814 PROPERTY HOLDINGS, LLC, etc. v. NEW BIRTH BAPTIST CHURCH CATHEDRAL OF FAITH INTERNATIONAL, INC., etc. ( 2022 )

Third District Court of Appeal
State of Florida
Opinion filed July 13, 2022.
Not final until disposition of timely filed motion for rehearing.
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No. 3D20-0233
Lower Tribunal No. 17-23799
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814 Property Holdings, LLC, etc.,
Appellant,
vs.
New Birth Baptist Church Cathedral of Faith International,
Inc., etc., et al.,
Appellees.
An Appeal from the Circuit Court for Miami-Dade County, Alan S. Fine,
Judge.
Lowy and Cook, P.A., and Leah R. Rose and Jonathan Smulevich;
Gordon Rees Scully Mansukhani LLP, and David M. Gersten, for appellant.
Akerman LLP, and Carmen I. Tugender (Fort Lauderdale), Gerald B.
Cope, Jr., and Michael B. Chavies, for appellee New Birth Baptist Church
Cathedral of Faith International, Inc.
Before EMAS, LINDSEY and BOKOR, JJ.
ON THE COURT’S SUA SPONTE MOTION FOR CLARIFICATION
BOKOR, J.
We sua sponte withdraw our previously-issued opinion dated June 29,
2022, and substitute the following in its place.
814 Property Holdings, LLC appeals summary judgment in favor of
New Birth Baptist Church Cathedral of Faith International, Inc. as to two
claims for declaratory and injunctive relief under a condominium declaration.
814 Property argues that the trial court erred by interpreting the declaration
to allow a limited common element appurtenant to a unit to be sold
separately from that unit, as well as by invalidating a purchase option
provision as an unreasonable restraint on alienation. Because we agree with
the trial court’s analysis finding the purchase option provision in the
condominium declaration unenforceable, we affirm the final summary
judgment on appeal.
BACKGROUND
814 Property and New Birth each own a unit in a two-unit condominium
building located in Miami-Dade County. 814 Property owns unit number one,
and New Birth owns unit number two. From its unit, New Birth operates a
gospel radio station that broadcasts via a large radio antenna located on the
condominium property.
2
The declaration of condominium that created the two-unit
condominium includes specific provisions accounting for the radio antenna.
The declaration categorizes the antenna as “a Limited Common Element
appurtenant to Unit. No. 2 [New Birth’s condominium unit],” and includes a
clause giving 814 Property a first option to purchase New Birth’s
condominium unit:
Notwithstanding anything to the contrary hereinabove set forth,
a right of first offer exists in favor of the Owner of Unit No. 1
(“Owner 1”) to purchase Unit No. 2 upon and subject to the terms
and conditions hereinafter set forth. The owner of Unit No. 2
(“Owner 2”), for good and valuable consideration paid by and
received from Owner 1, has granted and does hereby give and
grant unto Owner 1 the right and option to purchase (“Purchase
Option”) Unit No. 2 for the sum of $200,000.00 (“Option Price”)
upon and subject to the terms and conditions herein contained.
The owner of Unit No. 2 (“Owner 2”) agrees to use its best and
good faith efforts to obtain approval for the transfer of the Radio
Antenna by the Federal Communications Commission (“FCC”).
On or before five (5) days after receiving such approval, Owner
2 shall notify Owner 1 in writing (“Offer Notice”) and shall provide
a copy of the FCC approval. The Purchase Option shall be
exercisable by Owner 1 giving Owner 2 written notice of its
exercise within ten (10) business days of receipt by Owner 1 of
the Offer Notice (the “Notice Period”). If Owner 1 fails to exercise
the Purchase Option prior to the expiration of the Notice Period,
then and in such event, the Purchase Option shall be terminated,
provided however, Owner 1 shall continue to have a right of first
refusal to purchase Unit No. 2 at a price and upon terms and
conditions as may thereafter be offered by a third party. Such
right of first refusal must be exercised, if at all, on or before ten
business days after receipt of written notice from Owner 2, which
written notice shall be accompanied by a copy of the outside
offer.
