Florida’s Third District Court of Appeals Unanimously Rejects Exculpatory Clause in Commercial Lease Setting

Rachael Bronstein By May 21, 2018 Posted in Announcements Share

Florida’s Third District Court of Appeal Finds Ambiguity in Exculpatory Clause Renders Same Unenforceable. MIAMI, FL (May 9, 2018) – Today, a unanimous three-judge panel for the Florida Third District Court of Appeal issued an opinion that will have a significant impact on the scope of certain defenses that are routinely asserted by commercial landlords in civil litigation. Managing Partners Gary N. Mansfield and David Stone, along with Senior Associates Ariane Wolinsky and Robert Mansen of the Fort Lauderdale-based law firm Mansfield, Bronstein & Stone represented the Tenant/Appellant Obsession in Time, Inc. (“Obsessions”), paving the way for the future drafting of more concise exculpatory clauses to ensure enforceability of said clauses in commercial lease agreements. The case, Obsessions in Time, Inc., et. al. vs. Jewelery Exchange Venture, LLLP (“Jewelry Exchange”), et. al. (Case No. 2015-12254-CA-01) stems from litigation brought by Obsessions who leased space from Jewelers Exchange located in Aventura, FL. Tenant Obsession sold classic watches and other valuables at the Jewelers Exchange, who provided a master safe where Obsessions stored their goods. The lease agreement, prepared by Jewelry Exchange, required that all valuables must be in the vault within one hour of closing.
The landlord’s lease contained a provision fully eliminating their exposure for any loss or damage to the contents in the vault for “any cause of whatsoever . . . and the sole liability of lessor hereunder is limited to the exercise of ordinary care to prevent the opening of said vault . . . by any person other than the lessee or [their] agent.” Obsessions alleged that Jewelry Exchange allowed an unauthorized individual to remove their items from the vault, resulting in a loss in excess of $2 million. In making their finding on behalf of Obsessions, the Third District Court of Appeal restated its prior findings that, to be enforceable, exculpatory clauses must be so clear, unambiguous, and unequivocal that “an ordinary and knowledgeable person will know what he is contracting away.” In their unanimous reversal, the Third DCA held that “the exculpatory provision in the instant case fails to meet this standard.” The Court’s findings were that two specific portions of the Jewelry Exchange clause create ambiguity, are not reconcilable, “render[ing] the exculpatory clause unclear, unequivocal, and ambiguous.” The Court further concluded that none of the remaining provisions in the lease rendered the conflicting language clear. The Third DCA concluded that, “in a single clause, Jewelry Exchange purported to absolve itself of all liability for loss or damage while at the same time agreeing that its “sole liability” was limited to the exercise of ordinary care to prevent the [unauthorized] opening of the vault.” Effects of Obsessions The Obsessions opinion provides clear direction to those drafting exculpatory leases purporting to limit or eliminate landlord liability on commercial properties, and further clarifies the observation of the Florida Supreme Court that “Public policy disfavors exculpatory contracts because they relieve one party of the obligation to use due care and shift the risk of injury to the party who is probably least equipped to take the necessary precautions to avoid injury and bear the risk of loss.”