Hallandale Plaza, LLC v. New Tropical Car Wash, LLC

335 So.3d 712

HALLANDALE PLAZA, LLC, Appellant,

v.NEW TROPICAL CAR WASH, LLC, Appellee.

No. 4D21-1445

District Court of Appeal of Florida, Fourth District.

[March 9, 2022]

Kevin H. Fabrikant and Corey J. Biazzo of Fabrikant & Associates, PLLC, Hollywood, for appellant.

Holiday Hunt Russell of Holiday Hunt Russell PLLC, Fort Lauderdale, for appellee.

Conner, C.J.

Hallandale Plaza, LLC ("the Landlord") appeals the order dismissing its eviction action against New Tropical Car Wash LLC ("the Tenant"). The Landlord contends the trial court erred in: (1) denying due process by sua sponte dismissing the eviction action on the Tenant's preliminary motion to determine rent; (2) finding the Tenant paid additional rent under duress; (3) failing to consider that the Tenant's payment of additional rent for a period constituted a waiver of an alleged oral amendment to the written lease removing the obligation of additional rent; and (4) misinterpreting the written lease agreement. We reverse as to the first, second, and fourth issues and remand for further proceedings, addressing the third issue to the extent it is relevant on remand.

Background

The Landlord acquired the rental property from a former owner, subject to an existing written commercial lease between the prior owner and the Tenant ("the Lease"). Subsequently, the Landlord filed a one-count complaint for eviction against the Tenant, alleging that the Tenant failed to pay the full amount of rent due under the Lease and the Landlord had been assigned the rights under the Lease as the landlord.

In its answer, the Tenant denied the allegation that it failed to pay rent and asserted that it was current with its rental obligations. On the same day the Tenant filed its answer, the Tenant also filed its motion to determine rent pursuant to chapter 83, Florida Statutes. The motion sought determination of the rent to be paid during the pendency of the eviction action. The motion further asserted that not only was there no rent due, but instead the Landlord owed the Tenant thousands of dollars in "improper forced payments" of real estate taxes and operating expenses.

The Lease was admitted into evidence at the hearing on the motion to determine rent. The Lease required the Tenant to pay "base rent" and "additional rent." The base rent was a consistent monthly amount. The additional rent was a proportionate share of "annual operating expenses" and "annual taxes" incurred by the Landlord for the property. The Lease provided that the Tenant's proportionate share of additional rent would be estimated before each lease year began, divided into twelve payments, and payable monthly with the base rent. Each year, if the estimated amount of additional rent proved to be inaccurate, the additional rent would be adjusted accordingly.

The evidence reflected that the Tenant's base rent was in the court registry and was current. However, the parties disagreed as to any additional rent due. The Tenant's representative testified to an oral agreement with the original landlord, amending the Lease to remove the Tenant's obligation of additional rent. Evidence was presented that: (1) prior to purchasing the property from the original landlord, the Landlord expressed concern as to whether an amendment to the Lease terms had been made such that would prevent it from enforcing the terms of the Lease; (2) the Landlord was advised in writing that an oral agreement had been made between the Tenant and original landlord that the Tenant would not have to make those payments; and (3) because of the oral modification agreement, the Tenant never paid operating expenses or real estate taxes to the original landlord, and that for more than a year after the Landlord purchased the subject property, the Landlord had not charged him the additional rent.

The Tenant's representative testified that subsequently, the Landlord's director began harassing him to pay the real estate taxes and operating expenses, explaining that the Landlord sent him a notice stating it would take possession of the premises if the Tenant did not make the payments. The Tenant's representative testified he did not have a choice, did not feel comfortable, and was under a lot of pressure when he ultimately paid that additional rent. Evidence was presented that the Tenant had a pending small claims action to recoup the payments made for real estate taxes and operating expenses due to the Landlord's harassment.

The Landlord presented evidence that while the original landlord indicated it had orally agreed with the Tenant that the Tenant would not have to pay additional rent, the Landlord nevertheless proceeded on the Lease terms because the Lease clearly required a written addendum to document a modification of the Lease and there was no written addendum.