3
In August 2017, 814 Property exercised its right under the option
clause to purchase Unit No. 2. 814 Property directed that New Birth
“immediately use its best and good faith efforts to obtain approval for the
transfer of the Radio Antenna by the [FCC]” to an appointee assigned by 814
Property. After New Birth refused to either recognize the purchase or
transfer ownership of the radio antenna, 814 Property sued. Specifically,
814 sought both a declaratory judgment that the declaration obligated New
Birth to use good faith efforts to obtain approval from the FCC for the transfer
of the radio antenna to 814 Property (Count I), and damages and specific
performance for the alleged breach of the declaration due to New Birth’s
failure to comply with the option clause (Count II). New Birth counterclaimed,
seeking that the court declare the option clause unenforceable and void as
a restraint on alienation.
Both parties moved for summary judgment. After a hearing, the trial
court granted summary judgment in favor of New Birth, interpreting the
declaration to have clearly and unambiguously intended for the word
“transfer” to refer to transferring the antenna to another location, rather than
to 814 Property, upon the exercise of the purchase option, as well as finding
the option clause itself void and unenforceable as an unreasonable restraint
on alienation. This appeal followed.
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ANALYSIS
We review a trial court’s grant of summary judgment de novo to
determine whether there exists any disputed issue of material fact and
whether the moving party was entitled to prevail as a matter of law. See,
e.g., Garcia v. First Cmty. Ins. Co., 241 So. 3d 254, 256 (Fla. 3d DCA 2018).
“A trial court’s interpretation of a condominium’s declaration is also reviewed
de novo.” Courvoisier Cts., LLC v. Courvoisier Cts. Condo. Ass’n, Inc., 105
So. 3d 579, 580 (Fla. 3d DCA 2012) (italics omitted).
A condominium declaration is a contract possessing “attributes of a
covenant running with the land” and “spelling out mutual rights and
obligations of the parties thereto.” Cohn v. Grand Condo. Ass’n, Inc., 62 So.
3d 1120, 1121 (Fla. 2011) (quotations omitted); see also Rivercrest Cmty.
Ass’n, Inc. v. Am. Homes 4 Rent Props. One, LLC, 298 So. 3d 106, 111 (Fla.
2d DCA 2020). “When interpreting a contract, the court must first examine
the plain language of the contract for evidence of the parties’ intent.” Beach
Towing Servs., Inc v. Sunset Land Assocs., LLC, 278 So. 3d 857, 860 (Fla.
3d DCA 2019) (quotation omitted). “Expressed intent is that found on the
face of the covenant as shown by the language of the entire instrument in
which the covenant appears.” Id. (quotation omitted); see also Rivercrest,
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298 So. 3d at 111 (“[C]ontractual provisions are to be interpreted in the
context of the entire agreement.”).
Here, the trial court properly entered summary judgment in favor of
New Birth on the basis that the option clause in the declaration was an
unreasonable restraint on alienation. “In general, restrictions and
encumbrances on the alienation of property are disfavored, subject to certain
exceptions recognized by the courts.” Sandpiper Dev. & Constr., Inc. v.
Rosemary Beach Land Co., 907 So. 2d 684, 685 (Fla. 1st DCA 2005).
“When determining the validity of restraints on alienation, courts must
measure such restraints in terms of their duration, type of alienation
precluded, or the size of the class precluded from taking.” Id. (quotation
omitted). As explained by the Florida Supreme Court:
The rule against unreasonable restraints on the use of property
concerns restraints of such duration that they prevent the free
alienation of property. While the rule against perpetuities
invalidates interests which vest too remotely, the rule against
unreasonable restraints is principally concerned with the duration
of a restraint on the property rather than the time of vesting. The
test which should be applied with respect to restraints on
alienation is the test of reasonableness. The validity or invalidity
of a restraint depends upon its long-term effect on the
improvement and marketability of the property. Once that effect
is determined, common sense should dictate whether it is
reasonable or unreasonable.
Iglehart v. Phillips, 383 So. 2d 610, 614 (Fla. 1980) (noting also that “[i]t is
generally agreed that an option restraint is reasonable if the option price is
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at market or appraised value, irrespective of the duration of the option”); see
also Smurfit-Stone Container Enters., Inc. v. Zion Jacksonville Ltd. P’ship,
52 So. 3d 55, 57 (Fla. 1st DCA 2010) (describing Iglehart as “the seminal
case on the matter of preemptive rights and the alienation of property”;
reversing in part as to summary judgment based on unreasonable restraint
on alienability where contract allowed first option to purchase with unlimited
duration, but did not require seller to accept offer and thus would not
constrain marketability). 1
The declaration imposes both a fixed price and an indefinite duration
on the purchase option. The options clause allows “a right of first offer . . .
in favor of [814 Property] to purchase Unit No. 2” for a fixed price of
$200,000.00. This provision includes no time limit for the option, providing
1
We note the en banc decision of this court in Metropolitan Dade County v.
