Integration Clause Leads to Commercial Dispute

AGBL Enterprises, LLC v. Girlcook, Inc., 96 So.3d 1058 (Fla. 4th DCA 2012):

AGBL Enterprises (“Lessor”) leased a commercial building in a shopping plaza to be used as a full service restaurant to Girlcook (“Lessee”). The lease contained an integration clause that stated, “[T]he entire agreement between the Lessor and Lessee consists solely of the terms in this lease and the accompanying rider. The agreement between the lessor and lessee will not consist of any verbal or implied statements which are not specifically written in this lease or the accompanying rider.” Despite the shopping plaza undergoing major renovations at the time the lease was signed, no provision in the lease required the renovations to be completed by any specific date. Moreover, Lessee agreed to accept the premises, which included the building being leased and the entirety of the plaza, in the current condition at the beginning of the rental period. The lease also required Lessee to make monthly rent payments before the first day of each month. Lessor was responsible for maintaining the roof, foundation and exterior of the building, and all parking areas in decent repair for their intended use.

After Lessee failed to make rent payments for three months, Lessor brought an action seeking eviction and past due rents for breach of lease. As an affirmative defense, Lessee alleged that it had notified Lessor that Lessor was in breach of lease for failing to maintain the premises, and that Lessee was placing rent payments in escrow. Lessee also filed a counterclaim alleging fraudulent inducement into executing the lease and that Lessor breached the lease: (1) by failing to have the sewage hooked up as required by September 1; (2) by refusing to repair the roof, parking structures, air conditioning, and landscaping; (3) by providing inadequate parking spaces for the businesses in the plaza; and (4) by intentionally removing and destroying the return air unit of the restaurant.

The trial court determined that Lessor had breached the lease because Lessor’s work in the plaza was not completed by September 1, 2007 and because Lessor had failed to maintain the roof of the building, exterior of the plaza, and all parking areas in decent repair. The Fourth District Court of Appeal affirmed the finding that Lessor breached the lease by failing to maintain the premises; however, reversed and remanded with instructions that the trial court reduce damages attributable to Lessor’s failure to timely complete work on the shopping plaza.

In its reasoning, the Fourth District Court of Appeal agreed with Lessor that the trial court erred by considering parol evidence to contradict the terms of the fully integrated written lease agreement. Lessor could not be liable for damages incurred by Lessee as a result of Lessor’s failure to complete work on the shopping plaza where building was located because Lessor had no obligation under the lease.

This case demonstrates the importance of understanding provisions in a commercial lease for both the Lessor and Lessee. Although negotiations prior to signing the lease may have involved a completion date for the plaza’s renovations, the integration clause required any terms to be specifically written in the lease. Commercial transactions can be complex and require meticulous attention to detail and superior negotiation skills.

Have questions about commercial real estate? Contact Schecter Law Attorneys At Law Today.

Call Us at (954) 779-7009