Vereit Real Estate, L.P. v. Fitness Int'l, LLC

365 So.3d 442

VEREIT REAL ESTATE, L.P., Appellant, v. FITNESS INTERNATIONAL, LLC, Appellee.

No. 3D22-1273

District Court of Appeal of Florida, Third District.

Opinion Filed May 17, 2023

Ballard Spahr LLP, and Katherine E. Anderson (Phoenix, AZ), and Michael Schuster (Denver, CO), for appellant.

Shutts & Bowen LLP, and Daniel Nordby (Tallahassee); Shutts & Bowen LLP, and Matthew R. Chait and Sean M. Smith (West Palm Beach), for appellee.

Before SCALES, LINDSEY and GORDO, JJ.

SCALES, J.

In this case, concerning a commercial tenant's obligation to pay rent for the two-and-half month period ("closure period") ¹ that executive and emergency orders ("closure orders") prevented the operation of gyms and fitness facilities in Florida due to the Covid-19 pandemic, Vereit Real Estate, L.P. ("Landlord"), the defendant/counter-plaintiff below, appeals a final summary judgment in favor of the plaintiff/counter-defendant below, Fitness International, Inc. ("Tenant"). The trial court determined that Tenant was not obligated to pay rents during the closure period pursuant to the underlying lease agreement's force majeure clause and, in the alternative, under the equitable doctrines of impossibility of performance, impracticability of performance and frustration of purpose. Because the subject force majeure clause, by its express terms, does not relieve Tenant of its rent obligations, and the equitable doctrines asserted by Tenant are similarly inapplicable, we reverse the final judgment and remand this cause back to the trial court with directions that final summary judgment be entered for Landlord.

I. RELEVANT FACTS AND PROCEDURAL BACKGROUND

The facts of this case are relatively simple and are not in dispute. In November 2016, Tenant entered into a fifteen-year lease agreement with Landlord's predecessor-in-interest that permits Tenant to use the leased premises in exchange for Tenant's payment of rent ("Lease"). The Lease contains a force majeure clause that excuses either party's obligation to perform any act required by the Lease if "restrictive laws" hamper the party's ability to perform that act:

22.3 FORCE MAJEURE.If either party is delayed or hindered in or prevented from the performance of any act required hereunder because of strikes, lockouts, inability to procure labor or materials, failure of power, restrictive laws , riots, insurrection, war, acts of terrorism, fire, severe inclement weather such as snow or ice or other casualty or other reason of a similar or dissimilar nature beyond the reasonable control of the party delayed, financial inability excepted (any " Force Majeure Event"), performance of such act shall be excused for the delay caused by the Force Majeure Event. Delays or failure to perform resulting from lack of funds or which can be cured by the payment of money shall not be Force Majeure Events.

(Emphasis in italics added).

Tenant operates an LA Fitness health club and fitness facility on the leased premises. Tenant met its monthly rent obligation through March 2020, but decided to temporarily close the subject LA Fitness on March 17, 2020, due to the Covid-19 pandemic. Three days later, Florida Governor Ron DeSantis issued an executive order that, as of March 20, 2020, required all gyms and fitness centers in Florida to close temporarily in order to prevent the spread of Covid-19. Through subsequent governor-issued executive orders and emergency orders issued by Miami-Dade County (collectively, the closure orders), Tenant was prevented from operating the LA Fitness until June 8, 2020. Tenant did not pay rent for the leased premises in April, May, or June 2020.

In December 2020, Tenant filed the instant two-count declaratory judgment action against Landlord in the Miami-Dade County Circuit Court. The first count of Tenant's operative complaint seeks a declaration that, pursuant to the Lease's force majeure clause, Tenant was excused from paying rent during the closure period because the closure orders prevented Tenant from operating the subject LA Fitness on the leased premises during that timeframe. The second count seeks a declaration that Tenant was excused from paying rent during the closure period pursuant to the equitable doctrines of impossibility of performance, impracticability of performance and frustration of purpose. Tenant's operative complaint also alleges claims for Landlord's purported breach of the Lease's force majeure clause and unjust enrichment, seeking partial reimbursement for the rent monies Tenant paid for March 2020, after the closure period commenced.

In May 2021, Landlord filed a responsive pleading and counterclaim that alleges Tenant breached the Lease by not paying rent during the closure period. Tenant's answer thereto alleges the affirmative defenses of impossibility of performance, impracticability of performance and frustration of purpose.