Sunlink Corp., 642 So. 2d 551, 555-56 (Fla. 3d DCA 1992) (en banc) adopts
as the opinion of the en banc court Judge Jorgenson’s dissent to the panel
opinion, which found a restrictive covenant reasonable. Although the court
found the restraint reasonable in that case, we note that the same analysis
employed by Judge Jorgenson and the en banc court would yield a different
result here. In Sunlink, the en banc court analyzed the “terms of [the
restraint’s] duration, type of alienation precluded, or the size of the class
precluded from taking.” Seagate Condo. Ass'n, Inc. v. Duffy, 330 So. 2d 484,
485 (Fla. 4th DCA 1976). Specifically, Judge Jorgenson explained that “the
duration of the restrictive covenant is reasonable; the type of alienation
precluded is legitimate, and the size of the class precluded from taking is
reasonable, as it is not unlimited or absolute.” Sunlink, 642 So. 2d. at 555.
Here, unlike Sunlink, the restraint lasts indefinitely.
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only that “[t]he Purchase Option shall be exercisable” within ten days of New
Birth providing notice of its effort to obtain transfer of the radio antenna from
the FCC. Nothing requires New Birth to seek such approval within a limited
time, and if New Birth obtained FCC approval, the option would not
terminate; rather, 814 Property would retain a right of first refusal on any
outside offers, and this right would lapse only if not timely exercised.
Because these terms contain none of the limitations outlined in Iglehart and
would constrain the development and marketability of the unit around New
Birth’s endeavors to transfer the radio antenna, the trial court properly
concluded that the options clause was unenforceable and granted summary
judgment on that basis. See Iglehart, 383 So. 2d at 615 (“It is the generally
accepted rule that a fixed price repurchase option of unlimited duration,
independent of the lease, is an unreasonable restraint. . . . An option for a
fixed price clearly discourages any improvements of the land by the existing
property owner because he could never recover the value of the
improvements should the optionee exercise the option.”); Brine v. Fertitta,
537 So. 2d 113, 114 (Fla. 2d DCA 1988) (agreeing that option contract was
void due to restraint on alienation where “the option was for an indefinite
period and was, in effect, for a fixed price, i.e., a price which, while adjustable
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for inflation, was not adjustable for changes in the market value of the
property”).
Accordingly, the trial court correctly found the purchase option clause
unenforceable and granted final summary judgment in favor of New Birth. 2
Affirmed.
2
Because we first address the purchase option clause and affirm the order
on appeal on that basis, we need not delve into the interpretation or legality
of the option clause as it pertains to the transfer of Unit No. 2 separate from
its appurtenant limited common element—the antenna. However, we note
that after entry of summary judgment, this court addressed the issue of the
statutory preeminence over conflicting provisions in a condominium
document, disapproving the alienation of a common element separate from
a unit to which it pertains. See IconBrickell Condo. No. Three Ass’n, Inc. v.
New Media Consulting, LLC, 310 So. 3d 477, 480 (Fla. 3d DCA 2020) (“[A]ll
provisions of a condominium declaration must conform to the [Florida
Condominium] Act, ‘and to the extent that they conflict therewith, the statute
must prevail.’” (quoting in part Winkelman v. Toll, 661 So. 2d 102, 105 (Fla.
4th DCA 1995))); Brown v. Rice, 716 So. 2d 807, 809 (Fla. 5th DCA 1998)
(“By enacting these statutes, our legislature has specifically prohibited the
conveyance of all common elements, including limited common elements,
unless such an interest passes along with the title to the living unit.”); see
also § 718.107(1), Fla. Stat. (“The undivided share in the common elements
which is appurtenant to a unit shall not be separated from it and shall pass
with the title to the unit, whether or not separately described.”); §
718.106(2)(a), Fla. Stat. (“There shall pass with a unit, as appurtenances
thereto,” inter alia, “[a]n undivided share in the common elements and
common surplus”); § 718.107(2), Fla. Stat. (“The share in the common
elements appurtenant to a unit cannot be conveyed or encumbered except
together with the unit.”); § 718.103(19), Fla. Stat. (defining “limited common
elements” as a subcategory of “common elements” which are “reserved for
the use of a certain unit or units to the exclusion of all other units”).
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