Florida Atlantic University Board of Trustees v. Harbor Branch Oceanographic Institute Foundation, Inc.

Supreme Court of Florida

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No. SC2023-1470

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FLORIDA ATLANTIC UNIVERSITY BOARD OF TRUSTEES,

Appellant/Cross-Appellee,

vs.

HARBOR BRANCH OCEANOGRAPHIC INSTITUTE FOUNDATION,

INC.,

Appellee/Cross-Appellant.

December 4, 2025

COURIEL, J.

The Florida Constitution states that no “law impairing the

obligation of contracts shall be passed.” Art. I, § 10, Fla. Const.

Harbor Branch Oceanographic Institute Foundation, Inc.

(Foundation), a research institute affiliated with Florida Atlantic

University (FAU), claims that the Legislature violated this guarantee

when it adopted the Florida Excellence in Higher Education Act of

2018. Specifically, the Foundation says that the Act’s requirement

that all Foundation board members be approved by the FAU

trustees unconstitutionally impairs a memorandum of

understanding (MOU) it negotiated with the university. The

Foundation makes the same argument about a rule adopted by the

Board of Governors of the State University System of Florida, which,

the Foundation says, contravenes the same memorandum by

reducing its control over its budget. After careful consideration, we

conclude that neither of the contested provisions unconstitutionally

interferes with the parties’ agreement.

I

In Florida, a university direct-support organization is a non-

profit corporation “[o]rganized and operated exclusively to receive,

hold, invest, and administer property and to make expenditures to

or for the benefit of a state university in Florida or for the benefit of

a research and development park or research and development

authority affiliated with a state university.” § 1004.28(1)(a)2., Fla.

Stat. (2025). In 2007, after experiencing financial trouble, the

Foundation agreed in the MOU to become such an organization—a

DSO—affiliated with FAU.

DSOs are highly regulated and, as the definition above

suggests, exist for an exclusive, statutorily prescribed purpose.

Section 1004.28 governs their use of university property and

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facilities, giving each affiliated university oversight powers over a

DSO’s budget and board of directors, restricting its political

activities, exempting it from public records requests, and

prescribing financial audits. In exchange, DSOs get to use a

university’s property, facilities, and the work of its people. See

§ 1004.28(2)(b).

Relevant to this litigation, the MOU included the following

provisions: “The [Foundation’s] board of directors will have two (2)

appointees from FAU”; and “Foundation distributions shall be made

in the sole discretion of the [Foundation] Board of Directors to

defray the expenses of its operations, to restore restricted corpus

and retire debt, and to or for the benefit of [the Foundation at FAU]

or FAU.”

In 2009, the Florida Board of Governors (BOG) amended BOG

Regulation 9.011(3). 1 The amendment required that DSO budgets

1. Under article IX, section 7 of the Florida Constitution, the

Florida state university system is overseen and controlled by a

BOG. “The board shall operate, regulate, control, and be fully

responsible for the management of the whole university system.”

Art. IX, § 7(d), Fla. Const. As part of its oversight power, the BOG

can adopt regulations. See § 1001.706(2), Fla. Stat. (2025).

Current regulations govern state universities on matters such as

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be “approved by the organization’s governing board and the

university board of trustees.” 2 In 2017, FAU took efforts to exercise

control over the Foundation’s budget. It proposed to transfer all

legal, communications, accounting, auditing, development, and

staffing functions to FAU. It also did away with the Foundation’s

CEO, defunding the position and replacing the CEO with FAU’s Vice

President for Research as the Foundation’s president.

That led to this case. Seeking clarity about its power to spend,

in March 2017, the Foundation sought a declaratory judgment that

FAU “is not permitted to impose its proposed budget on the

Foundation, or any other budget that would substantially impair or

destroy the Foundation’s discretion to make distributions and

ensure that its grants are properly administered and accounted

student admissions, tuition and fees, property and finance, and

purchasing. See generally State University System of Florida,

Active Regulations (2025),

https://www.flbog.edu/regulations/active-regulations. Section

1004.28(2)(b), Florida Statutes, permits the BOG to adopt

regulations for DSOs. Under this authority, the BOG adopted BOG

Regulation 9.011, which regulates DSOs.

2. This regulation has since been renumbered to 9.011(4).

So, 9.011(4) refers to the amended BOG Regulation giving

university boards of trustees approval power over DSO budgets.

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for.” While that matter was pending, the Florida Legislature passed

the Florida Excellence in Higher Education Act of 2018. See ch.

2018-4, Laws of Fla. Relevant here is section 1004.28(3), Florida

Statutes, which provides that the “university board of trustees shall

approve all appointments to any direct-support organization not

authorized by this subsection.”3 Pursuant to this statute, in May

2019, FAU told the Foundation to submit all board appointees for

FAU consideration and approval. The Foundation refused.

