Apple Glen Investors, L.P. v. Express Scripts, Inc. , 700 F. App'x 935 ( 2017 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-16461
Non-Argument Calendar
________________________
D.C. Docket No. 8:14-cv-01527-VMC-EAJ
APPLE GLEN INVESTORS, L.P.,
an Indiana Limited Partnership,
Plaintiff-Appellee,
versus
EXPRESS SCRIPTS, INC.,
f.k.a. Merck-Medco Managed Care, LLC,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(July 3, 2017)
Before MARCUS, JULIE CARNES, and JILL PRYOR, Circuit Judges.
PER CURIAM:
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After a five-day bench trial, the district court entered final judgment in favor
of Apple Glen Investors, L.P. (“Apple Glen”) in a suit against Express Scripts, Inc.
(“ESI”), Apple Glen’s former tenant, seeking damages for breach of contract. In
this diversity action, Apple Glen alleged that ESI breached a commercial property
lease by failing to put, keep, maintain, and return the property and its equipment in
the condition required by the lease. On appeal, ESI argues that the district court
erred by: (1) ruling that Apple Glen did not split its cause of action; and (2) relying
on extrinsic evidence and failing to read the contract as a whole to determine the
condition required by the unambiguous lease. After careful review, we affirm.
In 1999, the parties’ predecessors in interest entered into a lease agreement,
which specified in Paragraph 12(a) that:
Tenant shall at all times, at Tenant’s sole cost and expense, put, keep
and maintain the Leased Premises (including, without limitation, the
parking areas, roof, footings, foundations, interior and exterior walls
and structural components of the Leased Premises) and the Equipment
in a first class condition and order of repair, except for ordinary wear
and tear, and shall promptly make all repairs and replacements of
every kind and nature, whether foreseen or unforeseen, which may be
required to be made upon or in connection with the Leased Premises
in order to keep and maintain the Leased Premises in the order and
condition required by this Paragraph 12(a). . . . Tenant shall, in all
events make all repairs for which it is responsible hereunder promptly,
and all repairs shall be in good, proper and workmanlike manner.
The lease also required in Paragraph 12(d) that:
Tenant shall from time to time replace with other operational
equipment or parts (the “Replacement Equipment”) any of the
Equipment (the “Replaced Equipment”) which shall have become
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worn out or unusable for the purpose for which it is intended, or been
lost, stolen, damaged or destroyed as provided in Paragraph 15.
The lease emphasized that the landlord had no obligations, and the tenant was
responsible for all operating expenses and capital expenditures.
The lease term expired in 2010, and a dispute developed regarding potential
renewal of the lease. In November 2009, Apple Glen sued ESI, then known as
Medco, in Florida state court concerning its rent obligations when the lease was
renewed or expired. It amended the complaint in October 2012 to allege that
Medco breached Paragraph 12 of the lease by failing to restore the property’s roof
to the condition required by the lease. Apple Glen sought reimbursement for a
change order to install a two-ply roof after Medco contracted with a roofer to
install a one-ply roof and refused to pay for a two-ply roof. Following a January
2014 trial, the state court entered judgment in favor of Apple Glen for holdover
rent and reimbursement. The judgment was upheld on appeal. ESI vacated the
property on March 31, 2014. Apple Glen filed the instant action on May 27, 2014,
alleging that ESI breached Paragraph 12 of the lease based on 26 deficiencies in
the condition of the vacated property and equipment.
After a bench trial, we review the district court’s factual findings for clear
error. Crystal Entm’t & Filmworks, Inc. v. Jurado, 643 F.3d 1313, 1319 (11th Cir.
2011). “Under the clear error standard, we may reverse the district court’s findings
of fact if, after viewing all the evidence, we are left with the definite and firm
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conviction that a mistake has been committed.” Id. at 1319–20 (quotations
omitted). “We review conclusions of law made by a district judge following a
bench trial de novo.” Renteria-Marin v. Ag-Mart Produce, Inc., 537 F.3d 1321,
1324 (11th Cir. 2008).
The district court did not err in ruling that Apple Glen did not improperly
split its cause of action between its first lawsuit and the instant lawsuit. “The rule
against splitting causes of action is an aspect of the doctrine of res judicata.”
