CERTIFIED MOTORS, LLC

v.

AVENTINE HILL, LLC

DISTRICT COURT OF APPEAL OF FLORIDA

SECOND DISTRICT

CERTIFIED MOTORS, LLC, a Florida limited liability company; and JOSEPH ELNAGGAR,

Appellants,

v.

AVENTINE HILL, LLC, a Florida limited liability company; and MANUEL DELGADO, JR., Appellees.

No. 2D22-2306

September 6, 2023

Appeal from the Circuit Court for Hillsborough County; Cheryl K. Thomas, Judge. George A. Vaka and Nancy A. Lauten of Vaka Law Group, P.L., Tampa; and Liben M. Amedie of The Liben Law Firm, Tampa, for Appellants. Stacy D. Blank, Paul A. McDermott, and Daniel L. Buchholz of Holland & Knight LLP, Tampa, for Appellee Aventine Hill, LLC. No appearance for remaining Appellee.

LaROSE, Judge.

Certified Motors, LLC, appeals a summary judgment entered in favor of Aventine Hill, LLC. The trial court found the parties' commercial lease renewal option unenforceable. We have jurisdiction. See Fla. R. App. P. 9.110(k) ("Review of Partial Final Judgments.").¹ Having carefully reviewed the record, and with the benefit of oral argument, we reverse.²

Background

Certified entered into a commercial lease to operate a car repair and sales business. Rent was $5,000 per month. The lease included a five-year renewal option: TERM. The term of this Lease shall begin on January¹, 2017, and last until December 31, 2022. Tenant can exercise an option for an additional⁵[-]year period if given in writing to the owner 90 days before the term expiration. (Second emphasis added.)

Several months later, Aventine purchased the leased premises, thereby becoming Certified's landlord.

The parties' relationship was rough from the start. Aventine accused Certified of breaching the lease in a variety of ways. Certified denied the accusations. Eventually, Aventine sued Certified.

Analysis

Florida's summary judgment rule provides that "[t]he [trial] court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fla. R. Civ. P. 1.510(a). We review the trial court's summary judgment de novo. See Lee Cnty. Elec. Coop., Inc. v. City of Cape Coral, 159 So. 3d 126, 127 (Fla. 2d DCA 2014) ("In the declaratory judgment proceeding, the City and LCEC filed cross-motions for summary judgment. The circuit court determined that the facts were undisputed, and it ruled in the City's favor . . . . Our review of the summary judgment is de novo."). Our review of the trial court's interpretation of the lease terms is also de novo. See Bethany Trace Owners' Ass'n v. Whispering Lakes I, LLC, 155 So. 3d 1188, 1191 (Fla. 2d DCA 2014) ("We review the trial court's interpretation of a contract de novo. Because the interpretation of a contract is a question of law, this court may reach a construction or interpretation of the contract contrary to that of the trial court." (citations omitted)). Certified argues that where a renewal option is silent as to some terms, the option remains enforceable. In such an instance, Certified tells us that the renewal option embraces the terms of the original lease. Aventine contends that an enforceable renewal option must specify either the rent for the renewal term (or at least affirmatively declare the rental amount to be the same as during the initial lease period) or a definite procedure to establish a new rental amount. v. CWI, Inc., 358 So. 3d 464, 468 (Fla. 2d DCA 2023) ("[T]he 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." (quoting Snyder v. Fla. Prepaid Coll. Bd., 269 So. 3d 586, 592 (Fla. 1st DCA 2019))). Indisputably, the renewal option omits both a rental amount and a definite procedure to establish the rent. The parties, however, disagree over the import of these omissions; whether and what terms must be included in an enforceable renewal option.

I. Lack of Essential Contract Terms "[W]hen contracting parties do not agree on an essential provision there is no 'meeting of the minds' that is the essence of a contract, and . . . it is not the province of the court to make the contract or to supply material terms or provisions omitted by the parties." Edgewater Enters., Inc. v. Holler, 426 So. 2d 980, 982 (Fla. 5th DCA 1982). Failure to include essential terms is generally fatal to a contract's enforceability. See Davis v. Hearthstone Senior Cmtys., Inc., 155 So. 3d 1232, 1234 (Fla. 2d DCA 2015) ("[A] contract cannot stand if it is missing the essential terms of an agreement." (quoting Greenbrook NH, LLC v. Est. of Sayre, 150 So. 3d 878, 878 (Fla. 2d DCA 2014))).

