Thrifty Dutchman, Inc. v. Florida Supermarkets, Inc.

• Decision Date: 17 January 1989
• Docket Number: No. 87-2048,87-2048
• Parties: 14 Fla. L. Weekly 207 THRIFTY DUTCHMAN, INC., a Florida corporation, Appellant, v. FLORIDA SUPERMARKETS, INC., a Florida corporation, Appellee.
• Court: Florida District Court of Appeals

Page 634

541 So.2d 634

14 Fla. L. Weekly 207

THRIFTY DUTCHMAN, INC., a Florida corporation, Appellant, v. FLORIDA SUPERMARKETS, INC., a Florida corporation, Appellee.

No. 87-2048.

District Court of Appeal of Florida,

Third District.

Jan. 17, 1989.

Rehearing Denied May 10, 1989.

Michael Winer, Ft. Lauderdale, Holland & Knight and Irving M. Wolff, Miami, for appellant.

Sherr, Tiballi, Fayne & Schneider and William H. Lefkowitz, Ft. Lauderdale, McDermott, Will & Emery and James E. McDonald and B. Richard Young, Miami, for appellee.

Before NESBITT, BASKIN and FERGUSON, JJ.

FERGUSON, Judge.

Thrifty Dutchman, an owner-lessor of commercial property, appeals a trial court order granting equitable relief to the lessee, Florida Supermarkets, upon the lessee's negligent failure to timely renew a lease option.

In 1956 Weinkle and Kessler, Thrifty Dutchman's predecessors in interest, built a commercial building which they leased to Irene Corporation for twenty-five years. The lessee was given an option to renew the lease at the end of the twenty-five year term, for four, five-year periods. ¹ In order to renew, the lessee was required to give notice to the landlord by registered mail no later than six months prior to the lease expiration date.

Irene Corporation assigned its leasehold interest to the appellee, Florida Supermarkets, as part of the latter's acquisition of forty-two Pantry Pride chain stores in South Florida. By the lease terms, notice of an intent to renew should have been given no later than May 31, 1986. Thrifty Dutchman, the lessor, never received the renewal notice.

Subsequently, Weinkle, the president of Thrifty Dutchman, believing that there would be no renewal of the lease, negotiated a deal with a corporate creditor to forego immediate collection of a debt owed by Thrifty Dutchman which, allegedly, could force Thrifty Dutchman into bankruptcy. In exchange for Weinkle's promise to either sell the property and pay off the debt, or pledge a new long-term lease to satisfy the debt, the creditor cancelled a scheduled hearing in an action to enforce payment. Weinkle signed a listing agreement for the property and, on September 23, 1986, sent a letter to the lessee concerning arrangements for turning over possession of the property on the lease termination date. In response, Florida Supermarkets wrote a letter expressing its intent to extend the lease, stating that the renewal notice had been sent by certified mail on April 9, 1986.

Thrifty Dutchman wrote back explaining that it did not receive the April 9th letter and requested the certified mail number in order to conduct a search. Although Florida Supermarkets continuously maintained that it sent timely notice, the certified mail receipt was never produced. Florida Supermarkets filed a complaint against Thrifty Dutchman seeking a declaration of its rights with regard to the lease and an injunction against any attempt to oust the lessee. Attached to the complaint was a copy of a letter which Florida Supermarkets claimed to have mailed on April 9th. Thrifty Dutchman answered and counterclaimed for past rent. It is undisputed that Florida Supermarkets never tendered any rent on the property until Thrifty Dutchman counterclaimed--ten months after Florida Supermarkets took possession.

After a trial the court rejected Florida Supermarkets' claim that it had sent notice in April and ruled that the lessee had failed to give timely notice of its intent to renew the lease. Nevertheless, the trial court granted Florida Supermarkets' demand for equitable relief and permitted the lessee to exercise the option. We reverse on a holding that, under the circumstances of this case, the plaintiff was not entitled to equitable relief.

The general rule governing notice of lease renewal is that the giving of timely notice, in accordance with the provisions of the lease, is a condition precedent to the lessee's right to renew. The rule is grounded on the principle that time is of the essence in an option contract and that a notice requirement is strictly construed. 3 G. Thompson, Real Property § 1122 (1980 Repl.).

In recent years, however, courts have recognized that there may be special circumstances which warrant relief from the consequences of a lessee's failure to give timely notice in the prescribed manner. 51C C.J.S. Landlord and Tenant § 59 (1968). In Florida, a court of equity may relieve a tenant from the enforcement of a stipulation in the lease that notice must be given within a specified time where the failure to give notice resulted from accident, fraud, surprise or mistake, and there are other special circumstances warranting equitable relief. Dugan v. Haige, 54 So.2d 201, 202 (Fla.1951). In this case, Florida Supermarkets did not plead or prove accident, fraud, surprise, or mistake as required by Dugan. In fact the lessee's contention at trial was that the notice was sent as required by the lease. The court rejected the contention and instead found that the lessee simply failed to send notice.

Here, another factor weighing against the lessee on the equities scale is the failure to pay rent. ² The failure to give notice, together with a failure to pay rent for ten months, was consistent with an intent not to renew the lease. Commenting on the lessee's actions, the trial court stated:

[I]t seems to me that the conduct of the lessee from the very beginning, in the way in which these affairs were handled, were sloppy; that they didn't even start paying rent when they were supposed to, on the grounds they didn't put this in some computer. They didn't send the notice out and because of this, they caused this controversy and this lawsuit, and caused the lessor, acting on the grounds that this thing was never timely submitted, to incur attorney fees and costs.

There is, thus, a tacit finding by the trial court that Florida Supermarkets was negligent. That finding is supported by uncontroverted, competent, and substantial...