Griffin Industries, LLC v. Dixie Southland Corporation

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
GRIFFIN INDUSTRIES, LLC, a foreign limited liability company,
Appellant,
v.
DIXIE SOUTHLAND CORPORATION, a Florida corporation,
Appellee.
No. 4D13-2328
[April 15, 2015]
Appeal and cross-appeal from the Circuit Court for the Seventeenth
Judicial Circuit, Broward County; John J. Murphy, III, Judge; L.T. Case
No. 09-042396 (21).
Scott B. Cosgrove of Leon Cosgrove, LLC, Coral Gables, and Steven J.
Rosenwasser and John H. Rains IV of Bondurant, Mixson & Elmore LLP,
Atlanta, Georgia, for appellant.
John H. Pelzer of Greenspoon Marder, P.A., Fort Lauderdale, for
appellee.
LINDSEY, NORMA SHEPARD, Associate Judge.
This case involves a landlord/tenant dispute over a lease of a
commercial property in Broward County. The Tenant, Griffin Industries,
LLC (“Griffin”), appeals a final judgment rendered following a non-jury trial
in favor of the Landlord, Dixie Southland Corporation (“Dixie”). Griffin
alternatively appeals and Dixie cross-appeals the amount of damages
awarded. For the reasons set forth below, we affirm the judgment in favor
of Dixie and reverse and remand for a calculation of damages consistent
herewith.
I.
The incidents that precipitated the filing of this action occurred over a
thirty-four day period. Although there was disputed testimony at trial
regarding permits and storm water management, and whether Griffin’s
acquisition of another property was related to these issues, the following
facts were uncontested.
In September 2007, Griffin approached Patricia Montalbano, Dixie’s
longtime real estate broker, and inquired about a piece of property owned
by Dixie east of Florida’s turnpike and south of Route 595 in the town of
Davie that was zoned for Griffin’s proposed use (the “Property”).1 Griffin’s
representatives viewed and inspected the Property with Ms. Montalbano
on more than one occasion. Thereafter, they entered into a written lease
agreement for a warehouse located on the Property for a five-year term,
commencing November 1, with monthly rent in the amount of $10,000.00
for the first year and increasing for the second and subsequent years to
$10,400.00, $10,816.00, $11,248.64, and $11,698.59, respectively, plus
sales taxes, real estate taxes and insurance (the “Lease”). The parties
mutually performed under the Lease for approximately a year and a half.
On April 7, 2009, Griffin entered into an agreement to purchase another
property, located in Pompano Beach, Florida. Meanwhile, three weeks
later, the Town of Davie posted a “Courtesy Correction Notice” (the
“Courtesy Notice”) at the Property which contained a handwritten directive
to “discontinue pumping water into the street, remove exterior pipe & cap-
off” within six days. The Courtesy Notice further stated that:
FAILURE TO COMPLY WILL RESULT IN A CASE BEING
ESTABLISHED AND A HEARING SCHEDULED BEFORE A
SPECIAL MAGISTRATE WHERE FINES OF UP TO $1,000.00
PER DAY MAY BE IMPOSED ALONG WITH CODE
COMPLIANCE COST RECOVERY FEES PER ORDINANCE.
Griffin e-mailed the Courtesy Notice to Dixie the next day along with a
letter demanding that the issue be corrected and expressing concern about
the Property flooding over the upcoming weekend if the storm water was
not discharged. In response, Dixie removed and capped off the offending
pipe in compliance with the directive in the Courtesy Notice. Although
Dixie had initially installed a flexible hose to discharge the storm water
into the street, it was never used. Instead, Dixie implemented a plan to
pump excess water through PVC pipes onto different portions of the
Property, and, five days after issuing the Courtesy Notice, the Town of
Davie re-inspected the Property and closed its file.
1 Griffin is in the business of recycling food fats and greases. The facility at the
Property was to be used as a collection point for materials brought in by small
trucks. These materials, which are not hazardous, would be transferred onto
larger trucks for transport to Griffin’s Tampa facilities.
