This is an appeal by Trump Enterprises, Inc., from a final judgment denying its motion for apportionment of a condemnation award paid by the State of Florida, Department of Transportation ("DOT") to Publix Supermarket, Inc. Because Trump was not compensated for the value of its leasehold either by jury verdict or settlement after the condemnation award by the DOT, but continues to pay the same rental for less land after the condemnation, we reverse and remand.
Appellee, Publix, owned a shopping center in which appellant, Trump, as assignee leased an outparcel of land which it operated as a
In 1989, DOT commenced an eminent domain action to take a portion of the land from the shopping center for the purpose of road widening. Trump pled entitlement to a portion of any condemnation proceeds paid to Publix since a portion of the property taken was located in Trump's leasehold. In 1990, the trial court entered a stipulated final judgment agreed to by both Publix and Trump in the amount of $305,000, as full payment by the DOT to Publix for the condemned property. The court reserved jurisdiction to apportion the payment. Thereafter, both Publix and Trump motioned the court for an apportionment of the proceeds. This appeal follows a ruling adverse to the tenant, Trump.
Of the payment of $305,000, $250,000 was paid for the total land taken. At trial, Trump's expert testified that a total of 15,357 square feet was taken, of which 5,333 square feet were within Trump's leasehold. He then opined that this computed to 34.73% of the total land taken and then calculated that 34.73% of the $250,000 equaled $86,825, which represents the condemnation proceeds paid to Publix for that portion of the leasehold land taken.
He then testified that Publix as lessor would be entitled to a rental income stream for 24.25 years, if the lease options were all renewed, and to a reversion 24.25 years after the taking. A value of $8,600 in today's dollars was assigned as the difference between the value of the reversion before the taking and the value of the reversion after the taking. According to the expert, the net amount of $78,225 represents the condemnation proceeds to which Trump would be entitled as just compensation for the value of its leasehold taken. Publix never rebutted this testimony, nor did it present any independent evidence of either the value of the condemned portion of the leasehold or the value of Publix's reversionary interest.
A basic principle of real property law is that a valid lease for a term of years is a conveyance of an interest in land. Flowers v. Atlantic Coast Line Ry., 140 Fla. 805, 192 So. 321 (1939). Further, as stated in State Road Department v. White, 148 So.2d 32, 34 (Fla. 2d DCA 1962):
Further, as stated in National Advertising Co. v. State, Department of Transportation, 611 So.2d 566 (Fla. 1st DCA 1992), "[i]t has long been established that a `lessee' is an owner protected by the constitutional guarantee in Article X, section 6(a) of the Florida Constitution against the taking of private property without just compensation." Id. at 569 (citing Carter v. State Rd. Dep't, 189 So.2d 793 (Fla.1966)).
Accordingly, in an eminent domain or condemnation proceeding where the property taken is encumbered by a leasehold interest, the first issue to be determined from all pertinent proffered facts is the value of the fee interest and the value of the leasehold interest. See National Advertising Co.; Carter. After such a determination, either by jury verdict or by a stipulated final judgment, as in this case, the parties next proceed to an apportionment hearing at which time the court determines their respective rights in the amount awarded. Dama v.
In entering its Final Judgment Denying Apportionment, the trial court in this case specifically found as follows:
The trial court failed, however, to consider that the lease and the sub-lease agreements were for the lease of unimproved land only, not for a restaurant. The restaurant building was constructed by the original sub-lessee. Neither the "continued profitability" of the restaurant business, nor the fact that Trump's business suffered no damage should have factored into the equation. Rather, the trial court should have limited its consideration at the apportionment hearing to the value of the leasehold taken, see Parks, and concluded that, as a result of the condemnation, Trump's leasehold was diminished by 5,333 square feet. Trump is entitled to compensation for the resultant decrease in the value of his leasehold interest. We approve the method employed by Trump's expert in valuing the portion of the condemnation proceeds to which Trump is entitled.
We turn next to the issue of the absence of a condemnation clause in the lease agreement. Publix urges that since the agreement does not contemplate condemnation proceeds, Trump is not entitled to be compensated for the leasehold land taken. We reject that argument, and hold, to the contrary, that a lessee of land under a written lease agreement for a term of years is an owner of property in the constitutional sense and is thereby entitled to full compensation for such a taking, notwithstanding the silence in such a lease. See generally Mullis v. Division of Admin., 390 So.2d 473 (Fla. 5th DCA 1980).
Id. at 474 (citing 2 Nichols on Eminent Domain, § 5.23(2) (3d ed. 1979)). Accordingly, Trump should not be deprived of just compensation simply because the lease agreement lacks a condemnation clause.
The final judgment appealed is therefore reversed, and the cause remanded to the trial court to enter final judgment in accordance with this opinion.
Reversed and remanded.
GLICKSTEIN, J., concurs.
JACQUELINE R. GRIFFIN, Associate Judge, dissents without opinion.