The City of Pensacola v. Seville Harbour, Inc., a Florida etc. at al.
219 So. 3d 984
| Fla. Dist. Ct. App. | 2017Background
- In 1985 the City of Pensacola (City) leased three waterfront parcels (Parcels I, IA, III) to Seville Harbour under a 30‑year Marina Lease with renewal provisions; Parcel IA was originally state land but deeded to the City in 1990 without changing lease terms.
- Rent under the Marina Lease is the greater of ground rent per square foot or a percentage of the lessee’s prior‑year "gross sales" and "gross rentals;" "gross sales" includes receipts from business conducted on the leased property "by [Seville Harbour], its subsidiaries or business combinations."
- In 2000 Seville Harbour entered a written Marina Sublease with Merrill Land covering Parcels IA, III and part of Parcel I for the remaining term (plus renewals), but Seville Harbour expressly reserved perpetual non‑exclusive easements (ingress/egress, parking, utilities, maintenance) and access rights.
- Merrill Land subleased Parcel IA to Great Southern, which operates two restaurants there; neither Seville Harbour nor Merrill Land paid additional City rent based on the restaurants’ gross sales.
- The City sent a default notice asserting Merrill Land was a partial assignee and additional rent was owed based on Great Southern’s sales; parties litigated whether the Marina Sublease was an assignment (pro tanto) or a sublease and whether Parcel IA’s renewal fee had to be paid.
- The trial court granted summary judgment for Seville Harbour and Merrill Land, holding the Marina Sublease is a sublease (not an assignment) and that Parcel IA’s renewal was proper because no state charge was being imposed on the City; the First DCA affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Is the Seville Harbour–Merrill Land agreement a pro tanto assignment or a sublease? | City: The transaction is an assignment (pro tanto) of leasehold interests, making Merrill Land liable and triggering rent based on gross sales/business combination. | Appellees: The document is a sublease; Seville Harbour retained legal interest (easements and access), so it did not transfer its entire interest. | Sublease. Court held Seville Harbour retained easements/access—an interest in land—so it did not transfer its entire interest; therefore transaction is a sublease. |
| 2. If an easement is reserved, does that prevent an assignment? | City: Easements reserved are incidental and do not defeat an assignment. | Appellees: Reservation of perpetual non‑exclusive easements and access constitute retained interests that prevent assignment. | Reservations of easements/access are interests in land; retaining them means the lessee did not transfer its entire interest, so no assignment. |
| 3. Was Parcel IA’s renewal improper because the required "lease fee" was unpaid? | City: Renewal invalid for Parcel IA because the lease fee (appraised rental value charged by State) was not paid. | Appellees: Since Parcel IA was deeded to the City in 1990 and the State charged nothing thereafter, no fee was owed and renewal was proper. | Renewal proper. Court accepted that the lease fee equaled what the State charged the City and since the State charged nothing, no fee was due; renewal valid. |
Key Cases Cited
- C.N.H.F., Inc. v. Eagle Crest Dev. Co., 128 So. 844 (Fla. 1930) (form of transaction is not controlling; legal effect determines assignment vs. sublease)
- Estate of Basile v. Famest, Inc., 718 So. 2d 892 (Fla. 4th DCA 1998) (test: whether lessee transferred entire interest; absent reversionary interest, transaction is assignment)
- MDS (Canada) Inc. v. Rad Source Techs., Inc., 143 So. 3d 881 (Fla. 2014) (multi‑factor analysis required in some contexts; distinguish license/sublicense issues)
- Burdine v. Sewell, 109 So. 648 (Fla. 1926) (an easement is an interest in land requiring formal conveyance)
- Dianne v. Wingate, 84 So. 3d 427 (Fla. 1st DCA 2012) (easement is a real property interest distinct from ownership)