IN THE SUPREME COURT OF THE STATE OF FLORIDA SUPREME COURT CASE NO. SC14-461

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1 Filing # Electronically Filed 03/14/ :09:56 PM RECEIVED, 3/14/ :13:45, John A. Tomasino, Clerk, Supreme Court IN THE SUPREME COURT OF THE STATE OF FLORIDA SUPREME COURT CASE NO. SC THIRD DISTRICT COURT CASE NOS. 3D , 3D LOWER TRIBUNAL NO KATZ DELI OF AVENTURA, INC., Petitioner/Plaintiff, v. WATERWAYS PLAZA, LLC. Respondent/Defendant. PETITIONER S BRIEF ON JURISDICTION SCOTT ALAN ORTH, ESQ. Florida Bar No Law Offices of Scott Alan Orth, P.A. Attorney for Katz Deli of Aventura, Inc Sheridan Street Hollywood, Florida / F scott@orthlawoffice.com service@orthlawoffice.com (Primary) eservicesao@gmail.com (Secondary)

2 TABLE OF CONTENTS TABLE OF AUTHORITIES ii PREFACE STATEMENT OF THE CASE AND FACTS A. Nature of the Case B. Course of Proceedings in the Circuit Court C. Disposition in the Lower Tribunal SUMMARY OF THE ARGUMENT ARGUMENT ON JURISDICTION I. Express and direct conflict with McCone v. Adams II. III. The denial of incremental rent value expressly and directly conflicts with and violates the principle in Moses v. Autuono The denial of incremental rental value as damages for breach of the lease expressly and directly conflicts with and violates the principle in Harvey Corp., v. Universal Equipment Co CONCLUSION CERTIFICATE OF SERVICE CERTIFICATE OF COMPLIANCE F:\networkdocs\HAIBI\KATZ V. WATERWAYS\Appeal\SC K v WW\Brief, Jurisdiction [2].wpd i

3 TABLE OF AUTHORITIES CASES Harvey Corp. v. Universal Equip. Co., 29 So.2d 700, 158 Fla. 644 (Fla. 1947) , 8, 9, 10 Katz Deli of Aventura, Incorporated v. Waterways Plaza, LLC, 38 Fla. L. Weekly D 2511 Fla. 3d McCone v. Adams, 239 So.2d , 6, 7, 10 Moses v. Autuono, 56 Fla. 499, 47 So. 925 (Fla. 1908) , 6, 7, 8, 10 Rost v. Bowling, 861 So. 2d 1246 (Fla. 2d DCA 2003) WSG West Palm Development v. Blank, 990 So. 2d 708 (Fla. 4th DCA 2008) Young v. Cobbs, 110 So. 2d 651 (Fla. 1959) F:\networkdocs\HAIBI\KATZ V. WATERWAYS\Appeal\SC K v WW\Brief, Jurisdiction [2].wpd ii

4 PREFACE The following abbreviations and designations may appear in this brief: "Op." or "Opinion" refers to the Third District's decision in the Appendix to the Petitioner's Amended Brief on Jurisdiction, reported as Katz Deli of Aventura, Inc. v. Waterways Plaza, LLC, 38 Fla. L. Weekly D 2511 (Fla. 3d DCA Nov. 27, 2013). Motion for Rehearing and Rehearing En Banc denied, February 7, "Katz" or "Tenant" refers to the Petitioner/Plaintiff, Katz Deli of Aventura, Inc. Katz was the appellant below. "Katz Deli" in italics refers to the Third District's decision, of which Katz is seeking review. "Waterways" or "Landlord" refers to the Respondent/Defendant, Waterways Plaza, LLC. Waterways was appellee below. There is a prior petition for review pending whereby Waterways is the petitioner, case number SC F:\networkdocs\HAIBI\KATZ V. WATERWAYS\Appeal\SC K v WW\Brief, Jurisdiction [2].wpd 1

