DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
BOCA RATON COMMUNITY REDEVELOPMENT AGENCY,
Appellant,
v.
CROCKER DOWNTOWN DEVELOPMENT ASSOCIATES,
Appellee.
No. 4D21-873
[February 9, 2022]
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Lisa S. Small, Judge; L.T. Case No. 50-2018-CA-014900-
XXXX-MB.
Jamie A. Cole and Laura K. Wendell of Weiss Serota Helfman Cole &
Bierman, P.L., Fort Lauderdale, for appellant.
Paul S. Figg, Mitchell W. Berger and Michael J. Higer of Berger
Singerman LLP, Fort Lauderdale, for appellee.
DAMOORGIAN, J.
The instant appeal arises out of a declaratory relief action filed by
Crocker Downtown Development Associates (“the Developer”) regarding
the meaning of a fair market value instruction contained within a lease’s
purchase option. Specifically, the Developer sought a declaration
regarding whether the fair market value of the property should be
calculated as encumbered by the lease. Relying on the holding in Taylor
v. Fusco Management Co.,
593 So. 2d 1045 (Fla. 1992), the trial court
concluded that, for purposes of determining the fair market value, the
property was to be valued as encumbered by the lease. The Boca Raton
Community Redevelopment Agency (“the CRA”) now appeals that ruling
and raises several issues on appeal. We affirm on all issues and write only
to address the CRA’s argument that the trial court misapplied the holding
in Taylor.
In 1990, the CRA and the Developer entered into a ninety-nine-year
lease agreement. Pursuant to the lease, the Developer built a shopping
center known as Mizner Park. Under the lease, the Developer paid both
fixed and net operating income rent. The lease established a fixed rent
schedule that increased over time. Fixed rent was $280,000 for the second
through twenty-ninth year of the lease, thereafter the fixed rent increased
to $910,000 annually.
Section 31.1 of the lease provided the Developer an option to purchase
the leased property for $9,100,000 or for the “Fair Market Value
(as hereinafter defined) of the Premises as of the date such option is
exercised,” whichever was greater. Section 31.2 of the lease, in turn, set
forth the process for exercising the purchase option, the method of
choosing appraisers, and the means of determining the fair market value
of the property. The last sentence of Section 31.2 also included the
following at-issue instruction for determining the property’s fair market
value:
In connection with the determination of Fair Market Value by
each appraiser or appraisers, the Fixed Rent for the balance
of the Lease Term shall be deemed to be $910,000,
notwithstanding the fact that actual Fixed Rent may be less
than that amount until the thirtieth (30th) Lease Year.
The Developer filed a declaratory action seeking interpretation of the
last sentence of Section 31.2 and a determination as to whether the
property should be valued as encumbered or unencumbered by the lease.
Relying on Taylor, wherein our supreme court held that the fair market
value of leased property should be computed as unencumbered by the
lease in the absence of specific language to the contrary, the trial court
determined “the last sentence of section 31.2 satisfies Taylor, because it
provides clear direction to the appraiser(s) as to how to ‘compute’ Fair
Market Value which is contrary to valuing the premises unencumbered by
the Lease.”
On appeal, the CRA contends the trial court misapplied Taylor because
the last sentence in Section 31.2 does not contain specific, clear, or
unambiguous language demonstrating the parties’ intent to value the
property as encumbered by the lease. In support of its position, the CRA
points to the absence of language in Section 31.2 restricting or narrowing
the words “Fair Market Value of the Premises” with any qualifying words,
such as “burdened by,” “encumbered by,” or “subject to” the lease.
Both parties agree that Taylor controls this dispute. In Taylor, our
supreme court considered “[w]hether the fair market value of leased
property at the time a lessee exercises an option to purchase the property
is the value of the fee simple estate unencumbered by the lease or the
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value of the fee estate encumbered by the lease.”
593 So. 2d at 1046.
The court answered the certified question as follows:
[I]n the absence of specific language to the contrary in the
lease, we hold that the market value of leased property at the
time a lessee exercises an option to purchase the property
should be computed as if the property were unencumbered by
the lease. Any intent to value the property otherwise should
be clearly stated in the lease.
Id. at 1047. The court explained that it adopted this bright-line rule
“to avoid a contract-by-contract analysis of the language used to describe
the interest which is subject to a purchase option.”
Id. at 1046–47.
Notably, although Taylor requires “specific language” to show the parties’
intent to value leased property as encumbered by the lease, the court did
not dictate any exact or precise verbiage that must be used to satisfy this
requirement. See
id.
In the present case, although Section 31.2 does not include the words
“burdened by” or “encumbered by,” it does set forth specific language
instructing the appraisers to use the CRA’s fixed rental revenue in
calculating the fair market value of the property. This instruction,
particularly the phrase “for the balance of the Lease term,” shows a clear
intent to value the property as encumbered by the lease. Indeed, there is
no reasonable alternative explanation for including the last sentence of
Section 31.2 in the lease other than to express the parties’ intent to value
the property as encumbered by the lease. See Universal Prop. & Cas. Ins.
Co. v. Johnson,
114 So. 3d 1031, 1036 (Fla. 1st DCA 2013) (“[A] contract
will not be interpreted in such a way as to render a provision meaningless
when there is a reasonable interpretation that does not do so.”); see also
Hahamovitch v. Hahamovitch,
174 So. 3d 983, 986 (Fla. 2015) (“Where a
contract is clear and unambiguous, it must be enforced pursuant to its
plain language.”).
For the foregoing reasons, we agree with the trial court that the property
should be valued as encumbered by the lease and affirm the final summary
judgment entered in favor of the Developer.
Affirmed.
FORST and KLINGENSMITH, JJ., concur.
* * *
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Not final until disposition of timely filed motion for rehearing.
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