Three Eighty Nine Corp. v. Cohn
| Decision Date | 02 April 2015 |
| Docket Number | Case No. 9:14-CV-81573-ROSENBERG/HOPKINS |
| Court | U.S. District Court — Southern District of Florida |
| Parties | THREE EIGHTY NINE CORPORATION, a Florida non-profit corporation, Plaintiff, v. JONATHAN R. COHN & JAMIE COHN KOST, CO-TRUSTEES OF THE COHN IRREVOCABLE TRUST DATES JULY 22, 2008, Defendants. |
This matter is before the Court on Defendants' Motion to Dismiss [DE 7]. The Motion has been fully briefed, and the Court heard oral argument on the Motion on March 25, 2015. The Court has reviewed the documents in the case file and is fully advised in the premises. For the reasons set forth below, Defendants' Motion is granted.
On September 14, 1960, Plaintiff, as a lessee, entered into a ninety-nine year lease. DE 1-1 ¶¶ 1, 3. Defendants are the successors-in-interest to the lessor in the lease. Id. at ¶ 6. The property which is the subject of the lease has and continues to be used as a parking lot for a cooperative apartment complex. Id. at ¶ 7. The lease contains an escalation clause wherein the rent due under the lease is increased in conjunction with increases in the consumer price index. Id. at ¶ 8. The lease contains no option to purchase and Defendants have refused to provide Plaintiff with anoption to purchase the leased property. Id. at ¶ 10. Because of the rent escalation clause and because of Defendants' refusal to provide Plaintiff with an option to purchase, Plaintiff filed the suit presently before the Court.
In considering a motion to dismiss, the Court must accept the allegations in a complaint as true and construe them in a light most favorable to the plaintiffs. See Resnick v. AvMed, Inc., 693 F.3d 1317, 1321 (11th Cir. 2012). At the pleading stage, the Complaint need only contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). All that is required is that there are "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547 (2007).
Plaintiff argues in its Complaint that Defendants have breached the terms of the lease at issue in this case for two reasons. First, Plaintiff argues Defendants have breached the lease by virtue of Defendants' application of the rent escalation clause in the lease which, as Plaintiff argues, contravenes a Florida statute. Second, Plaintiff argues that Defendants have breached the lease by refusing to provide Plaintiff with an option to purchase, which Plaintiff also argues contravenes a Florida statute. Defendants argue neither statute applies to this case and, as a result, Defendants contend that Plaintiff's Complaint should be dismissed. Defendants' arguments each are addressed in turn.
Plaintiff's first argument that Defendants have breached the lease agreement is that Defendants have escalated rent in violation of a Florida statute. Plaintiff argues the Florida statuteis incorporated into the lease because the lease is expressly subject to the "local laws, statutes, ordinances and regulations applicable to the leased premises." DE 1-1 at 9. The statute relied upon by Plaintiff reads as follows:
It is declared that the public policy of this state prohibits the inclusion or enforcement of escalation clauses in land leases or other leases or agreements for recreational facilities, land, or other commonly used facilities serving residential cooperatives, and such clauses are hereby declared void for public policy. For the purposes of this section, an escalation clause is any clause in a cooperative lease or agreement which provides that the rental under the lease or agreement shall increase at the same percentage rate as any nationally recognized and conveniently available commodity or consumer price index.
Fla. Stat. § 719.4015(1).
In response, Defendants argue that § 719.4015 does not apply to the lease in this case because the lease predated § 719.4015 and, at the time the lease was executed, rent escalation clauses (like the one in this case) were legal. For authority, Defendants cite to Fleeman v. Case, 342 So. 2d 815 (Fla. 1976).
In Fleeman, the Florida Supreme Court considered the constitutionality of a Florida statute that prohibited rent escalation clauses in the context of condominium associations. That statute was virtually identical to the statute at issue in this case, and it reads as follows:
It is declared that the public policy of this state prohibits the inclusion or enforcement of escalation clauses in leases (for recreational facilities or other commonly used facilities serving condominiums) or management contracts for condominiums, and such clauses are hereby declared void for public policy. For the purposes of this section, an escalation clause is any clause in a condominium lease or management contract which provides that the rental under the lease or fee under the contract shall increase at the same percentage rate as any nationally recognized and conveniently available commodity or consumer price index.