5 STATEMENT OF THE CASE AND FACTS A. Nature of the Case. This case concerns the Third District s rejection of the traditional measure of damages for a wrongfully evicted tenant under Florida law. Katz petitions this Court for review of Katz Deli as the rejection by the Third District expressly and directly conflicts with precedent of the First District and this Court. B. Course of Proceedings in the Circuit Court. After successful operations in Pembroke Pines and at a smaller unit at the Waterways Plaza, Katz obtained a long term leasehold ( Lease ) of a 15,336 square foot, attractive, well-equipped restaurant and market in Aventura, Florida. Katz Lease began in 2002 for an initial five year term. The Katz Lease continued for another 15 years at Katz' option ("three automatic lease renewals for five-year terms"). (Op. 2-3) In July 2003 Katz vacated the premises. Shortly thereafter, the Landlord repaired and re-rented the same space to two replacement tenants at a substantially higher rent. 1 (Op. 3-4) At a bench trial in 2012, the circuit court determined that Waterways 1 The replacement tenants (who still occupy the same premises) had paid Waterways, to the date of the trial, over two million dollars in additional rent (above the Katz rent rate). Under Exhibits prepared by Katz trial expert, the Landlord will likely collect over four million dollars in additional rent over the full term of the Lease. F:\networkdocs\HAIBI\KATZ V. WATERWAYS\Appeal\SC K v WW\Brief, Jurisdiction [2].wpd 2

6 ( Landlord ) engaged in grossly negligent or willful conduct by allowing leaks that caused damage, odors and mold. The court concluded that Waterways had breached the Lease and constructively evicted Katz (as of May 1, 2003). (Op. 4-6) At trial and in post-trial arguments on damages, Katz claimed, inter alia, as general damages, the additional rent due under the replacement tenants leases to the end of Katz Lease, or alternatively to the end of the replacement tenants leases or to the Lease term ending shortly after the trial. Katz had alternatively claimed lost profits to the end of its Lease or a combination of lost profits for the initial term and the incremental rent thereafter. (Op. 7) The trial court overruled all of Katz claims for the difference between the rent reserved under the lease and the value of the leasehold for any term, in favor of lost profits limited to the first lease period. (Op. 6) Both parties appealed the determination of damages to the Third District Court of Appeals. (Op. 7) C. Disposition in the Lower Tribunal. The Third District acknowledged Katz claim to the difference in rent. (Op. 6) Nevertheless, the Third District rejected Katz appeal and affirmed the alternative award of limited lost profits for only four years. (Op. 7, 11, 12, 14-15) The Katz Deli decision held: "Under these unique circumstances, we hold that lost profits is a proper measure of damages because Waterways' long-term continuing breach of the contract allowed Katz to stay in business for a year, but slowly depreciated the market value of that business, thus rendering an award F:\networkdocs\HAIBI\KATZ V. WATERWAYS\Appeal\SC K v WW\Brief, Jurisdiction [2].wpd 3

7 of market value damages insufficient to make Katz whole." (Op ) In affirming the trial court award, the Third District recited: Here, Katz argues it would have renewed its lease through the end of 2022 with reasonable certainty because the deli was operating successfully prior to the water leaks, and because its rent payment was well below market value. Indeed, Katz points to the subsequent tenants that were still operating in its former space in the Plaza at the time of trial in 2012 as evidence that it would have renewed its lease. Those successor tenants were paying substantially higher rent payments, but nonetheless continued to renew their leases with Waterways and operate their businesses through the end of the trial period below. Katz also correctly points out that even if the deli and market were struggling, it could have subleased the premises at a substantially higher rent rate and reaped a similar profit that Waterways is now making on the market rental rates. (Op. 15)(Emphasis Supp.) 2 Notwithstanding the undisputed excess rental income above that reserved in the Lease, Katz was denied all claims for the incremental rent damages. All motions for rehearing and rehearing, en banc were denied by the Third District. SUMMARY OF THE ARGUMENT The Third District s decision expressly and directly conflicts with the decision of the First District (that has been adopted as the general rule in the Second and 2 The trial court determined that the alternative claim for lost profits was to be the measure of damages but never gave a reason why the incremental rent increases were not an appropriate or available measure of damages. The trial court denied lost profits as to all renewal terms that potentially ran through 2022 because the trial court found that business profits (not rental profits) for this period were not reasonably certain. The incremental rent increases are a mathematical function. F:\networkdocs\HAIBI\KATZ V. WATERWAYS\Appeal\SC K v WW\Brief, Jurisdiction [2].wpd 4