The Tenant argued to the trial court that the issue before it was the Tenant's responsibility for payment of operating expenses and that the Lease was ambiguous. The Tenant maintained that while one portion of the Lease generally referred to operating expenses as additional rent, a specific definition of "operating expenses" in the Lease reflected that such did not include real estate taxes. The Tenant argued that this conflict made the Lease terms ambiguous and that the Lease should be construed against the Landlord. The Tenant also argued that the Landlord stepped into the shoes of the original landlord who had modified the Lease and not charged for the additional rent, waiving any obligation on the part of the Tenant to pay such expenses, and that this was expressed to the Landlord prior to its purchase of the property.

The Landlord argued that the Lease was not ambiguous, that additional rent was defined as operating expenses and taxes, and that taxes not being defined within "operating expenses" made sense. The Landlord maintained that the oral agreement between the original landlord and the Tenant was not sufficient to constitute modification of the Lease, and that the Tenant waived any right to claim it was not obliged to pay the taxes and operating expenses when it made such payments in the past to the Landlord.

The trial court entered its order on the Tenant's motion, wherein it acknowledged that both parties agreed that the Tenant was current as to the payment of base rent but disagreed as to whether "additional rent" was outstanding. The trial court concluded that the Lease was ambiguous as to what "additional rent" consisted of, noting that while the Lease's paragraph 3(c) provides for the payment of operating expenses, paragraph 3(d) defines "operating expenses" as not including "real property taxes." The trial court reasoned that, at a minimum, the issue of whether " ‘additional rent’ i.e. operating expenses," encompassed real estate taxes was ambiguous and should be construed against the drafter as well as the Landlord as the successor landlord.

The trial court found that the Tenant was not required to pay additional rent due to the oral agreement reached by the Tenant and the original landlord, which the trial court determined amended the Lease. The trial court found that the original landlord took no action to collect these amounts and that the Landlord purchased the property with knowledge of same, and that in fact, the Landlord did not raise the issue to the Tenant until more than a year after the Landlord purchased the property. The trial court rejected the Landlord's claim that the oral agreement amending the Lease was invalid under the Lease requirement that changes be in writing and signed by both parties. The trial court instead relied on case law holding that oral modification may be permissible despite a provision requiring changes to be in writing where the oral agreement is accepted and acted upon "in such [a] manner as would work a fraud on either party to refuse to enforce." King Partitions & Drywall, Inc. v. Donner Enters., Inc. , 464 So. 2d 715, 716 (Fla. 4th DCA 1985) (quoting Prof'l Ins. Corp. v. Cahill , 90 So. 2d 916, 918 (Fla. 1956) ). The trial court concluded that such was the case here, where even the Landlord recognized prior to its purchase of the property that the Tenant and original landlord had amended the Lease so that the Tenant would not be responsible for payment of "additional rent."

The trial court also concluded that the Landlord harassed the Tenant about the payment of additional rent and that the Tenant, under duress, began paying additional rent.

Based on the foregoing, the trial court ruled that the Tenant was current with its monthly rental obligations and was not required to pay "additional rent." In addition, the trial court dismissed the case and transferred it to the judge handling the Tenant's small claim suit to address any subsequent motions collateral to the dismissal. The Landlord's motion for rehearing was denied and the Landlord gave notice of appeal.

Appellate Analysis

Due Process

The Landlord argues on appeal that it was denied due process when the trial court sua sponte dismissed the eviction action upon ruling on the Tenant's motion to determine rent. More specifically, the Landlord argues it was deprived of notice and opportunity to be heard on the issue of dismissal of the action. The Landlord maintains the purpose of the motion authorized by statute is to provide a preliminary hearing to determine the amount of rent to be deposited into the court registry during the pendency of the eviction action. The Landlord points out that the Tenant did not move or ask for dismissal and argues that "[a] trial court cannot dismiss a cause of action without a pending motion or objection," and thus "[i]t is a due process violation for a trial court to sua sponte dismiss a claim without notice or a hearing," citing Bank of N.Y. Mellon Corp. v. Hernandez , 299 So. 3d 461, 463 (Fla. 3d DCA 2020). The Landlord also argues that the motion to determine rent was not intended to serve as a vehicle for final adjudication of eviction actions.

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