BOCA RATON COMMUNITY REDEVELOPMENT AGENCY v. CROCKER DOWNTOWN DEVELOPMENT ASSOCIATES

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA

FOURTH DISTRICT

BOCA RATON COMMUNITY REDEVELOPMENT AGENCY,

Appellant,

v.

CROCKER DOWNTOWN DEVELOPMENT ASSOCIATES,

Appellee.

No. 4D21-873

[February 9, 2022]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm

Beach County; Lisa S. Small, Judge; L.T. Case No. 50-2018-CA-014900-

XXXX-MB.

Jamie A. Cole and Laura K. Wendell of Weiss Serota Helfman Cole &

Bierman, P.L., Fort Lauderdale, for appellant.

Paul S. Figg, Mitchell W. Berger and Michael J. Higer of Berger

Singerman LLP, Fort Lauderdale, for appellee.

DAMOORGIAN, J.

The instant appeal arises out of a declaratory relief action filed by

Crocker Downtown Development Associates (“the Developer”) regarding

the meaning of a fair market value instruction contained within a lease’s

purchase option. Specifically, the Developer sought a declaration

regarding whether the fair market value of the property should be

calculated as encumbered by the lease. Relying on the holding in Taylor

v. Fusco Management Co., 593 So. 2d 1045 (Fla. 1992), the trial court

concluded that, for purposes of determining the fair market value, the

property was to be valued as encumbered by the lease. The Boca Raton

Community Redevelopment Agency (“the CRA”) now appeals that ruling

and raises several issues on appeal. We affirm on all issues and write only

to address the CRA’s argument that the trial court misapplied the holding

in Taylor.

In 1990, the CRA and the Developer entered into a ninety-nine-year

lease agreement. Pursuant to the lease, the Developer built a shopping

center known as Mizner Park. Under the lease, the Developer paid both

fixed and net operating income rent. The lease established a fixed rent

schedule that increased over time. Fixed rent was $280,000 for the second

through twenty-ninth year of the lease, thereafter the fixed rent increased

to $910,000 annually.

Section 31.1 of the lease provided the Developer an option to purchase

the leased property for $9,100,000 or for the “Fair Market Value

(as hereinafter defined) of the Premises as of the date such option is

exercised,” whichever was greater. Section 31.2 of the lease, in turn, set

forth the process for exercising the purchase option, the method of

choosing appraisers, and the means of determining the fair market value

of the property. The last sentence of Section 31.2 also included the

following at-issue instruction for determining the property’s fair market

value:

In connection with the determination of Fair Market Value by

each appraiser or appraisers, the Fixed Rent for the balance

of the Lease Term shall be deemed to be $910,000,

notwithstanding the fact that actual Fixed Rent may be less

than that amount until the thirtieth (30th) Lease Year.

The Developer filed a declaratory action seeking interpretation of the

last sentence of Section 31.2 and a determination as to whether the

property should be valued as encumbered or unencumbered by the lease.

Relying on Taylor, wherein our supreme court held that the fair market

value of leased property should be computed as unencumbered by the

lease in the absence of specific language to the contrary, the trial court

determined “the last sentence of section 31.2 satisfies Taylor, because it

provides clear direction to the appraiser(s) as to how to ‘compute’ Fair

Market Value which is contrary to valuing the premises unencumbered by

the Lease.”

On appeal, the CRA contends the trial court misapplied Taylor because

the last sentence in Section 31.2 does not contain specific, clear, or

unambiguous language demonstrating the parties’ intent to value the

property as encumbered by the lease. In support of its position, the CRA

points to the absence of language in Section 31.2 restricting or narrowing

the words “Fair Market Value of the Premises” with any qualifying words,

such as “burdened by,” “encumbered by,” or “subject to” the lease.

Both parties agree that Taylor controls this dispute. In Taylor, our

supreme court considered “[w]hether the fair market value of leased

property at the time a lessee exercises an option to purchase the property

is the value of the fee simple estate unencumbered by the lease or the

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value of the fee estate encumbered by the lease.” 593 So. 2d at 1046.

The court answered the certified question as follows:

[I]n the absence of specific language to the contrary in the

lease, we hold that the market value of leased property at the

time a lessee exercises an option to purchase the property

should be computed as if the property were unencumbered by

the lease. Any intent to value the property otherwise should

be clearly stated in the lease.

Id. at 1047. The court explained that it adopted this bright-line rule

“to avoid a contract-by-contract analysis of the language used to describe

the interest which is subject to a purchase option.” Id. at 1046–47.

Notably, although Taylor requires “specific language” to show the parties’

intent to value leased property as encumbered by the lease, the court did

not dictate any exact or precise verbiage that must be used to satisfy this

requirement. See id.

In the present case, although Section 31.2 does not include the words

“burdened by” or “encumbered by,” it does set forth specific language

instructing the appraisers to use the CRA’s fixed rental revenue in

calculating the fair market value of the property. This instruction,

particularly the phrase “for the balance of the Lease term,” shows a clear

intent to value the property as encumbered by the lease. Indeed, there is

no reasonable alternative explanation for including the last sentence of

Section 31.2 in the lease other than to express the parties’ intent to value

the property as encumbered by the lease. See Universal Prop. & Cas. Ins.

Co. v. Johnson, 114 So. 3d 1031, 1036 (Fla. 1st DCA 2013) (“[A] contract

will not be interpreted in such a way as to render a provision meaningless

when there is a reasonable interpretation that does not do so.”); see also

Hahamovitch v. Hahamovitch, 174 So. 3d 983, 986 (Fla. 2015) (“Where a

contract is clear and unambiguous, it must be enforced pursuant to its

plain language.”).

For the foregoing reasons, we agree with the trial court that the property

should be valued as encumbered by the lease and affirm the final summary

judgment entered in favor of the Developer.

Affirmed.

FORST and KLINGENSMITH, JJ., concur.

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Not final until disposition of timely filed motion for rehearing.

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