8 Fourth Districts) in McCone v. Adams, and this Court s precedents in Moses v. Autuono and Harvey Corp v. Universal Equip.Corp., on the issue of the damages available to a tenant that has been constructively evicted. The Third District denied to the successful Tenant below the incremental rent value for the remaining term of the Lease. This Court has jurisdiction. Art. V, Section 3(b)(3), Florida Constitution. ARGUMENT ON JURISDICTION Conflict jurisdiction is established as the decision of the Third District expressly and directly conflicts with the decisions of the First District and with the decisions of this Court in Moses v. Autuono and Harley Corp. v. Universal Equip. Co. The decision in Katz Deli, denying the incremental rental value over the term of the Lease to the wrongfully evicted tenant in a constructive eviction case, expressly and directly conflicts with: McCone v. Adams, 239 So.2d 859, (Fla. 1st DCA 1970); Moses v. Autuono, 56 Fla. 499, 47 So. 925 (Fla. 1908); and Harvey Corp., v. Universal Equip. Co., 29 So.2d 700, 158 Fla. 644 (Fla. 1947). 3 I. Express and direct conflict with McCone v. Adams. In McCone v. Adams, 239 So.2d 859, (Fla. 1st DCA 1970), the court, after first reciting that the tenant had been wrongfully evicted, summarized the law and the facts of that case as follows: 3 The Third District recited (footnote 5) that it had reviewed the method of calculating damages de novo, (Op. 9) F:\networkdocs\HAIBI\KATZ V. WATERWAYS\Appeal\SC K v WW\Brief, Jurisdiction [2].wpd 5

9 By this proof plaintiff sought to establish his damages to be the difference between the sum of $ a month testified to by his witness and the sum of $ monthly rental agreed to be paid by the terms of the lease. Such difference of $ a month projected over the remaining fifty-seven months unexpired term of the lease would result in a loss of $7, In rejecting the proffered evidence submitted by plaintiff, the trial court committed prejudicial and reversible error.... In the early case of Moses v. Autuono [56 Fla. 499, 47 So. 925, 927] the Supreme Court defined the proper rule of law to be applied in fixing damages for breach of a lease of lands and tenements as follows: * * * In general, the measure of damages is the difference between the stipulated rent and the value of the use of the premises.... Id. at 860.(Emphasis added). This principal, as a general rule, has been adopted in the Second and Fourth Districts. See WSG West Palm Development v. Blank, 990 So. 2d 708 (Fla. 4 th DCA 2008); and Rost v. Bowling, 861 So. 2d 1246 (Fla. 2d DCA 2003). McCone v. Adams is on all fours with the facts of the Katz Deli case. Katz Deli and McCone cannot be reconciled. The difference or additional actual rent or rental value above that reserved in the Lease is exactly the measure of damages sought by Katz at trial and on appeal. Upon the trial court having ruled that Waterways had constructively evicted Katz from the premises, Katz tendered the evidence of its own Lease and the actual value, via the replacement tenants leases and a CPA s calculation of the additional rent paid and to be paid. Indeed, the Third F:\networkdocs\HAIBI\KATZ V. WATERWAYS\Appeal\SC K v WW\Brief, Jurisdiction [2].wpd 6

10 District accepted that Katz had a Lease rate, including escalations, that was substantially below that paid by the replacement tenants. (Op. 3,4) The rental rates under the leases having been established, the damages are a mathematical certainty, there being no necessary speculation. In this case, the Tenant had the unilateral option to renew the leasehold at the Waterways Plaza under the terms of the Lease. (Op. 3) This translates into a right of possession for the renewal time period. The Landlord frustrated and interfered with not only the ability of the Tenant to enjoy the beneficial use of the property, but also frustrated and interfered with Katz's ability and right to renew. The refusal of the trial court to award general damages equal to the incremental rental value and the rejection of this as the proper measure of damages by the Third District, expressly and directly conflicts with the First District in McCone v. Adams. II. The denial of incremental rent value expressly and directly conflicts with and violates the principle in Moses v. Autuono. In Moses v. Autuono, 56 Fla. 499, 47 So. 925 (Fla. 1908), the landlord agreed to build and then rent a three story brick building to the tenant for five years with a five year option. The landlord there apparently abandoned the idea of completing the building and the tenant sued for liquidated damages. Id.,56 Fla. at 501; 47 So. at The trial court entered judgment on a liquidated damages clause for $18,000. On appeal, this Court reversed the liquidated damages holding that the contract clause F:\networkdocs\HAIBI\KATZ V. WATERWAYS\Appeal\SC K v WW\Brief, Jurisdiction [2].wpd 7