In June 2019, FAU filed its own claim for declaratory

judgment, asking the court to decide the budget dispute in its favor.

FAU also asked the court for a declaration that section 1004.28(3)

required the Foundation to submit its board appointees to FAU for

approval.

The Foundation answered, asserting, as an affirmative

defense, that amended section 1004.28(3) impaired its rights under

the MOU in violation of article I, section 10 of the Florida

Constitution. This provision states, in its entirety, that “[n]o bill of

3. There have been no relevant changes to the statute since

2018.

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attainder, ex post facto law or law impairing the obligation of

contracts shall be passed.” Art. I, § 10, Fla. Const. The Foundation

did not notify the attorney general or the state attorney that it

raised this constitutional challenge to section 1004.28(3), even

though Florida Rule of Civil Procedure 1.071 required it to do so. 4

The trial court determined that both relevant provisions of the

MOU contained latent ambiguities. In this context, “latent

4. This rule states:

A party that files a pleading, written motion, or

other document drawing into question the

constitutionality of a state statute or a county or

municipal charter, ordinance, or franchise must

promptly

(a) file a notice of constitutional question stating the

question and identifying the document that raises it; and

(b) serve the notice and the pleading, written

motion, or other document drawing into question the

constitutionality of a state statute or a county or

municipal charter, ordinance, or franchise on the

Attorney General or the state attorney of the judicial

circuit in which the action is pending, by either certified

or registered mail.

Service of the notice and pleading, written motion,

or other document does not require joinder of the

Attorney General or the state attorney as a party to the

action.

Fla. R. Civ. P. 1.071.

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ambiguities are those which appear only as the result of considering

extrinsic or collateral evidence that shows that a word, thought to

have only a single meaning, actually has two or more meanings.”

11 Samuel Williston & Richard A. Lord, Williston on Contracts

§ 33:43 (4th ed. 1993 & Supp. 2025). 5

After a four-day trial, the trial court issued a final judgment.

It determined that the MOU “limited FAU’s involvement with the

Foundation’s board of directors to 2 appointees.” It found that

“[b]oth FAU and the Foundation clearly understood and agreed that

FAU would not be entitled to have any other ‘say-so’ in the

Foundation board membership.” This finding led the trial court to

conclude that amended section 1004.28(3) impaired the MOU. The

trial court then stated that FAU “did not present any evidence

5. See also GE Fanuc Intelligent Platforms Embedded v. Brijot

Imaging Sys., Inc., 51 So. 3d 1243, 1245 (Fla. 5th DCA 2011) (“A

latent ambiguity arises when the language in a contract is clear and

intelligible, but some extrinsic fact or extraneous evidence creates a

need for interpretation or a choice between two or more possible

meanings.” (citation omitted)). Parol evidence, that is, extrinsic

evidence, “is admissible to explain a latent ambiguity.” 11 Williston

on Contracts § 33:43; see also GE Fanuc, 51 So. 3d at 1245

(explaining that when a contract has latent ambiguities, “the intent

of the parties can be demonstrated with parol evidence”). So the

trial court admitted parol evidence as to both issues.

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regarding the purpose behind or justification for the 2018

amendment to Fla. Stat. § 1004.28,” so FAU did not establish a

“significant and legitimate public purpose” for the statute. Thus,

the trial court found that FAU failed to show the statute “was

‘enacted to deal with a broad, generalized economic or social

problem’ sufficient to outweigh the significant and severe

impairment to the MOU.”

As for the budget dispute, the trial court determined that

inasmuch as the MOU did not contain a specific contractual

agreement addressing approval of the Foundation’s budget, there

was no constitutional impairment of the MOU. It explained, “the

Foundation budget was not the negotiated issue, the Foundation’s

‘to or for the benefit’ expenditures to FAU (as required by the DSO

Statute) was the specific negotiated issue contained within the

MOU.” So it found for FAU on that issue.

The Fourth District Court of Appeal affirmed, quoting at length

from the lower court’s decision and findings. Fla. Atl. Univ. Bd. of

Trs. v. Harbor Branch Oceanographic Inst. Found., Inc., 372 So. 3d

302, 307-10 (Fla. 4th DCA 2023). As to board appointments, the

Fourth District concluded that amended section 1004.28(3)

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“effectively rewrote the parties’ contract by requiring the

Foundation’s board appointments to be approved by FAU.” Id. at

308 (citing Citrus Cnty. Hosp. Bd. v. Citrus Mem’l Health Found.,

Inc., 150 So. 3d 1102, 1108 (Fla. 2014)). The court then found “no

error in the trial court’s conclusion that FAU did not establish an

interest outweighing the substantial impairment to the MOU.” Id.