Tyson v. Viacom, Inc., 890 So. 2d 1205, 1210 (Fla. Dist. Ct. App. 2005)
(quotations omitted). When we are asked to give res judicata effect to a state court
judgment, we apply the res judicata law of the “state whose decision is set up as a
bar to further litigation,” which is Florida. Kizzire v. Baptist Health Sys., Inc., 441
F.3d 1306, 1308 (11th Cir. 2006). Under Florida law, for res judicata to bar
relitigation of a claim decided in a prior final adjudication, there must be: (1)
identity in the thing sued for; (2) identity of the cause of action; (3) identity of the
persons and parties to the action; and (4) identity of the quality or capacity of the
person for or against whom the claim is made. W&W Lumber of Palm Beach, Inc.
v. Town & Country Builders, Inc., 35 So. 3d 79, 83 (Fla. Dist. Ct. App. 2010).
Generally, “[i]dentity of the causes of action is established where the facts
which are required to maintain both actions are identical.” Gold v. Bankier, 840
So. 2d 395, 397 (Fla. Dist. Ct. App. 2003) (quotation omitted). Florida courts have
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also applied a transactional test to determine identity of the causes of action. See
Leahy v. Batmasian, 960 So. 2d 14, 17 (Fla. Dist. Ct. App. 2007). Under the
transactional test, there is an identity of the causes of action not only as to every
question decided in an earlier lawsuit, but “also as to every other matter which the
parties might have litigated and had determined, within the issues as [framed] by
the pleadings or as incident to or essentially connected with the subject-matter” of
the first litigation. Hay v. Salisbury, 109 So. 617, 621 (Fla. 1926) (quotation
omitted). “This rule applies to every question falling within the purview of the
original action, both in respect to matters of claim and defense, which could have
been presented by the exercise of due diligence.” Id. (quotation omitted).
A new claim is not barred by the rule against splitting a cause of action “if
the underlying cause of action had not accrued at the time of filing the previous
lawsuit.” Gilbert v. Fla. Power & Light Co., 981 So. 2d 609, 614 (Fla. Dist. Ct.
App. 2008). Moreover, Florida courts have recognized that res judicata does not
bar a second breach-of-contract action based on a subsequent breach. See U.S.
Project Mgmt., Inc. v. Parc Royale E. Dev., Inc., 861 So. 2d 74, 76–77 (Fla. Dist.
Ct. App. 2003).
Here, the facts necessary to prove Apple Glen’s previous and instant breach-
of-contract claims are not identical. Gold, 840 So. 2d at 397. Although both
claims require proof of the same elements, Apple Glen alleged different facts
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concerning how the tenants breached the lease in each case. The first case
concerned Medco’s installation of a sub-standard roof; the instant case concerned
26 deficiencies, including the conditions of asphalt paving and sidewalks,
landscaping and irrigation, and security systems, which resulted from failures to
maintain and replace the property and equipment over time or from removal of
certain equipment from the premises when ESI vacated the property.
Moreover, ESI failed to show that the breaches raised in the instant case
could have been raised at the time the first lawsuit was filed. Hay, 109 So. at 621.
The district court found that ESI did not present any evidence proving that Apple
Glen’s current claim had accrued when it filed its prior complaint to recover for the
roof replacement. ESI argues that the district court concluded that a 2009 letter
from Apple Glen gave ESI proper notice of the deficiencies claimed in the instant
case, and, therefore, the letter proves that the instant claim had accrued as early as
2009. However, the district court expressly found that the 2009 letter “reminded”
ESI of its contractual obligation to maintain the premises in a “first class
condition,” based on ESI’s broker’s report that the building was “aged” and the
equipment was “obsolete.” The 2009 letter did not specify what deficiencies
existed at that time. Then, in 2013, when Apple Glen learned of the possibility that
ESI might vacate the leased premises on short notice, it retained CMK Design
Studio, LLC to inspect the premises, and a CMK report detailed aspects of the
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property that were not being appropriately maintained. In 2014 (after the trial in
the first lawsuit), Apple Glen sent ESI a letter and a copy of the CMK report
requesting that ESI contact Apple Glen to discuss problems identified in the CMK
report, but ESI never responded. Thus, the 2009 letter did not indicate that Apple
Glen was aware of the specific problems that CMK identified in 2014, nor did it
suggest that Apple Glen was aware that ESI would ignore the problems and breach
the lease -- even though, together, these letters gave ESI notice of the premises’
deficiencies. On this record, we cannot say that the district court’s finding that ESI
failed to prove that the current claim had accrued was clearly erroneous. Crystal
Entm’t, 643 F.3d at 1319–20. Moreover, because the claim had not accrued, Apple
Glen could not have raised it in the previous complaint, and the rule against
splitting a cause of action did not apply. Hay, 109 So. at 621.