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A week and a half after the Town closed its file on the Courtesy Notice,
Griffin requested Dixie, via e-mail, to provide a written response as to what
was being done to address the issues in the Courtesy Notice. Dixie
responded the next day advising that it had engaged an engineering firm
to evaluate the drainage situation and storm water management on the
Property. Griffin then immediately sent another e-mail inquiring as to
what was being done in the interim and whether it was permitted by the
City or the State. Dixie responded that water was being retained in a
portion of the Property not used by Griffin and from there was being
pumped through piping into an on-site basin. On May 20, 2009, Dixie
entered into a written agreement with Pillar Consultants, Inc. to design an
onsite drainage system.
Nonetheless, on May 26, 2009, Griffin’s Director of Legal Affairs sent a
letter to Dixie stating that he had visited the Property on May 21 and that
it was “obvious that illegal discharges are still occurring” and that, as a
result, Griffin was terminating the Lease (the “Termination Letter”). Griffin
vacated the Property in June 2009 and did not pay rent for July 2009 or
any month thereafter. Dixie leased the Property to another tenant in
October 2009 for a three-year term to commence on December 1, 2009 for
$6,000.00 per month.
Dixie sued, and Griffin counterclaimed, for breach of the Lease. Griffin
also raised several affirmative defenses. The parties stipulated at trial that
they entered into the Lease and that Griffin paid no rent after June 2009.
After a bench trial spanning two days, the trial court entered judgment in
favor of Dixie and awarded damages for rent and sales tax through June
2010, specifically finding that Griffin’s affirmative defenses were “not
supported by sufficient credible evidence.”
On appeal, Griffin seeks reversal of the judgment in favor of Dixie and
entry of a judgment in Griffin’s favor on the basis that it was legally entitled
to terminate the Lease because Dixie refused to correct an illegal condition
on the Property. Specifically, Griffin contends that it had the legal right to
terminate the Lease because Dixie created and refused to correct
unpermitted storm water and drainage systems, that Dixie breached the
Lease by failing to “keep and maintain in good condition” the storm water
and drainage systems, that Dixie constructively evicted Griffin by failing
to correct illegal storm water and drainage systems, and fraudulently
induced Griffin to enter into the Lease by falsely representing that “the
property had all the permits.” Griffin alternatively contends that the
amount of damages awarded should be reduced to reflect rent through
November 2009 pursuant to a clause in the addendum to the Lease. In
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its cross-appeal, Dixie seeks the rent plus sales and property taxes and
insurance not paid by the new tenant for the remaining term of the Lease.
II.
Griffin relies on Marquez-Gonzalez v. Perera, 673 So. 2d 502 (Fla. 3d
DCA 1996), to justify its termination of the Lease based on Dixie’s refusal
to correct an illegal condition on the Property. In Marquez-Gonzalez, the
tenant leased dilapidated commercial space on an “as is” basis with an
agreement to undertake necessary refurbishing. The tenant subsequently
learned that a portion of the property contained an illegal structure which
had been built without the required permits. The landlord refused to
correct the illegal condition and the tenant sued to rescind the lease. After
a bench trial, the trial court entered judgment for the landlord on the
theory that the tenant had leased the premises “as is.” The district court
reversed, holding that the landlord, and not the tenant, was obligated to
correct the illegal condition on the property because the tenant’s
inspection would not have revealed the existence of an illegal condition.
Id. at 503. Thus, in Marquez-Gonzalez, it was undisputed that an illegal
condition existed on the premises. The only issue was whether the
landlord or the tenant was responsible for its correction.
Here, in contrast, the issue of whether an illegal condition existed on
the Property was contested. At Griffin’s request, the trial court took
judicial notice of all applicable building codes but made no finding that
there were any illegal conditions on the Property and specifically found
that Griffin’s affirmative defenses were “not supported by sufficient
credible evidence.”2
It is not the role of appellate courts to re-weigh evidence presented to
trial courts, to assess whether there is contradictory evidence in the record
which supports a different conclusion than that reached by the trial court,
to retry the case, or to substitute its judgment for the trial court’s on
factual matters. See Richardson v. Everbank, 152 So. 3d 1282 (Fla. 4th
DCA 2015) (citing Lahodik v. Lahodik, 969 So. 2d 533, 535 (Fla. 1st DCA
2007)). Rather, an appellate court’s review of a trial court’s finding on
factual matters is limited to whether they are supported by competent,
2 “An affirmative defense is an assertion of facts or law by the defendant that, if
true, would avoid the action and the plaintiff is not bound to prove that the
affirmative defense does not exist.” Custer Med. Ctr. v. United Auto Ins. Co., 62
So. 3d 1086, 1096 (Fla. 2010) (citations omitted). “[T]he burden of proving each
element of an affirmative defense rests on the party that asserts the defense.” Id.(citing Dorse v. Armstrong World Indus., 513 So. 2d 1265, 1269 n.5 (Fla. 1987)).