Aventine cites to several cases echoing these general propositions. For instance, in Jahangiri v. 1830 N. Bayshore, LLC, 253 So. 3d 699, 702 (Fla. 3d DCA 2018), the Third District noted that [t]he amount of rental is an essential element of a lease, if not the basis for a lease, and an agreement to make a lease, or to renew or extend a lease, that fails to specify either the amount of the rental or a definite procedure to be followed to establish the amount of the rental, is too indefinite to be legally binding and enforceable. (Quoting Edgewater Enters., Inc., 426 So. 2d at 983.) More recently, in FM³ Liquors, Inc. v. Bien-Aime, 319 So. 3d 706, 707-08 (Fla. 3d DCA 2021), the Third District held that the landlord was entitled to immediate possession of the property following expiration of the lease. The court explained that "renewal is foreclosed by this court's recent opinion in Jahangiri" where the renewal option omitted the rent amount or a definite procedure to establish the rent amount. Id. at 707. Similarly, in LaFountain v. Estate of Kelly, 732 So. 2d 503, 503-04 (Fla. 1st DCA 1999), the First District affirmed a trial court's order determining that a renewal option was unenforceable. The court held that "[t]he renewal option in the instant case did not specify the rental amount or a method for reaching agreement on the rent, and the option was thus unenforceable once the parties failed to agree to an essential element of the lease." Id. at 505.

These cases teach that "[w]here essential terms of an agreement remain open, and subject to future negotiation, there can be no enforceable contract." Dows v. Nike, Inc., 846 So. 2d 595, 602 (Fla. 4th DCA 2003). Black letter law tells us that "an 'agreement to agree' is unenforceable as a matter of law." ABC Liquors, Inc. v. Centimark Corp., 967 So. 2d 1053, 1056 (Fla. 5th DCA 2007).

For instance, in John Alden Life Insurance Co. v. Benefits Management Associates, Inc., 675 So. 2d 188, 189 (Fla. 3d DCA 1996), the Third District held that a contractual provision to negotiate a bonus payment in the future "was merely an 'agreement to agree' in the future about the bonus and hence unenforceable as a matter of law." Legal commentaries echo this proposition in the context of a real estate renewal option: Although a promise may be sufficiently definite when it contains an option given to the promisor or the promisee, if an essential element is reserved for the future agreement of both parties, as a general rule the promise can give rise to no legal obligation until such future agreement. Since either party in such a case may, by the very terms of the promise, refuse to agree to anything to which the other party will agree, it is impossible for the law to affix any obligation to such a promise. On this ground, courts have traditionally refused to enforce agreements to agree in contracts dealing with real property; thus leases containing renewal covenants leaving the renewal rental for the future agreement of the parties have generally been held unenforceable for indefiniteness and uncertainty.

II. Silence is Golden

Having briefly outlined some contours of contract formation and enforceability, we introduce the concept of silence. The language used (or not used) in a renewal option has profound legal implications. See id. at 981 ("Options to renew can be worded in various ways, but what may seem to be negligible semantic differences can have a dramatic difference in the construction the court places on the particular clause."). Where the renewal option says nothing about the rent payable during the renewal period, the silence, as a matter of law, dictates that the same rent will carry over into the renewal period. Silence tells us what rent will be paid.