ESI argues that our decision in Capitol Funds, Inc. v. Arlen Realty, Inc., 755
F.2d 1544 (11th Cir. 1985), is controlling, but we disagree. In Arlen Realty, we
applied Georgia law to determine that res judicata barred a landlord’s counterclaim
for breach of the duty to repair. Id. at 1546–47. The landlord raised a nearly
identical claim in Georgia state court one year before, and Georgia law required
the landlord to rebut a presumption that the facts had not changed and events had
not occurred since the previous lawsuit. Id. at 1545–47. Because the landlord
failed to rebut the presumption, we determined that the district court did not err in
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concluding that he could have raised his second claim in the first lawsuit. Id. at
1547. But Florida law does not include that presumption, and, as discussed, the
district court did not clearly err in finding that ESI failed to prove that Apple Glen
could have raised the current deficiencies in its first lawsuit. Accordingly, the
district court properly determined that Apple Glen’s current lawsuit was not barred
by the doctrine of res judicata or the rule against splitting a cause of action.
We are also unpersuaded by ESI’s argument that the district court erred by
relying on extrinsic evidence and failing to interpret the contract as a whole. “It is
well settled that the actual language used in the contract is the best evidence of the
intent of the parties and, thus, the plain meaning of that language controls.” Rose
v. M/V “Gulf Stream Falcon”, 186 F.3d 1345, 1350 (11th Cir. 1999) (citing Green
v. Life & Health of Am., 704 So. 2d 1386, 1391 (Fla. 1998)). Florida law allows
courts to consider extrinsic evidence of course of performance, course of dealing,
or usage of trade to explain or supplement a contract’s terms, even when those
terms are not ambiguous, as long as the evidence is not used to contradict the
contract's terms. Fla. Stat. § 672.202 & cmt. 1(c). Florida courts have also
recognized that “evidence to show the meaning of technical terms, and the like, is
not regarded as an exception to the parol evidence rule, because it does not
contradict or vary the written instrument, but simply places the court in the
position of the parties when they made the contract . . . .” Se. Banks Tr. Co., N.A.
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v. Higginbotham Chevrolet-Oldsmobile, Inc., 445 So. 2d 347, 348 (Fla. Dist. Ct.
App. 1984) (quotations and alterations omitted). Florida law requires that we look
to the contract as a whole. See Jones v. Warmack, 967 So. 2d 400, 402 (Fla. Dist.
Ct. App. 2007).
Here, expert testimony was presented to explain whether the named
conditions breached the lease’s requirements that the premises and equipment
remain in “first class condition,” excepting “ordinary wear and tear,” and that the
tenant replace “worn out or unusable” equipment. Apple Glen’s expert presented
industry standards to explain his methodology for determining whether the named
conditions met the lease’s requirements. The district court noted that its
interpretation of the contract’s terms based on the testimony presented was
consistent with the dictionary definitions of the terms. Thus, the court permissibly
allowed extrinsic evidence to explain the contract’s terms, and the evidence did not
contradict them. See Fla. Stat. § 672.202 & cmt. 1(c); Se. Banks Tr. Co., 445
So. 2d at 348. The district court also looked to the contract as a whole because it
read Paragraphs 12(a) and 12(d) in concert when it interpreted ESI’s obligations
under the contract. Jones, 967 So. 2d at 402.
Accordingly, we affirm the judgment of the district court.
AFFIRMED.
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