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

Tue Aug 3 10:04:51 PDT 2010

Exclusives in retail context are tricky to do properly. You need to
focus on a lot of things; make sure use clauses are tightly written;
keep a running list of all current exclusives which govern in the
center; require each new tenant to agree its use is expressly subject to
and limited by that exclusives list attached to its lease and cause each
new tenant to agree to be bound by and not violate those exclusives;
and, in granting new exclusives, there has to be carve outs for existing
tenants and their uses and permitted uses under their leases, as same
may be assigned, sublet, extended, relocated or replaced; and often
carveouts also for some outparcels or other phases of a center, and
always carve outs for the larger tenants - majors, department stores,
grocery stores and other anchors; then you need to push for strict
limitation of remedies on breach if at all possible.

________________________________

From: landten-bounces at lists.flabarrpptl.org
[mailto:landten-bounces at lists.flabarrpptl.org] On Behalf Of Rick G.
Emmanuel
Sent: Tuesday, August 03, 2010 12:34 PM
To: 'RPPTL Landlord Tenant Committee'
Subject: Re: [RPPTL LandTen] Assignment, Subletting and Exclusive Use
Provision Question

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=%2ffi
nd%2fdefault.wl&DB=735&SerialNum=1981119298&FindType=Y&ReferencePosition
Type=S&ReferencePosition=1173&AP=&rs=WLW10.06&ifm=NotSet&fn=_top&sv=Spli
t&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>   
<https://web2.westlaw.com/KCNotes/default.wl?utid=1&fn=_top&mt=Florida&p
bc=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>   
<https://web2.westlaw.com/KCNotes/default.wl?utid=1&fn=_top&mt=Florida&p
bc=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>   
<https://web2.westlaw.com/KCNotes/default.wl?utid=1&fn=_top&mt=Florida&p
bc=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=19
69126399&fn=_top&sv=Split&tc=-1&findtype=Y&ordoc=1981119298&mt=Florida&d
b=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=19
70124290&fn=_top&sv=Split&tc=-1&findtype=Y&ordoc=1981119298&mt=Florida&d
b=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&referencepos
itiontype=S&serialnum=1944110374&fn=_top&sv=Split&referenceposition=82&f
indtype=Y&tc=-1&ordoc=1981119298&mt=Florida&db=162&utid=1&vr=2.0&rp=%2ff
ind%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(LE
10368674)&mt=Florida&db=BC-COMPANYSRBD&utid=1&vr=2.0&rp=%2ffind%2fdefaul
t.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(LE
00064224)&mt=Florida&db=BC-COMPANYSRBD&utid=1&vr=2.0&rp=%2ffind%2fdefaul
t.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

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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