As for budget approval, the Fourth District agreed with the trial

court that the amended BOG regulation did not impair the MOU

because the MOU did not contain an agreement addressing budget

approval. Id. at 310. And in concluding, the Fourth District also

noted, “[o]ur holding does not affect the Foundation’s exclusive

discretion to make distributions as provided in the MOU.” Id. at

310-11. This appeal and cross-appeal followed.

II

Before arriving at the parties’ disagreements about the MOU,

we must address the fact that the Foundation did not comply with

Florida Rule of Civil Procedure 1.071 when it filed this case. That

rule provides, “[a] party that files a pleading, written motion, or

other document drawing into question the constitutionality of a

state statute . . . must promptly” do two things. It must “file a

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notice of constitutional question stating the question and

identifying the document that raises it”; and it must “serve the

notice and the pleading . . . on the Attorney General or the state

attorney of the judicial circuit in which the action is pending.” Fla.

R. Civ. P. 1.071.

The Foundation admits it did neither but contends that the

requirements of the rule can be waived and that FAU and the

attorney general did in fact waive those objections when they failed

to raise them below. FAU and the attorney general disagree and

cite our decision in Lee Memorial Health System v. Progressive Select

Insurance Co., 260 So. 3d 1038 (Fla. 2018), where we decided that

the Second District Court of Appeal erred when it considered a

constitutional challenge under the contracts clause because the

party failed to serve the attorney general notice under rule 1.071.

On the facts of this particular case, the Foundation has the

better of this argument. We conclude FAU waived any argument

that the case could not proceed without notice to the attorney

general when it requested that the trial court rule on the

constitutional impairment issue. When a party “request[s] that the

trial court determine the issue of the statute’s constitutionality and

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ignore[s] the requirement at the trial level, we [have found] it has

waived the right to challenge the non-joinder [of the Florida

Attorney General].” State Farm Mut. Auto. Ins. v. Warren, 805 So.

2d 1074, 1076 (Fla. 5th DCA 2002). It would be unfair to allow

FAU to raise rule 1.071 now, given that it has previously asked for a

ruling on the constitutional issue.

As to the attorney general, she was notified by the Foundation

pursuant to Florida Rule of Appellate Procedure 9.425 while this

matter was on appeal before the Fourth District. The attorney

general neither filed any briefs nor argued before the Fourth

District.

We need not and do not decide here that a party’s failure to

comply with rule 1.071 can always be excused by later conduct on

appeal. Nor do we hold that any state litigant has the power to

waive the attorney general’s right to be heard pursuant to the rule.

The attorney general certainly has authority to waive compliance

with rule 1.071, and in this case gave every indication of having

done so when this matter was before the Fourth District. In any

event, because we ultimately find no constitutional violation, our

decision today does not turn on rule 1.071.

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III

Turning to the merits, FAU contends that the MOU does not

limit FAU’s ability to approve the Foundation’s directors. The

Foundation counters that a plain reading of the MOU cabins FAU’s

involvement with the Foundation’s board to its two directors and

nothing more.

The trial court and Fourth District both found that amended

section 1004.28(3) unconstitutionally impaired the MOU. The

Fourth District concluded that “[t]he Amended Statute effectively

rewrote the parties’ contract by requiring the Foundation’s board

appointments to be approved by FAU.” Harbor Branch, 372 So. 3d

at 308.

The constitutionality of a statute is a pure question of law that

is subject to de novo review. City of Miami v. McGrath, 824 So. 2d

143, 146 (Fla. 2002). Similarly, “a matter of contract interpretation

. . . is a question of law subject to de novo review.” Jackson v.

Shakespeare Found., Inc., 108 So. 3d 587, 593 (Fla. 2013) (citing

Chandler v. Geico Indem. Co., 78 So. 3d 1293, 1296 (Fla. 2011)).

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Here, because the MOU does not speak to the approval of

directors, section 1004.28(3) does not impair the obligations of the

MOU.

A

Article I, section 10 of the Florida Constitution forbids

impairing the obligations of a contract. When “assessing the

validity of [a] Contracts Clause claim,” the Court “begin[s] by

identifying the precise contractual right that has been impaired and

the nature of the statutory impairment.” Keystone Bituminous Coal

Ass’n v. DeBenedictis, 480 U.S. 470, 504 (1987); see also Gen.

Motors Corp. v. Romein, 503 U.S. 181, 186-87 (1992) (holding that

there was no need to “reach the questions of impairment” because

“there was no contractual agreement regarding the specific . . .

terms allegedly at issue”). 6 Precision is important in this regard, for

“we are obligated to accord legislative acts a presumption of

6. “We recognize that this Court, when construing a provision

of the Florida Constitution, is not bound to accept as controlling the

United States Supreme Court’s interpretation of a parallel provision

of the federal Constitution. Yet such rulings have long been

considered helpful and persuasive, and are obviously entitled to

great weight.” Pomponio v. Claridge of Pompano Condo., Inc., 378

So. 2d 774, 779 (Fla. 1979).