The parties filed competing motions for summary judgment on their respective pleadings. Following a hearing thereon, on June 8, 2022, the trial court entered separate summary judgment orders granting Tenant's motion and denying Landlord's motion. Specifically, the trial court determined that, pursuant to the Lease's force majeure clause, Tenant was excused from paying rent during the closure period because the closure orders prevented Tenant from operating the LA Fitness on the leased premises during that timeframe. The trial court determined further, in the alternative, that Tenant's rent obligation was excused during the closure period pursuant to the equitable doctrines of impossibility of performance, impracticability of performance and frustration of purpose. On June 30, 2022, the trial court entered final judgment in favor of Tenant, awarding Tenant damages, attorney's fees and costs totaling $88,310.82, plus interest. Landlord timely appealed this final summary judgment.

II. ANALYSIS²

A. The Force Majeure Clause

1. Introduction

Tenant's reliance on the subject force majeure clause to excuse its obligation to pay rent is misplaced because a plain reading of either of the two sentences comprising the subject clause precludes Tenant's sought rent relief.

A force majeure clause is a contractual provision that excuses a party's non-performance when extraordinary events that are beyond that party's control prevent the party from performing under the contract. See Home Devco/Tivoli Isles LLC v. Silver, 26 So. 3d 718, 722-23 (Fla. 4th DCA 2010). "Even so, it ‘is not an opt-out provision; it is limited in scope.’ " Rockwell at Amelia Passage, LLC, 343 So. 3d at 630 (quoting Stein v. Paradigm Mirasol, LLC, 586 F.3d 849, 858 (11th Cir. 2009) ). The plain language of the force majeure clause itself defines when, and under what circumstances, the contracting parties are excused from performing under the agreement. See KRG Oldsmar Project Co., LLC v. CWI, Inc., 358 So.3d 464, 468 (Fla. 2d DCA 2023). "When a contract is clear and unambiguous, the court's role is to enforce the contract as written, not to rewrite the contract to make it more reasonable for one of the parties." Id. (quoting Snyder v. Fla. Prepaid Coll. Bd., 269 So. 3d 586, 592 (Fla. 1st DCA 2019) ).

2. The first sentence

The first sentence of the subject force majeure clause provides, in relevant part, that "[i]f either party is delayed or hindered in or prevented from the performance of any act required hereunder because of ... restrictive laws ... performance of such act shall be excused for the delay caused by the Force Majeure Event." (Emphasis added).

Hence, for Tenant to successfully assert the clause to excuse Tenant's rent obligations, Tenant had the summary judgment burden to establish that the closure orders (i.e., "restrictive laws" ³ ) delayed, hindered or prevented Tenant from paying rent.

The trial court held that "[o]nce [Tenant's] right to operate a health club in the Premises – the very thing for which [Tenant] bargained in entering into the Lease – was taken away, the Rent obligation necessarily must be excused. Those obligations go hand in hand." It appears that the trial court conflated Tenant's contractual right to operate a fitness facility at the leased premises with Tenant's separate and distinct contractual requirement to pay rent. While the closure orders no doubt prevented Tenant from operating a fitness facility at the leased premises, the Lease did not require Tenant to operate a fitness facility at the leased premises.

The Lease does provide that "[t]he ‘ Initial Use[ ]’ of the Building shall be for the operation of a health club and fitness facility," but it further provides that, subject to certain conditions and limitations, "Tenant may also use the Building for such other use as Tenant may determine in Tenant's reasonable business judgment." In addition, the Lease provides that "Tenant shall at all times and from time to time have the right to cease business operations from the Parcel, provided that Tenant continues to ... pay Rent due under the Lease ...." Thus, while Tenant certainly has the right to operate a fitness facility on the leased premises, it is not contractually required to do so. Nor is Tenant even required to conduct any business operations on the leased premises so long as Tenant continues to pay rent to Landlord.

The Lease requires Tenant to pay rent. But the summary judgment record contains no evidence that Tenant's payment of rent during the closure period was delayed, hindered, or prevented by the closure orders. Indeed, the closure orders did not make it illegal for Tenant to pay rent, and Tenant concedes that it had the ability to pay rent during the entirety of the closure period. See Fitness Int'l, LLC v. DDRM Hill Top Plaza L.P., SACV 21-00142CJC(ADSx), 2021 WL 5456666, at *4 (C.D. Cal. Oct. 20, 2021 ) (interpreting a similar force majeure provision, concluding that "even if the Court were to construe the restrictive laws at issue as a force majeure event, Tenant has not shown that its...