[RPPTL LandTen] Assignment, Subletting and Exclusive Use Provision Question

Tue Aug 3 09:33:50 PDT 2010

I think a critical factor here is the use clause in  lease 1. If lease 1 is prior in time to lease 2, and if the proposed assignment does not violate the use clause in lease 1, I think the landlord would have a real problem on his hands. My suggestion is that the lease 2 exclusive needs to make exception for the lease 1 use clause.

Thanks,

Rick

Patrick G. Emmanuel, Jr., Esq.
Emmanuel, Sheppard & Condon, P.A.
30 South Spring Street
Pensacola, FL  32502
Telephone: (850) 433-6581
Facsimile: (850) 433-6162

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From: landten-bounces at lists.flabarrpptl.org [mailto:landten-bounces at lists.flabarrpptl.org] On Behalf Of Jeffrey Mazor
Sent: Tuesday, August 03, 2010 10:46 AM
To: 'RPPTL Landlord Tenant Committee'
Subject: Re: [RPPTL LandTen] Assignment, Subletting and Exclusive Use Provision Question

George:

I agree with David. Also, you are probably well familiar  with this, but maybe it will  be useful (from Fernandez v. Vazquez, 397 So.2d 1171, 1173-74 (Fla. 3d DCA 1981)<https://web2.westlaw.com/find/default.wl?vc=0&ordoc=2011992142&rp=%2ffind%2fdefault.wl&DB=735&SerialNum=1981119298&FindType=Y&ReferencePositionType=S&ReferencePosition=1173&AP=&rs=WLW10.06&ifm=NotSet&fn=_top&sv=Split&mt=Florida&utid=1&vr=2.0&pbc=81501C16>). Underlines are mine:

[3]<https://web2.westlaw.com/result/%09%09%09%09%09%09#F31981119298> [cid:180582716 at 03082010-339B] <https://web2.westlaw.com/KCNotes/default.wl?utid=1&fn=_top&mt=Florida&pbc=AFFE46B4&vr=2.0&sv=Split&ifm=NotSet&locatestring=HD(003)%2cCL(H%2cO)%2cDC(A%2cL%2cO%2cD%2cG)%2cDT(E%2cD%2cC%2cM)&rs=WLW10.06&service=Find&rlt=CLID_FQRLT212475391038&serialnum=1981119298&rp=%2fKCNotes%2fdefault.wl&n=1&rlti=1> [4]<https://web2.westlaw.com/result/%09%09%09%09%09%09#F41981119298> [cid:180582716 at 03082010-339B] <https://web2.westlaw.com/KCNotes/default.wl?utid=1&fn=_top&mt=Florida&pbc=AFFE46B4&vr=2.0&sv=Split&ifm=NotSet&locatestring=HD(004)%2cCL(H%2cO)%2cDC(A%2cL%2cO%2cD%2cG)%2cDT(E%2cD%2cC%2cM)&rs=WLW10.06&service=Find&rlt=CLID_FQRLT212475391038&serialnum=1981119298&rp=%2fKCNotes%2fdefault.wl&n=1&rlti=1> [5]<https://web2.westlaw.com/result/%09%09%09%09%09%09#F51981119298> [cid:180582716 at 03082010-339B] <https://web2.westlaw.com/KCNotes/default.wl?utid=1&fn=_top&mt=Florida&pbc=AFFE46B4&vr=2.0&sv=Split&ifm=NotSet&locatestring=HD(005)%2cCL(H%2cO)%2cDC(A%2cL%2cO%2cD%2cG)%2cDT(E%2cD%2cC%2cM)&rs=WLW10.06&service=Find&rlt=CLID_FQRLT212475391038&serialnum=1981119298&rp=%2fKCNotes%2fdefault.wl&n=1&rlti=1>  Accordingly, we hold that a lessor may not arbitrarily refuse consent to an assignment of a commercial lease which provides, even without limiting language, that a lessee shall not assign or sublease the premises without the written consent of the lessor.[FN8]<https://web2.westlaw.com/result/%09%09%09%09%09%09#B00881981119298> A withholding of consent to assign a lease, which fails the tests for good faith and commercial reasonableness, constitutes a breach of the lease agreement. Whether a landlord breached the lease by acting unreasonably in withholding consent of a commercial tenant is to be determined by a jury according to the facts of that case. The following factors are among those which a jury may properly consider in applying the standards of good faith and commercial reasonableness: (a) financial responsibility of the proposed subtenant (b) the "identity" or "business character" of the subtenant, i. e., suitability for the particular building, (c) the need for alteration of the premises, (d) the legality of the proposed use, and (e) the nature of the occupancy, i. e., office, factory, clinic, etc.; See Popovic v. Florida Mechanical Contractors, supra, Whitman v. Pet Inc., supra, American Book Co. v. Yeshiva University, Development Foundation, Inc., 59 Misc.2d 31, 297 N.Y.S.2d 156 (1969)<https://web2.westlaw.com/find/default.wl?tf=-1&rs=WLW10.06&serialnum=1969126399&fn=_top&sv=Split&tc=-1&findtype=Y&ordoc=1981119298&mt=Florida&db=602&utid=1&vr=2.0&rp=%2ffind%2fdefault.wl&pbc=AFFE46B4>; Johnson v. Jaquith, supra. Denying consent solely on the basis of personal taste, convenience or sensibility or in order that the landlord may charge a higher rent than originally contracted for have been held arbitrary reasons failing the tests of good faith and reasonableness under commercial leases. Catalina Inc. v. Biscayne Northeast Corp., supra; Chanslor Western Oil & Development Co. v. Metropolitan Sanitary District, 131 Ill.App.2d 527, 266 N.E.2d 405 (1970)<https://web2.westlaw.com/find/default.wl?tf=-1&rs=WLW10.06&serialnum=1970124290&fn=_top&sv=Split&tc=-1&findtype=Y&ordoc=1981119298&mt=Florida&db=578&utid=1&vr=2.0&rp=%2ffind%2fdefault.wl&pbc=AFFE46B4>, citing Broad and Branford Place Corp. v. J. J. Hockenjos Co., 132 N.J.L. 229, 39 A.2d 80, 82 (1944)<https://web2.westlaw.com/find/default.wl?tf=-1&rs=WLW10.06&referencepositiontype=S&serialnum=1944110374&fn=_top&sv=Split&referenceposition=82&findtype=Y&tc=-1&ordoc=1981119298&mt=Florida&db=162&utid=1&vr=2.0&rp=%2ffind%2fdefault.wl&pbc=AFFE46B4>.