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substantial evidence. Id.; see also Fla. Mining & Materials v. Mobley, 649
So. 2d 934, 934 (Fla. 1st DCA 1995) (“[C]ase[s] may not be retried on
appeal, and a ruling which is supported by competent, substantial
evidence will be upheld even though there may be some persuasive
evidence to the contrary.”). “This is because the trial judge is in the best
position to evaluate and weigh the testimony and evidence based upon its
observation of the bearing, demeanor and credibility of the witnesses.”
Acoustic Innovations, Inc. v. Schafer, 976 So. 2d 1139, 1143 (Fla 4th DCA
2008) (internal quotation marks omitted) (citing Shaw v. Shaw, 334 So. 2d
13, 16 (Fla. 1976)).
A tenant is not entitled to terminate a lease based on a theory of
constructive eviction unless the premises are unsafe, unfit, or unsuitable
for occupancy for the purposes for which they were leased. Cf. Barton v.
Mitchell Co., 507 So. 2d 148, 149 (Fla. 4th DCA 1987) (landlord’s failure to
add insulation to correct loud music, screaming, and vibration that
interfered with tenant’s business, despite repeated requests over ten-
month period, constituted constructive eviction (citing Hankins v. Smith,
138 So. 494 (Fla. 1931))). Other than the events that transpired during
the thirty-four days between the issuance of the Courtesy Notice and
Griffin’s Termination Letter, the record is devoid of evidence of complaints
on the part of Griffin with the storm water drainage system on the
Property. There is no evidence of any interference with Griffin’s operations
or of any safety, fitness, or suitability issues prior to the issuance of the
Courtesy Notice.
To the extent there may have been an illegal condition on the Property
when Griffin sent the Termination Letter, the Town of Davie already had
inspected the Property and closed its file; no fines had been imposed; there
was no pending Courtesy Notice or other form of governmental citation
wherein the possibility of fines being imposed existed; and Dixie had
engaged and entered into a written contract with an engineering firm to
design an onsite drainage system for the Property. None of these facts
were in dispute. Thus, any issues Griffin may have had relating to the
storm water drainage system either had been, or were, in the process of
being addressed by Dixie prior to the Termination Letter.
Finally, Griffin contends that Dixie fraudulently induced it to enter into
the Lease by assuring Griffin that it had all necessary permits prior to the
execution of the Lease. Specifically, Griffin’s Southeast Division Manager
testified that, prior to the execution of the Lease, Dixie’s broker, Pat
Montalbano, told her that the Property “had all the permits.” However,
Ms. Montalbano testified that no one inquired regarding the storm water
system or permits. The trial court heard and considered this testimony
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and evidently chose, as was within its providence, to believe Dixie’s version
of the events on this issue.
III.
Both Griffin and Dixie appeal the trial court’s award of damages. Griffin
asserts that if it is liable for any rent, the amount should be limited to rent
accruing from July 2009 through November 2009 based on an early
termination provision in the addendum to the Lease (the “Early
Termination Clause”). Alternatively, Griffin contends that any amounts
for which it is liable beyond November 2009 should reflect a deduction for
the amounts paid by the new tenant. Dixie contends that it is entitled to
rent plus sales and property taxes and insurance not paid by the new
tenant for the remaining term of the Lease.
