Aldana v. Colonial Palms Plaza, Ltd.

Brief Fact Summary. The validity of an anti-assignment clause provided in a lease was at issue.

Synopsis of Rule of Law. A provision of a lease forbidding the assignment of the lease, does not prevent the assignment of the right to receive contractual payment.

Facts. The Appellee landlord, Colonial Palms Plaza, Inc. (the "Appellee"), entered into a lease agreement with the tenant, Abby's Cakes on Dixie, Inc. (the "tenant"), for commercial space in a shopping center.  The lease contained a provision providing for the Appellee to pay the tenant up to $11,250 in the form of a construction allowance, after the tenant made certain improvements to the commercial space.  Prior to the tenant's completion of the improvements, the tenant assigned the rights to the first $8000 of the construction allowance to the Appellant assignee, Robert Aldana (the "Appellant").  The Appellant in turn loaned the tenant $8000 to finance the construction.  The assignment was recorded and sent by certified mail to the Appellee.  After the tenant completed the improvements, the Appellee ignored the assignment and paid the tenant the construction allowance.  The Appellant sued the Appellee, and the trial court granted the Appellee's motion for summary judgment and awarded the Appellee "attorney's fees pursuant to the offer of judgment rule, Fla.R.Civ.P.1.442, and costs pursuant to section 57.041, Florida Statutes (1989)."

Issue. Does a lease provision forbidding the assignment of the lease work to forbid the assignment of the right to receive contractual payments?

Held. No.  The court first recognizes that the Appellee relies upon an "anti-assignment clause in the lease agreement to argue that the assignment was void and unenforeceable."  The pertinent part of the clause reads as follows:  "TENANT agrees not to assign, mortgage, pledge, or encumber this Lease, in whole or in part, or to sublet the whole or any part of the DEMISED PREMISES, or to permit the use of the whole or any part of the DEMISED PREMISES by any licensee or concessionaire, without first obtaining the prior, specific written consent of LANDLORD at LANDLORD'S sole discretion…. Any such assignment, encumbrance or subletting without such consent shall be void and shall at LANDLORD'S option constitute a default."  The Appellant argues that the anti-assignment clause is ineffective for two reasons.  First, based on Article 9 of the UCC.  Second, under ordinary contract principles.  The court summarily rejects the first contention, but accepts the second.  As to the second, based on Restatement (Second) of Contracts, §322(1), and as a rule of construction, the court recognizes that the "lease provision at issue … does not prevent the assignment of the right to receive contractual payments."

Discussion. The court distinguishes between the assignment of a lease and the assignment of the right to receive contractual payments.