Opinion
Nos. 86-2567, 86-2578.
January 29, 1991.
Appeal from the Circuit Court, Dade County, Jon I. Gordon, J.
Fine, Jacobson, Schwartz, Nash, Block England and Arthur J. England, Jr. and Charles M. Auslander, Miami, for Sky Lake Gardens Recreation, Inc.
Weinstein Scharf and Robert D. Scharf, Coral Springs, for Sky Lake Gardens Nos. 1, 3 and 4, Inc.
On Motion for Rehearing as to Attorney's Fees and Motion for Clarification
On the Sky Lake Recreation Gardens, Inc. motion for rehearing as to attorney's fees and the Sky Lake Gardens Nos. 1, 3 and 4, Inc. motion for clarification, we revise, in part, our opinion of October 9, 1990. That opinion granted the motion of the Division of Florida Land Sales, Condominiums and Mobile Homes to appear as amicus curiae and join pending motions and vacated this court's opinion of January 31, 1989. Thus, both the previous opinions are vacated and replaced with the following:
Sky Lake Gardens Recreation, Inc., ("Recreation"), defendant/counterplaintiff below, seeks reversal of the trial court's amended final judgment which rescinded three 99-year recreation leases entered into between Recreation as lessor and Sky Lake Gardens Nos. 1, 3, and 4 ("the Associations"), plaintiffs/counterdefendants below, as lessees. The recreation leases, which were executed in 1964, provided for rental escalations every ten years, commencing in 1974. In 1984 the Associations filed suit challenging the validity of the rental escalation clauses. Recreation counterclaimed, seeking rescission of the leases in the event the escalation clauses were ultimately voided by the court. The trial court entered judgment in favor of the Associations, declaring the escalation clauses to be void pursuant to section 718.401(8)(a), Florida Statutes (1985). In light of that order, by amended final judgment, the court granted the relief requested by Recreation by rescinding further enforcement of the recreation leases, and denied both parties' requests for attorney's fees. We find that the trial court erred both in declaring the escalation clauses void and in rescinding further enforcement of the recreational leases.
The recent case of Association of Golden Glades Condominium Club, Inc. v. Security Management Corp., 557 So.2d 1350 (Fla. 1990) clarifies the enforceability of section 718.401(8)(a) and its subsequent changes. It demonstrates that the crucial inquiry in a case where an attempt is being made to void the escalation clause in a recreation lease is whether the lessor agreed to be bound by changes in the Condominium Act, chapter 718.
The legislative history pertaining to rent escalation clauses in condominium leases of recreation properties is reviewed in Association of Golden Glades Condominium Club, Inc., 557 So.2d at 1350-51.
In Angora Enters., Inc. v. Cole, 439 So.2d 832, 834 (Fla. 1983), cert. denied, 466 U.S. 927, 104 S.Ct. 1710, 80 L.Ed.2d 183 (1984), the supreme court held that where the declaration of condominium expressly incorporated the Condominium Act and any amendments, such language encompassed the amendment declaring escalation clauses in recreation or land leases void and unenforceable. In that case, the lessor was the signatory on both the lease and the declaration of condominium. The court observed that to say that the lessor, who in his corporate capacity was both the developer and the management firm, did not agree to the terms of declaration "is to refuse to see what is plainly written in black and white." The escalation clause in that lease was therefore held to be void. See Century Village, Inc. v. Wellington, E, F, K, L, H, J, M G, Condominium Ass'n, 361 So.2d 128 (Fla. 1978); see also Kaufman v. Shere, 347 So.2d 627 (Fla. 3d DCA 1977), cert. denied, 355 So.2d 517 (Fla. 1978); Wilderness Country Club Partnership, Ltd. v. Groves, 458 So.2d 769 (Fla. 2d DCA 1984).
In Cove Club Investors, Ltd. v. Sandalfoot South One, Inc., 438 So.2d 354 (Fla. 1983), the supreme court determined that there was no evidence that the lessor had agreed to be bound by changes in the Condominium Act. The court made that determination notwithstanding the fact that Sandalfoot, the lessor, was a wholly owned subsidiary of the developer. The evidence demonstrated that Sandalfoot had not been a party to the declaration of condominium which contained the language incorporating changes in the Condominium Act, and the court determined that in such circumstances the escalation clause under dispute remained valid.