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constitutionality and to construe challenged legislation to effect a

constitutional outcome whenever possible.” Fla. Dep’t of Revenue v.

Howard, 916 So. 2d 640, 642 (Fla. 2005).

Here, no contractual obligations have been impaired. The

specific contractual provision at issue reads, “[t]he [Foundation’s]

board of directors will have two (2) appointees from FAU.” No other

provision of the MOU discusses board appointments, composition,

or membership. From its face then, the MOU only discusses FAU’s

appointment of two directors. It says nothing about the extent of

any party’s discretion in making appointments, or whether the

parties had an agreement as to the subsequent approval of board

members. Section 1004.28(3), however, speaks of approval of DSO

board members: “[t]he university board of trustees shall approve all

appointments to any direct-support organization not authorized by

this subsection.”

Approval and appointment powers are distinct. For starters,

the verbs “approve” and “appoint” are different. Compare Approve,

Black’s Law Dictionary (12th ed. 2024) (defining “approve” as “[t]o

give formal sanction to; to confirm authoritatively”), with Appoint,

Black’s Law Dictionary (12th ed. 2024) (defining “appoint” as “[t]o

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choose or designate (someone) for a position or job, esp. in

government”). The distinction is familiar to readers of the U.S.

Constitution. For example, as FAU points out, the President has

the sole power to appoint principal officers, but presidential

appointments must still be approved by the Senate through the

confirmation process. See art. II, § 2, cl. 2, U.S. Const.; see also

Crumpacker v. Kansas, Dept. of Hum. Res., 474 F.3d 747, 754 n.7

(10th Cir. 2007) (“[I]t is indisputable that federal appointment power

is vested in the President. The Senate’s advice and consent power,

exercised in the confirmation process, does not turn Presidential

appointees into Senatorial appointees.”). The same distinction

appears in the Florida Constitution. See, e.g., art. IV, § 9, Fla.

Const. (“There shall be a fish and wildlife conservation commission,

composed of seven members appointed by the governor, subject to

confirmation by the senate for staggered terms of five years.”). As

this Court has held, the Florida Senate’s approval power does not

negate or undermine the Governor’s appointment power. See

Advisory Op. to Governor, 2 So. 2d 372, 375 (Fla. 1941) (“In creating

an office to be filled by executive appointment, a provision of the

statute that the appointment shall be confirmed by the Senate or

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that the appointment shall be made by the Governor by and with

the consent of the Senate is not unconstitutional, and such

provision does not unduly restrict the Governor’s discretion and

judgment in exercising the executive power of appointment.”).

Here, the MOU only speaks to FAU’s appointment power; it

says nothing about approval powers. The plain language of the

MOU allows FAU to appoint two members to the board. It creates

no other contractual rights regarding board appointments,

composition, or membership. There is no ambiguity about other

involvement with the board; there is merely silence. “Where a

contract is simply silent as to a particular matter, courts should

not, under the guise of construction, impose on the parties

contractual rights and duties which they themselves omitted.”

S. Crane Rentals, Inc. v. City of Gainesville, 429 So. 2d 771, 774

(Fla. 1st DCA 1983) (citation omitted).

The Foundation turns to the negative implication canon for

help—but it doesn’t, here. That rule, also known as expressio unius

est exclusio alterius, observes that “the expression of one thing

implies the exclusion of others.” See generally Antonin Scalia &

Bryan A. Garner, Reading Law: The Interpretation of Legal Texts

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107-11 (2012). Under this canon, the Foundation contends, apart

from FAU’s two directors, the MOU prohibits FAU from having any

further ability to approve or reject board appointees.

The negative implication canon “instructs that when certain

matters are mentioned in a contract, other similar matters not

mentioned were intended to be excluded.” In re Celotex Corp., 487

F.3d 1320, 1334 (11th Cir. 2007) (citation omitted). We, however,

have warned that this canon “must be applied with great caution,

since its application depends so much on context.” Alachua Cnty.

v. Watson, 333 So. 3d 162, 172 (Fla. 2022) (quoting Scalia &

Garner, supra, at 107). This canon “properly applies only when

the unius (or technically, unum, the thing specified) can reasonably

be thought of as an expression of all that shares in the grant or the

prohibition involved.” Id. (quoting Scalia & Garner, supra, at 107);

see also S. Coast Corp. v. Sinclair Ref. Co., 181 F.2d 960, 961 (5th

Cir. 1950) (“The expression in a contract of one or more things of a

class implies the exclusion of all not expressed, even though all

would have been implied had none been expressed.”). Similarly, the

Supreme Court of the United States has explained that this canon

“has force only when the items expressed are members of an

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‘associated group or series,’ justifying the inference that items not

mentioned were excluded by deliberate choice, not inadvertence.”