The Early Termination Clause provides as follows:
4. During month twenty-four (24) of the Lease term, Tenant
has the option to terminate this Lease by giving Landlord six
(6) months notice of its intention to vacate the Demised
Premises. Thereafter, Tenant will pay rent during the six
month period unless Landlord secures a new tenant prior to
the six (6) month expiration. Tenant will waive this option
should it fail to give the required notice during month twenty-
four (24).
At trial, the parties stipulated that Griffin paid no rent after July 2009.
It was uncontested that the only notice Griffin gave of its intent to vacate
the Property was the May 2009 Termination Letter. The plain language of
the Early Termination Clause requires the Tenant to give notice of its
intent to vacate during month twenty-four or waive its option to exercise
same. The parties further stipulated at trial that they entered into the
Lease on or about October 31, 2007; thus, month twenty-four of the Lease
would have commenced on or about October 31, 2009. Since Griffin gave
notice of its intent to vacate in May 2009, based on the plain language of
the Lease, it waived its right to exercise the Early Termination Clause.
Because Griffin’s notice of its intent to vacate was insufficient to trigger
the Early Termination Clause, the Court looks to the general default clause
(the “the Default Clause)” in the Lease. Here, the Default Clause provides:
DEFAULT:
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(b) If Tenant abandons or vacate(s) (sic) before the end of the
term of this Lease or shall suffer the Rents to be in arrears,
Landlord may, at its option, forthwith cancel this lease
terminating any rights Tenant has in the Demised Premises
without prejudice to Landlord’s right to recover damages from
Tenant for breach of this Lease.
In addition, “numerous Florida cases have reiterated the general rule that
when there has been a breach, abandonment, or renunciation of a lease
before the expiration of the term, the lessor has three options.” Holiday
Furniture Factory Outlet Corp. v. State, Dep’t of Corr., 852 So. 2d 926, 928
(Fla. 1st DCA 2003). “The lessor may (1) treat the lease as terminated and
retake possession for the lessor’s purposes; (2) hold possession for the
lessee’s account, in which case the lessee is responsible for any difference
between the rent obligation and amounts the lessor recovers by reletting
the premises; or (3) stand by and do nothing and sue the lessee as each
installment of rent matures, or sue for all the rents due when the lease
expires.” Id. (citing Wagner v. Rice, 97 So. 2d 267 (Fla. 1957); Stenor, Inc.
v. Lester, 58 So. 2d 673 (Fla. 1951); Williams v. Aeroland Oil Co., 155 Fla.
114, 20 So. 2d 346 (Fla. 1944); 4-Way, Inc. v. Bryan, 581 So. 2d 208 (Fla.
1st DCA 1991); Diehl v. Gibbs, 173 So. 2d 719 (Fla. 1st DCA 1965); Ft.
Lauderdale Joint Venture Ltd. P’ship v. Sander, 613 So. 2d 133 (Fla. 4th
DCA 1993); Blount v. Dino’s Fontana Di Trevi, Inc., 583 So. 2d 380 (Fla. 3d
DCA 1991); Gould v. Vitiello, 526 So. 2d 1018 (Fla. 2d DCA 1988); Linens
of Paris, Inc. v. Cymet, 510 So. 2d 1021 (Fla. 3d DCA 1987); Wolf v.
Buchman, 425 So. 2d 182 (Fla. 3d DCA 1983); Hulley v. Cape Kennedy
Leasing Corp., 376 So. 2d 884 (Fla. 5th DCA 1979); Jimmy Hall’s
Morningside, Inc. v. Blackburn & Peck Enters., Inc., 235 So. 2d 344 (Fla. 2d
DCA 1970)).
Here, Dixie elected to pursue the second option by re-letting the
Property while holding Griffin responsible for the difference between the
amounts due under the Lease and the amounts received from the new
tenant. It is undisputed that Griffin paid no rent after July 2009 and that
Dixie obtained a new tenant in December 2009, albeit at a lower monthly
rate. Thus, Griffin is liable for the rent plus sales and property taxes and
insurance not paid by the new tenant for the remaining term of the Lease.
Based on the foregoing, the trial court’s final judgment in favor of Dixie
is affirmed and this matter is remanded to the trial court for a recalculation
of the damages awarded consistent herewith.
Affirmed in part and reversed and remanded in part.
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WARNER and STEVENSON, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
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