More recently cited in Speedway SuperAmerica, LLC<https://web2.westlaw.com/find/default.wl?returnto=BusinessNameReturnTo&rs=WLW10.06&ifm=NotSet&fn=_top&sv=Split&findtype=l&lvbp=T&docname=CIK(LE10368674)&mt=Florida&db=BC-COMPANYSRBD&utid=1&vr=2.0&rp=%2ffind%2fdefault.wl&pbc=3F1E7F52> v. Tropic Enterprises, Inc<https://web2.westlaw.com/find/default.wl?returnto=BusinessNameReturnTo&rs=WLW10.06&ifm=NotSet&fn=_top&sv=Split&findtype=l&lvbp=T&docname=CIK(LE00064224)&mt=Florida&db=BC-COMPANYSRBD&utid=1&vr=2.0&rp=%2ffind%2fdefault.wl&pbc=3F1E7F52>. 966 So.2d 1  Fla.App. 2 Dist.,2007.

Jeffrey R. Mazor, Esq.
J. R. Mazor & Associates, P.A.
Presidential Circle Building
4000 Hollywood Blvd.,  Suite 265-s
Hollywood, FL 33021
Phone: 954-962-3500
Fax:       954-962-3560
Email:   Jmazor at Mazor.com<mailto:Jmazor at Mazor.com>

From: landten-bounces at lists.flabarrpptl.org [mailto:landten-bounces at lists.flabarrpptl.org] On Behalf Of George Pincus
Sent: Tuesday, August 03, 2010 10:42 AM
To: 'RPPTL Landlord Tenant Committee'
Subject: [RPPTL LandTen] Assignment, Subletting and Exclusive Use Provision Question

Here are my facts:

*         Landlord enters into a lease with Tenant #1.  The Assignment/Subletting clause says the typical "which consent shall not be unreasonably withheld" when the Landlord is asked by the Tenant to approve an assignment or sublease.  There are no criteria or conditions specified as to what qualifies as Landlord being reasonable when it says "no" to a proposed assignment or sublease.

*         Three (3) years later and Landlord is now negotiating a lease with Tenant #2, who is asking that Landlord not lease other space in the building to Tenant #2's competitors, which will be listed on a schedule to the Lease.

*         Question:  is it reasonable for Landlord to say "no" to Tenant #1 when Tenant #1 shows up with a request to sublet to one of Tenant #2's competitors on the list?

Obviously, the definitive answer is to go back to Tenant #1 and try and amend Tenant #1's Lease to preemptively provide that it is not unreasonable for Landlord to withhold consent to a proposed assignment or sublease to one of the listed competitors, but that is not going to happen.

I can't find any case law on this point (but at my advanced age, I suck at research).   Does anyone have any relevant experience with this issue?

I appreciate your thoughts on this issue.

Thanks very much.

George A. Pincus, Esq.
Shareholder
Stearns Weaver Miller Weissler
  Alhadeff & Sitterson, P.A.
New River Center, Suite 2100
200 East Las Olas Boulevard
Ft. Lauderdale, FL 33301
Telephone: 954-766-9705
Facsimile:    954-766-9719
E-mail: gpincus at stearnsweaver.com<mailto:gpincus at swmwas.com>
www.stearnsweaver.com

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