Barnhart v. Peabody Coal Co., 537 U.S. 149, 168 (2003) (quoting

United States v. Vonn, 535 U.S. 55, 65 (2002)). It “properly applies

only when in the natural association of ideas in the mind of the

reader that which is expressed is so set over by way of strong

contrast to that which is omitted that the contrast enforces the

affirmative inference.” Chevron U.S.A. Inc. v. Echazabal, 536 U.S.

73, 81 (2002) (citation omitted).

So here, the canon is an odd fit. The provision giving FAU two

board appointments does not naturally read as an expression

governing all other participation in the board appointment process

or shaping of the board, as the Foundation claims. These other

matters related to board composition do not have such a “natural

association of ideas in the mind of the reader” that the MOU’s

silence as to them demonstrates “deliberate choice, not

inadvertence.” Id. at 81; Barnhart, 537 U.S. at 168.

It is conceivable the canon could yield a reading of the MOU

that would prohibit FAU from appointing more than two board

members. But it would not “restrict[] FAU’s participation in the

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board appointment process to its selection of two members,” or

“create[] ‘a prohibition to all other modes’ of director appointment

that would permit approval or rejection ‘from FAU’ as to the other

members.” Nor would it lead us to conclude the Foundation has

the “right to appoint a majority of its board without interference

from FAU” or the right “to shape its board.” 7 Such assertions reflect

the canon’s use as an editorial device, rather than a guide to

meaning. See Haenal v. U.S. Fid. & Guar. Co., 88 So. 2d 888, 890

(Fla. 1956) (“[W]e ‘cannot under the guise of construction make a

new contract for the parties.’ ” (citation omitted)).

The Foundation’s appeal to Citrus County Hospital Board v.

Citrus Memorial Health Foundation, Inc., 150 So. 3d 1102 (Fla.

2014), likewise fails to persuade. In that case, the special law at

issue was a targeted rewrite of the contract between the parties.

See id. at 1108. Here, as we have said, no provision of the MOU

7. In fact, the only way to know that two members constitute

a minority of the Foundation’s board is to look at extrinsic evidence,

such as the Foundation’s corporate governance documents. For the

reasons we discuss above, the use of this extrinsic evidence is

inappropriate. Further, there is nothing in the plain text of the

MOU giving the Foundation a right to majority control of the board.

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has been rewritten at all. Additionally, Citrus County must be read

in light of the definition it gives for impairment: “to make worse; to

diminish in quantity, value, excellency, or strength; to lessen in

power; to weaken.” See id. (quoting State ex rel. Woman’s Benefit

Ass’n v. Port of Palm Beach Dist., 164 So. 851, 856 (Fla. 1935)). In

other words, any additional obligations imposed by the special law

not only rewrote the contract, but these obligations also worsened,

diminished, lessened, or weakened the party’s rights under the

contract. By contrast, in this case, no right in the MOU has been

worsened, diminished, lessened, or weakened by section

1004.28(3). Tellingly, the only diminishment, lessening, or

weakening that the Foundation can point to is a diminishment of a

purported right found nowhere in the MOU: the “ability to appoint a

majority of the board.” Furthermore, Citrus County does not use

the balancing test articulated in Pomponio, which we find applicable

here for reasons discussed below. See Pomponio v. Claridge of

Pompano Condo., Inc., 378 So. 2d 774, 780-82 (Fla. 1979).

The Foundation contends that, by virtue of section

617.0202(1)(d), Florida Statutes (2007), its bylaws and articles of

incorporation became part of the MOU. That statute required that

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a not-for-profit corporation’s articles of incorporation “set forth . . .

[a] statement of the manner in which the directors are to be elected

or appointed.” See § 617.0202(1)(d), Fla. Stat. (2007). In service of

this argument, the Foundation points to the principle that “[t]he

laws which exist at the time and place of the making of a contract

enter into and become a part of the contract made, as if they were

expressly referred to and incorporated in its terms.” Brandt v.

Brandt, 525 So. 2d 1017, 1020 (Fla. 4th DCA 1988) (quoting

S. Crane Rentals, Inc., 429 So. 2d at 772). The Foundation’s articles

of incorporation in 2007 (when the MOU was signed) provided for

five board members. Since FAU only has two board appointees

under the MOU, the Foundation concludes that these governing

documents grant it the right to control a majority of the board, so

FAU may not be involved whatsoever with the remaining three

board members.

This argument fails because provisions that are included in a

contract by operation of law are generally not subject to impairment

analysis. “[C]onstitutional provisions against impairing the

obligation of a contract do not apply to obligations imposed by the

law without the assent of the party bound . . . .” Fla. Sheriffs Ass’n

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v. Dep’t of Admin., Div. of Ret., 408 So. 2d 1033, 1035 (Fla. 1981)

(citing Anders v. Nicholson, 150 So. 639 (Fla. 1933)). 8

The Foundation argues that its right to appoint a board

majority with no interference or involvement from FAU vested in

2007 as part of the MOU, so applying section 1004.28(3) to the

MOU constitutes an impermissible retroactive application of the

statute.