Id. at 817. The Florida Supreme Court held that the statute did not retroactively apply, finding "[t]here being no express and unequivocal statement in this legislation that it was intended to applyto leases and management contracts which antedate its enactment, we hold the statute inapplicable to the contracts in these consolidated proceedings." Id. at 818. The legislature thereafter amended the statute to expressly apply to escalation clauses that predated the effective date of the statute, but the Florida Supreme Court ratified its decision in Fleeman and again held that the statute could not be retroactively applied. See Ass'n of Golden Glades Condo. Club, Inc. v. Sec. Mgmt. Corp., 557 So. 2d 1350, 1355-56 (Fla. 1990). The Florida Supreme Court did discuss case law, however, that permits the retroactive application of the statute in special circumstances. Id. at 1354. More specifically, the statute may be applied retroactively if the parties expressly "agreed to be bound by all future amendments to the Condominium Act." Id. (citing Century Village, Inc. v. Wellington, 361 So. 2d 128 (Fla. 1978)). Language that satisfies this requirement reads as follows: "[T]he provisions of the Condominium Act as presently existing, or as it may be amended from time to time . . . are adopted and included herein by express reference." Kaufman v. Shere, 347 So. 2d 627, 628 (Fla. Dist. Ct. App. 1977). Plaintiff conceded at oral argument that no such language appears in the lease in this case.1
Plaintiff argues, however, that the statute at issue in this case, § 719.4015, was not expressly addressed in the above-cited case law. While this is certainly true, the fact remains that § 719.4015 is virtually identical to the statute held to be unconstitutional as retroactively applied in Fleeman and Golden Glades. Plaintiff has provided no persuasive reason why the statute would be unconstitutional as applied to a condominium association but constitutional as applied to a cooperative association. Although the Court's own research has revealed no case law expressly holding § 719.4015 is unconstitutional when retroactively applied, the Court finds that Fleemanand Golden Glades are highly analogous to the instant case.2 Accordingly, the Court DISMISSES WITH PREJUDICE Plaintiff's claim for breach of contract to the extent Plaintiff's claim is premised upon the escalation clause in the lease and § 719.4015.
Plaintiff's second argument to establish Defendants have breached the lease agreement is that Defendants have failed to provide Plaintiff with an option to purchase the leased property. The lease contains no such provision. Plaintiff establishes its right to purchase in the lease agreement through a Florida statute, which Plaintiff argues is incorporated into the lease because the lease is expressly subject to the "local laws, statutes, ordinances and regulations applicable to the leased premises." DE 1-1 at 9. The statute relied upon by Plaintiff reads as follows:
A lease of recreational or other commonly used facilities entered into by the association or unit owners prior to the time the control of the association is turned over to unit owners other than the developer shall grant to the lessee an option to purchase the leased property, payable in cash on any anniversary date of the beginning of the lease term after the 10th anniversary, at a price then determined by agreement. If there is no agreement as to the price, then the price shall be determined by arbitration. This paragraph shall be applied to contracts entered into on, before, or after January 1, 1977, regardless of the duration of the lease.
Fla. Stat. § 719.401(f)(1). Defendants argue this statute does not require Defendants to provide an offer to purchase for two reasons. First, the statute only applies to leases of "recreational or other commonly used facilities," neither of which applies here. Second, the statute is unconstitutional as retroactively applied to the lease in this case, which was executed in 1960, notwithstanding the factthat the statute expressly states that it does apply retroactively. Defendants' second argument, based upon the statute's constitutionality, is irrelevant if the Court finds that the statute does not apply in this case. Accordingly, the Court turns its attention first to the threshold question of whether the statute applies.
Plaintiff has alleged that the property at issue is a parking lot that is "a commonly-used facility for the benefit of the occupants of the forty-one (41) cooperative apartment units." DE 1-1 at ¶ 7. Plaintiff does appear, then, to at least facially plead that the property at issue is a commonly-used facility, but the basis for Plaintiff's entitlement is the lease itself. To the extent there is any contradiction between the lease (which is attached to Plaintiff's...
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