11 applied only if the construction was late, but was inapplicable to the total failure of the contract. As the contract failed to provide for that contingency, the law had to provide the remedy. As recited by this Court the law is that: For a breach of contract to lease lands and tenements, the law contemplates compensation for losses that are the natural and proximate result of the breach. A party is in law held to have contemplated the natural and proximate results of his acts. In general the measure of damages is the difference between the stipulated rent and the value of the use of the premises... Id., 56 Fla. at 504; 47 So. at (Emphasis supplied). Accord, Young v. Cobbs, 110 So. 2d 651 (Fla. 1959). Katz Deli, by limiting damages to lost profits, and denying difference in rental value, expressly and directly conflicts with Moses. III. The denial of incremental rental value as damages for breach of the lease expressly and directly conflicts with and violates the principle in Harvey Corp., v. Universal Equipment Co. In Harvey Corp., v. Universal Equip. Co., 29 So.2d 700, 158 Fla. 644 (Fla. 1947), a tenant was denied possession of the property for a period due to the actions of the landlord. The master and chancellor awarded an amount as damages that approximates an abatement of the rents due by the plaintiff to use (sic) defendant under the lease for the period of detention. This Court reversed that award saying: The measure of damages recoverable in this, and similar cases, as approved by our adjudicated cases, is that the lessee can recover from the lessor for the breach of the contract to deliver possession of the leased premises, the difference, if any, between the rent contracted to be paid and the actual rental value of the premises for the time of unlawful F:\networkdocs\HAIBI\KATZ V. WATERWAYS\Appeal\SC K v WW\Brief, Jurisdiction [2].wpd 8

12 detention of the property. Id., 29 So. 2d, at The Third District s decision in Katz Deli which rejected Katz claim for the difference between the rent contracted to be paid and the actual rental value expressly and directly conflicts with this Court s application of the law in Harvey Corp. But for the gross neglect, willful actions and constructive eviction by Waterways Plaza, Katz had a property and contract right of value; the right to either use or to sub-let the premises in the renewal term. The Third District s decision effectively cutoff this property and contract right and violates the law of general damages long established in this State. The denial of this remedy is a windfall for the Landlord. Incremental rental value damages do not result in a windfall for Katz, it would receive only what it is entitled to for the loss of its property rights. Nor would such an award of damages in the renewal period over-penalize the grossly negligent landlord as this Landlord gets exactly the benefit of its side of the bargain - the rent and rent escalations provided for in the Katz Lease. For the first renewal time period (May 1, 2007 to April 30, 2012), the Landlord had reserved a total rent from Katz Deli of $1,569,640, an average of $26, per month. During this same time F:\networkdocs\HAIBI\KATZ V. WATERWAYS\Appeal\SC K v WW\Brief, Jurisdiction [2].wpd 9

13 period under the replacement tenants leases, the total rent actually collected was $2,662,330, or an average of $18,200 more rent per month. The difference should be legally awarded to Katz Deli under McCone, Harvey Corp., and Moses. The general damage award, if made as provided for by the precedents of this Court and as adopted in the First, Second and Fourth Districts, would result in the Landlord receiving the rent that was bargained for with the wrongfully evicted Tenant and the Tenant receiving the actual additional incremental rent. To allow less creates an incentive for an unscrupulous or grossly negligent landlord in an "up" market to drive the hapless tenant out of the premises or worse, out of business. CONCLUSION The district court decision in the present case expressly and directly conflicts with McCone v. Adams and with the established precedent in Moses v. Autuono and Harvey Corp. v. Universal Equip. Co., and this Court should accept jurisdiction to resolve this conflict. Respectfully submitted, /s/ Scott Alan Orth, Esq. SCOTT ALAN ORTH, ESQ. Florida Bar No Counsel for Tenant/Petitioner Katz F:\networkdocs\HAIBI\KATZ V. WATERWAYS\Appeal\SC K v WW\Brief, Jurisdiction [2].wpd 10

14 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a copy hereof has been electronically e-filed pursuant to AOSC13-7 and served via electronic pursuant to Fla. R. Civ. P to: Lance Shinder, Esq., lance@shinderlaw.com Arielle L. Berg, Esq., arielle@shinderlaw.com robin@shinderlaw.com Bambi G. Blum, Esq., bblumlaw@bellsouth.net cassandre.bblumlaw@gmail.com by delivery on this 14th day of March, /s/ Scott Alan Orth, Esq. SCOTT ALAN ORTH, ESQ. Florida Bar No Counsel for Tenant LAW OFFICES OF SCOTT ALAN ORTH, P.A Sheridan Street Hollywood, FL / Fax scott@orthlawoffice.com service@orthlawoffice.com (primary) eservicesao@gmail.com (secondary) CERTIFICATE OF COMPLIANCE I HEREBY CERTIFY that KATZ DELI OF AVENTURA, INC. s Brief on Jurisdiction has been prepared using Times New Roman 14 point font. /s/ Scott Alan Orth, Esq. SCOTT ALAN ORTH, ESQ. Florida Bar No F:\networkdocs\HAIBI\KATZ V. WATERWAYS\Appeal\SC K v WW\Brief, Jurisdiction [2].wpd 11