But again, the MOU says nothing about the Foundation

having a board majority, or other FAU involvement with the board.

Further, as FAU rightly points out, section 1004.28(3) only applies

to future board appointments. As we stated in Metropolitan Dade

County v. Chase Federal Housing Corp., “a statute does not operate

8. To the extent the Foundation’s articles of incorporation and

bylaws weigh in the balance, they tip it against the Foundation’s

argument. The articles say the Foundation is “operated exclusively

to receive, hold, invest and administer property and to make

expenditures to or for the benefit of [FAU or the Foundation at

FAU], so far as is or may be permitted by the laws of the State of

Florida.” The Foundation binds itself to operate consistent with and

under the laws of Florida. This makes sense given the Foundation’s

status as a DSO. “One whose rights, such as they are, are subject

to state restriction, cannot remove them from the power of the State

by making a contract about them.” Exxon Corp. v. Eagerton, 462

U.S. 176, 190 (1983) (quoting Hudson Cnty. Water Co. v. McCarter,

209 U.S. 349, 357 (1908)).

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‘retrospectively’ merely because it is applied in a case arising from

conduct antedating the statute’s enactment. Rather, the court

must ask whether the new provision attaches new legal

consequences to events completed before its enactment.” 737 So.

2d 494, 499 (Fla. 1999) (citation modified); see also Love v. State,

286 So. 3d 177, 187 (Fla. 2019) (where statute “in no way

‘attache[d] new legal consequences to events completed before its

enactment,’ ” statute was not retroactive). Thus, section 1004.28(3)

is not operating retroactively when applied to the Foundation.

B

We have traditionally considered the extent to which a statute

impairs a party’s contractual rights when giving effect to the

promise of article I, section 10, of the Florida Constitution. In

Pomponio v. Claridge of Pompano Condo., Inc., 378 So. 2d 774 (Fla.

1979), we said “virtually no degree of contract impairment is

tolerable in this state.” Id. at 780 (citing Yamaha Parts Distribs. Inc.

v. Ehrman, 316 So. 2d 557 (Fla. 1975)). Still, that principle

“necessarily implies that some impairment is tolerable, although

perhaps not so much as would be acceptable under traditional

federal contract clause analysis.” Id. “To determine how much

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impairment is tolerable, we must weigh the degree to which a

party’s contract rights are statutorily impaired against both the

source of authority under which the state purports to alter the

contractual relationship and the evil which it seeks to remedy.” Id.

“An impairment may be constitutional if it is reasonable and

necessary to serve an important public purpose.” Searcy, Denney,

Scarola, Barnhart & Shipley v. State, 209 So. 3d 1181, 1192 (Fla.

2017) (citing Pomponio, 378 So. 2d at 778-79). The question is

“whether the nature and extent of the impairment is

constitutionally tolerable in light of the importance of the state’s

objective, or whether it unreasonably intrudes into the parties’

bargain to a degree greater than is necessary to achieve that

objective.” Pomponio, 378 So. 2d at 780. For example, in Pomponio,

we addressed a challenge to a statute which provided for the

deposit of rents into the registry of the court during litigation

involving obligations under a condominium lease. Id. at 775.

There, we first observed that the statute in question unquestionably

impaired the landlord’s contract because it deprived him of the

current use of court-retained money in a manner that obviously

was not bargained for. Id. at 780-81. On the other side of the

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ledger, we explained, beyond general appeals to the state’s police

power, the specific objectives for the statute were “neither expressly

articulated nor plainly evident from a reading of the statute.” Id. at

781. In such circumstances, we held that “the balance between the

state’s probable objectives and its method of implementation, on the

one hand, and the degree of contract impairment inflicted in

furtherance of its policy, on the other, favors preservation of the

contract over this exercise of the police power.” Id.

Turning to this case, the relevant interests weigh in favor of

FAU. The contract at issue here is not a contract between two

private corporations. Rather, DSOs exist entirely to benefit state

universities. They are statutorily required to be “[o]rganized and

operated exclusively” for the “benefit” of these universities. See

§ 1004.28(1)(a)2. In order to use “property, facilities, and personal

services at any state university,” they must submit to regulation by

both the BOG and their university’s board of trustees. See

§ 1004.28(2)(b). These regulations include “budget and audit review

and oversight by the board of trustees, including thresholds for

approval of purchases, acquisitions, projects, and issuance of debt.”

Id. A university also has significant control over DSO leadership,

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with “at least one representative [on] the board of directors and the

executive committee.” § 1004.28(3). The university president “shall

also serve on the board of directors and the executive committee.”

