable attorney's fees. Taco counterclaimed for damages caused by Hasty's breach of the sublease agreement.

In answer to Hasty's claim for damages resulting from Taco's failure to make the payments required by the note, Taco replies that the trial court erred in refusing to hold that Hasty's breach of the sublease agreement operated also to release Taco of its obligations under the note. Taco argues that had the court applied the "contemporaneous instrument rule," the note and sublease agreement would have been construed as one agreement, and upon its breach by Hasty, any further performance required of Taco would also be excused.

We disagree that the note and sublease agreement are such that they should be considered as one under the contemporaneous instrument rule. See 6 Fla.Jur.2d Bills and Notes § 114. Compare Policastro v. Rudt, 180 So.2d 472 (Fla. 2d DCA 1965). But even if we were to agree that such instruments should be considered as one agreement, Taco could not, as it seeks to do in this action, enforce the sublease agreement by seeking damages for its breach and, at the same time, inconsistently maintain that it is completely discharged from any further promises under the note. The evidence supported the trial court's treatment of the note and sublease agreement as separate obligations. A contrary result is not indicated by the presence of the above-referred provisions in each of the two instruments providing that Taco's breach of one would be deemed to be a breach of its responsibilities under the other instrument.

Taco also contends that the amount awarded Hasty by the trial court for breach of the note is not supported by the evidence. The final judgment provides for recovery on the note in the sum of $14,035 ($12,934 principal and $1100 interest). Such sum is substantially at variance with the testimony presented by Hasty in support of its damages. The trial court also awarded Hasty $900 as a reasonable attorney's fee. This was attributable to Hasty's prosecution of its claim on the note. Hasty was entitled to a reasonable attorney's fee under the terms of the note. However, it appears that such fee was determined, in part, by the amount of damages awarded Hasty in the final judgment. Since, for the reasons stated, the amount of damages provided in the final judgment will, on remand, have to be refigured by the trial court, the amount awarded for attorney's fees will also be vacated and, on remand, the trial court will also redetermine the amount of attorney's fees to be awarded.

Taco further asserts that the $7,200 damages awarded Taco on its counterclaim for Hasty's breach of the sublease agreement were insufficient in that the damages awarded did not take into consideration additional sums Taco would have to pay for rental of the subject premises after December 31, 1982, the date on which the initial term under the sublease agreement was to expire. If awardable, this element of damages would be attributable to Taco's loss of its option to renew for an additional five-year term at the same rental provided in the sublease agreement. The specific error which Taco asserts the trial court committed was in sustaining Hasty's objection to testimony as to what rental Grace Company would...