Three Eighty Nine Corp. v. Cohn, Case No. 9:14-CV-81573-ROSENBERG/HOPKINS

• Court: United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida
• Writing for the Court: ROBIN L. ROSENBERG UNITED STATES DISTRICT JUDGE
• Docket Number: Case No. 9:14-CV-81573-ROSENBERG/HOPKINS
• 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.
• Decision Date: 02 April 2015

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.

Case No. 9:14-CV-81573-ROSENBERG/HOPKINS

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

April 2, 2015

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

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.

I. BACKGROUND

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 an

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option 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.

II. LEGAL STANDARD

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).

III. ANALYSIS AND DISCUSSION

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.

1. The Rent Escalation Clause

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 statute

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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:

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 apply

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to 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...