Id. And, of course there is the provision at issue here, mandating

that the “university board of trustees shall approve all

appointments.” Id. DSOs are also subject to audit by state entities:

“The Board of Governors, the university board of trustees, the

Auditor General, and the Office of Program Policy Analysis and

Government Accountability shall have the authority to require and

receive from the organization or from its independent auditor any

records relative to the operation of the organization.”

§ 1004.28(5)(a).

Given this statutory framework, it is no surprise that we, and

other courts, have recognized the close relationship between DSOs

and the state. In Plancher v. UCF Athletics Association, we held that

the UCF Athletics Association, a DSO for the University of Central

Florida, was entitled to limited sovereign immunity as a

“corporation[] primarily acting as an instrumentalit[y] or agenc[y] of

the state.” 175 So. 3d 724, 726 (Fla. 2015) (quoting § 768.28(2),

Fla. Stat. (2008)). Similarly, multiple federal courts have held that

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DSOs are protected by Eleventh Amendment immunity, which

protects “state officers and entities” from “the suit of an individual

without [the state’s] consent” “when they act as an ‘arm of the

state.’ ” 9 The Legislature thus has an obvious interest in regulating

and providing oversight over DSO leadership and finances.

We do not seek and do not weigh specific evidence of any

legislator’s intent in amending section 1004.28(3). While the

“specific objectives” of a statute can be “expressly articulated,” such

objectives can also be “plainly evident from a reading of the

statute.” Pomponio, 378 So. 2d at 781. As set forth above, such is

9. See Souto v. Florida Int’l Univ. Found., Inc., 446 F. Supp. 3d

983, 990 (S.D. Fla. 2020) (“[T]he relevant case law uniformly holds

that DSOs are arms of the state for Eleventh Amendment immunity

purposes . . . .”); see also Baker v. Univ. Med. Serv. Ass’n, No. 8:16-

CV-2978-T-30MAP, 2016 WL 7385811, at *3 (M.D. Fla. Dec. 21,

2016) (finding that “Florida law defines [University Medical Services

Association, a DSO of the University of South Florida] as an arm of

the state”); Univ. of Florida Research Found., Inc. v. Medtronic PLC,

Medtronic, Inc., No. 1:16CV183-MW/GRJ, 2016 WL 3869877, at *2,

*3 (N.D. Fla. July 15, 2016) (holding that the University of Florida

Research Foundation, a DSO for the University of Florida, “is

controlled by the state” and “an arm of the state” and thus entitled

to Eleventh Amendment immunity); Elend v. Sun Dome, Inc., No.

8:03-CV-1657-T-TGW, 2005 WL 8145752, at *5 (M.D. Fla. Dec. 22,

2005) (Wilson, Mag. J.) (holding that Sun Dome, a DSO of the

University of South Florida, was entitled to Eleventh Amendment

immunity and noting that under Florida law, Sun Dome was “a not-

for-profit corporation . . . controlled by the university”).

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the case here. Thus, we have assessed “the balance between the

state’s probable objectives and its method of implementation, on the

one hand, and the degree of contract impairment inflicted in

furtherance of its policy, on the other.” Id. (emphasis added).

To the extent that section 1004.28(3) impairs the MOU at all,

that impairment is no greater than necessary to achieve these

public interests. The statute does not “unreasonably intrude[] into

the parties’ bargain to a degree greater than is necessary to achieve”

the objective of state oversight over DSOs. See id. at 780.

Section 1004.28(3) does not unconstitutionally impair the

obligations of the MOU.

IV

Turning next to the Foundation’s cross-appeal, we agree with

the lower courts that BOG Regulation 9.011(4) does not impair the

MOU.

The MOU does not speak to budgets, only distributions. A

budget is a “statement of an organization’s estimated revenues and

expenses for a specified period, usu. a year,” whereas a distribution

is merely the “act or process of apportioning or giving out.”

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Compare Budget, Black’s Law Dictionary (12th ed. 2024), with

Distribution, Black’s Law Dictionary (12th ed. 2024).

As FAU points out, the distinction between the authority to

approve budgets and the discretion to distribute funds is frequently

made with respect to public monies. For example, in Alachua

County v. Watson, we held that a county’s power to set forth the

Sheriff’s budget at the object level was “not in derogation of the

Sheriff’s constitutional independence” or of the Sheriff’s

independence “concerning the purchase of supplies and equipment,

selection of personnel, and the hiring, firing, and setting of salaries

of such personnel.” 333 So. 3d at 167, 170 (citation omitted).

This case is different in that the Foundation retains an

independence from FAU and the State that was not present in

Alachua County. Still, the power to approve budgets is distinct from

the discretion to distribute funds. And while a budget may have a

downstream effect on distributions, that does not make them the

same. Nor does FAU’s approval authority over the Foundation’s

budget take away the Foundation’s ability to apportion or give out

endowment funds within the contours of that budget.