In the instant case, only the declarations of condominium signed by the developer incorporated changes in the Condominium Act. The leases never stated that the declarations of condominium were incorporated into the leases, nor did the leases incorporate changes in the Condominium Act. The lessees claim that because the signatories on both the declarations and the leases are the same parties, Angora should control. However, the developer and lessor in the instant case signed as officers of two distinct corporations. Cove Club Investors demonstrates that a subsidiary relationship between a developer and lessor standing alone will not allow the lessor to be held to obligations only assumed by the developer. Here, lessees alleged only that the developer and lessor were controlled and owned by the same parties doing business as two separate corporate entities. The corporate veil will not be pierced absent a showing of improper conduct. Dania Jai-Alai Palace, Inc. v. Sykes, 450 So.2d 1114 (Fla. 1984). Absent any such allegation, no question of fact remains. Furthermore, mere references in a recreation lease to a declaration of condominium do not fuse the documents into one instrument or establish the contractual intent that the lease itself be bound by revisions to the condominium law. Condominium Ass'n of Plaza Towers North, Inc. v. Plaza Recreation Dev. Corp., 514 So.2d 381 (Fla. 3d DCA 1987), approved, 557 So.2d 1356 (Fla. 1990). Such a drastic result as voiding specific lease rental provisions should only be accomplished by clearly expressed lease terms which expressly adopt the Condominium Act, as amended. Id. at 382.
Therefore, in the instant dispute, the trial court's order finding the escalation clause void must be reversed. At the lessor's request, the trial court granted rescission of the leases after it determined that the escalation clauses in those leases were invalid. The court found that rescission was necessary because by freezing rental payments at the 1974 levels, the court had caused the abrogation of an indispensable contract term. See Wilderness Country Club, 458 So.2d at 769. In light of our decision finding the escalation clauses remain valid, rescission is no longer justified or permissible. The order of rescission is therefore vacated.
As to the attorney's fees claimed, having found the recreation leases valid, the contracts' terms providing for the payment of attorney's fees control. The lessor claims entitlement to attorney's fees based on two lease provisions:
ARTICLE X
NON-PAYMENT OF RENT:
. . . And, it is further understood that LESSEE will pay, in addition to the fees and other sums agreed to be paid hereunder, such additional sums as the Court may adjudge reasonable as attorneys' fees in any suit or action instituted by LESSOR to enforce the provisions of this lease or the collection of the rent due LESSOR hereunder.
ARTICLE XXIV
AND the said unit owner in the condominium and guarantor further covenants and agrees:
3. To pay all and singular the costs, charges and expenses, including attorneys' fees, reasonably incurred or paid at any time by said LESSOR because of the failure on the part of the unit owner in the condominium and guarantor to perform, comply with, and abide by each and every the stipulations, agreements, conditions, and covenants of this lease, and every such payment shall bear interest from date at the rate of ten (10%) per cent per annum.
The legal fees incurred by the lessor may be categorized as: 1) those fees the lessor incurred in seeking rescission of the agreements; 2) those fees the lessor incurred in defending the lessees' declaratory action testing the legality of the agreements; 3) those fees the lessor incurred to enforce the agreements once lessees had stopped performance.
First, rescission is an elected remedy which seeks to avoid a contract. See Hustad v. Edwin K. Williams Co. East, 321 So.2d 601 (Fla. 4th DCA 1975), cert. denied, 333 So.2d 41 (Fla. 1976); Crown Ice Machine Leasing Co. v. Sam Senter Farms, Inc., 174 So.2d 614 (Fla. 2d DCA), cert. denied, 180 So.2d 656 (Fla. 1965). Thus the fees the lessor assumed in pursuing rescission were not the result of lessor's efforts to enforce the contract, as provided for in Article X, nor were they necessarily incurred by the lessees' nonperformance, as mandated in Article XXIV. Second, as to the fees incurred in defending the lessees' declaratory action, as long as lessees continued to perform during this litigation neither enforcement nor failure of performance came into play. Third, however, as to the fees lessor incurred once lessees halted performance, in the trial court and in appellate proceedings, Article X and Article XXIV are directly applicable, and lessor is due reimbursement because here lessor was attempting to enforce the agreement in response to lessees' halt in performance. As to these fees, to hold otherwise would grant lessees the benefit of the trial court's erroneous ruling.
Accordingly, the amended final judgment is reversed with directions to vacate the judgment rescinding the lease agreements in their entirety, and revalidate the escalation clause which was stricken. The trial court is further directed to fix and determine lessor's costs, charges, and attorney's fees as formulated by our decision.
Reversed and remanded.
FERGUSON, J., concurs.
In joining the opinion of the court I note that lessees' challenge to the escalation clause, brought after the 1984 escalation, was based solely on section 718.401(8)(a), Florida Statutes (1983), now section 718.4015(2), Florida Statutes (1989), and not on proof of actual common law unconscionability. See Steinhardt v. Rudolph, 422 So.2d 884, 889 (Fla. 3d DCA 1982), review denied, 434 So.2d 889 (Fla. 1983); see also Avila South Condominium Ass'n, Inc. v. Kappa Corp., 347 So.2d 599, 605 (Fla. 1977); Beeman v. Island Breakers, a Condominium, Inc., 15 F.L.W. D1693 (Fla. 3d DCA June 26, 1990); 718.122, Fla. Stat. (1989). The principles outlined in the opinion apply to the former, but not the latter. In other words, should some future rental escalation be unconscionable in fact, relief would be available under Steinhardt and section 718.122, Florida Statutes (1989). See Steinhardt, 422 So.2d at 889; see also Beeman, 15 F.L.W. at D1694-95.