Aventine seemingly believes this approach is too facile. But Aventine ignores the fact that "[a] lease renewal involves a continuation of the landlord-tenant relationship on the terms specified in the option to renew, or if no terms are specified, then '[a] lease renewal connotes a continuation of the landlord-tenant relationship on the same terms as the original lease.' " Woodard Tire Co. v. Hartley Realty Inc., 596 So. 2d 1114, 1116 (Fla. 3d DCA 1992) (alteration in original) (emphasis added) (quoting Strano v. Reisinger Real Est., Inc., 534 So. 2d 1214, 1215 (Fla. 3d DCA 1988)); see also Goldbloom v. J.I. Kislak Mortg. Corp., 408 So. 2d 748, 750 (Fla. 3d DCA 1982) ("[A]n otherwise silent agreement simply to renew an existing lease implies that the renewed term is for the same rental as the existing one. . . . ['W]hen there are no terms stated in the option [to renew the lease] the parties (are deemed to) contemplate that the lease will be renewed on the same terms in the original agreement.' " (citations omitted) (quoting Crossman v. Fontainebleau Hotel Corp., 273 F. 2d 720, 727 (5th Cir. 1959))). Aventine's insistence that the renewal option include either the rental amount during the renewal term or a definite procedure to establish the rent finds no support in the case law. By saying nothing about the rent, the renewal option adopts the original rental amount: Where the parties to a lease did not leave the rental amount for the lease renewal period open to negotiation, the court looks to the terms of the original lease, based on the premise that once the renewal option is exercised, the original lease is deemed a unitary one for the extended term. 49 Am. Jur. 2d Landlord & Tenant § 138 (2023); e.g., Woodard Tire Co. Inc., 596 So. 2d at 1116; Goldbloom, 408 So. 2d at 750. Aventine ignores this unique "unitary" character. Exercise of the renewal option "does not create a new lease; rather it is a prolongation of the original agreement for a further period. Once the option is exercised, the original lease is deemed a unitary one for the extended term and a new lease is not necessary." Dime Sav. Bank of N.Y. v. Montage St. Realty Assocs., 686 N.E. 2d 1340, 1342 (N.Y. 1997). Certified's renewal option is not lacking. By virtue of its silence, the lease terms apply to the renewal option with equal force and effect, as though restated therein. See Idol v. Little, 396 S.E. 2d 632, 634 (N.C. Ct. App. 1990) ("[A]n optional renewal provision in a lease which is silent on the amount of rent due upon renewal of the lease and which does not provide that the renewal rent will be set by the parties' future agreement is valid and enforceable, and the amount of rent due upon renewal is impliedly the amount of rent due under the original lease.").

III. Aventine's Lack of Authority Although enlightening, Aventine's cases are inapposite. The cases do not deal with the critical fact we have here: silence as to the renewal rent defaults to the original rental amount. Further, the cases involve renewal options anticipating more negotiations or without adequately defining a way to arrive at the rent amount. They advance no compelling support for Aventine's position.

As recounted earlier, for instance, the renewal option in Edgewater required the "monthly rental to be arbitrated, negotiated and determined among the parties to this lease" upon the lessee's exercise of the renewal option. Edgewater, 426 So. 2d at 981. This classic, and unenforceable, agreement to agree on an essential term, is absent from Certified's original lease.

Aventine urges us to read Edgewater as categorically requiring that a renewal option include either the amount of rent or a definite procedure to establish the rent. But the issue framed by the Fifth District was much narrower: whether a renewal option that "leaves the amount of the monthly rental during the renewal period to be negotiated, [wa]s sufficiently definite to be legally enforceable." Id. (emphasis added). Edgewater stands for the rather unremarkable proposition that an agreement to agree on an essential term is no agreement at all. Consequently, we cannot adopt Aventine's sweeping reading of Edgewater. Cf. Pedroza v. State, 291 So. 3d 541, 547 (Fla. 2020) ("A holding consists of those propositions along the chosen decisional path or paths of reasoning that (1) are actually decided, (2) are based upon the facts of the case, and (3) lead to the judgment." (quoting State v. Yule, 905 So. 2d 251, 259 n.10 (Fla. 2d DCA 2005) (Canady, J., specially concurring))).

Similarly, the renewal option in LaFountain, 732 So. 2d at 504, provided: The Lessor grants to the Lessee the option to renew said lease for two additional periods of five (5) years each, provided written notice of the intent to exercise the option is given at lease [sic] ninety (90) days before the expiration of the original term. In the event Lessee exercises its option to renew, the lease payment for the renewal period will be negotiated between the parties. (Emphasis added.) Once again, this is an unenforceable "agreement to agree."⁴ In Jahangiri, 253 So. 3d at 701, the renewal option stated: RENEWAL OPTIONS: Upon six months notice and provided [lessee] is not in default of any provision of this Lease, LESSOR agrees that [lessee] may renew this Lease for two five-year renewal options, each renewal at the then prevailing market rate for comparable commercial office properties. (Emphasis added). The Third District concluded that "renewal at the then prevailing market rate for comparable commercial office properties"

Conclusion

The trial court erred in declaring the parties' lease renewal option unenforceable.

Reversed and remanded.

ATKINSON and SMITH, JJ., Concur.

Opinion subject to revision prior to official publication.