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Accordingly, BOG Regulation 9.011(4) does not

unconstitutionally impair the MOU. As with approval of board

members, the MOU is simply silent as to budgets and budget

approval powers. No contractual obligation is impaired.

Even if the budget approval power did impair the Foundation’s

contractual right over distributions, the interests that our cases

instruct us to consider favor FAU here. As already noted, DSOs are

highly regulated. The state has a strong interest in ensuring that

DSOs are receiving, holding, investing, and administering their

finances and making their expenditures “to or for the benefit of a

state university.” See § 1004.28(1)(a)2. Budgetary approval is a

reasonable means of effectuating this interest, and it is not “a

degree greater than is necessary to achieve [this] objective.”

Pomponio, 378 So. 2d at 780.

V

We reverse the Fourth District as to the board appointments

issue and otherwise affirm.

It is so ordered.

LABARGA, GROSSHANS, FRANCIS, and SASSO, JJ., concur.

MUÑIZ, C.J., concurs specially with an opinion, in which

CANADY, J., concurs.

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NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION

AND, IF FILED, DETERMINED.

MUÑIZ, C.J., concurring specially.

I concur in the judgment and in the parts of the majority

opinion holding that any contractual impairment caused by the

Florida Excellence in Higher Education Act of 2018 and by Board of

Governors Regulation 9.011(3) (as amended in 2009) is permissible

under the Florida Constitution’s Contracts Clause.

I am not as sure as the majority that, under our Court’s

precedent, the Act and the Regulation did not impair the contract

between the Foundation and the University. In Citrus County

Hospital Board v. Citrus Memorial Health Foundation, Inc., 150 So.

3d 1102 (Fla. 2014), we found an impairment when a new statute

required one of the contracting parties “to comply with public

accountability and financial responsibility measures that [were]

mentioned nowhere in the parties’ agreements” and that went

beyond the legal requirements in place when the contract was

formed. Id. at 1108. That essentially describes what happened

here, too.

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Nonetheless, as the majority explains, post-Citrus County our

Court has acknowledged that “[a]n impairment may be

constitutional if it is reasonable and necessary to serve an

important public purpose.” Searcy, Denney, Scarola, Barnhart &

Shipley v. State, 209 So. 3d 1181, 1192 (Fla. 2017). The

permissibility of an impairment depends in part on the extent to

which a new law disrupts a party’s reasonable expectations under

the contract. Sullivan v. Nassau Cnty. Interim Fin. Auth., 959 F.3d

54, 64 (2d Cir. 2020). “And the reasonableness of expectations

depends, in part, on whether legislative action was foreseeable, and

this, in turn, is affected by whether the relevant party operates in a

heavily regulated industry.” Id. Under these standards, any

contractual impairment caused by the Act and the Regulation is

constitutionally permissible.

At the time it agreed to become a DSO, the Foundation could

not have reasonably expected that its arrangement with the

University would trump subsequent changes to laws and

regulations governing the relationship between universities and

DSOs generally. The Foundation signed up to become an entity

whose animating purpose (as a DSO) would be to hold and spend

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money exclusively for the benefit of its sponsoring school.

§ 1004.28(1)(a)2., Fla. Stat. (2007). As of 2007, universities already

were guaranteed seats on a DSO’s board, and DSOs were subject to

financial oversight by their sponsoring universities. § 1004.28(3),

(5), (7). The changes effected by the Act and the Regulation, which

apply across-the-board to all DSOs, incrementally and foreseeably

built on the oversight structure already mandated by law in 2007.

And, given the large sums of money that DSOs hold and spend on

behalf of our state universities, the importance of the state’s

interest in facilitating effective oversight of DSOs is self-evident.

For these reasons, I agree with the majority’s ultimate

disposition of this matter.

CANADY, J., concurs.

An Appeal from the District Court of Appeal

Statutory or Constitutional Invalidity

Fourth District – Case No. 4D2022-0313

(St. Lucie County)

Andy Bardos and Ashley H. Lukis of GrayRobinson, P.A.,

Tallahassee, Florida, and Jack R. Reiter of GrayRobinson, P.A.,

Miami, Florida,

for Appellant/Cross-Appellee

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Joseph G. Galardi and Scott W. Atherton of Atherton Galardi

Mullen & Reeder PLLC, West Palm Beach, Florida; and Stuart H.

Singer, Sashi C. Bach, Jesse Panuccio, and Lauren E. Amos of

Boies Schiller Flexner LLP, Fort Lauderdale, Florida,

for Appellee/Cross-Appellant

James Uthmeier, Attorney General, Jeffrey Paul DeSousa, Acting

Solicitor General, and Robert Scott Schenck, Assistant Solicitor

General, Office of the Attorney General, Tallahassee, Florida,

for Amicus Curiae Attorney General

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