In short: A landlord ignored a failing roof until leaks and mold drove a deli from its space. The Third DCA affirmed about $800,000 in lost profits through the initial lease term, holding lost profits, not market value, fit a business slowly destroyed. It also upheld denial of profits for unexercised renewal terms as too speculative.
The Facts
A family-run deli leased about 15,336 square feet in an Aventura shopping plaza under a below-market lease running through April 2007, with three five-year renewal options and a landlord duty to repair the roof and structure. Waterways Plaza, LLC bought the plaza subject to the lease. Its own pre-purchase study showed the roof over the deli needed replacement, but it did not replace it.
Leaks began in 2002 and worsened into open water flows, mold and odor. Business and reputation fell, and by May 2003 the space was unfit for a restaurant. The deli sued for breach of contract and constructive eviction and moved out in July 2003. The landlord reroofed, partitioned the space, and re-leased it to two new tenants at substantially higher rent. The deli never reopened. After a bench trial, the court found constructive eviction caused by the landlord’s gross negligence and awarded roughly $800,000 in lost profits through April 2007, but nothing for the renewal periods.
The Decision
The Third DCA (Judge Rothenberg writing) affirmed on all points. The landlord argued that because the business was destroyed, the only measure was the business’s market value on the date of loss, and since that was not proven, damages should be zero. The court disagreed. The business was worn down over a year by a continuing breach, so there was no clear date of loss, and market value would not make the tenant whole. Lost profits, proven with a reasonable yardstick such as sales history and unrebutted expert projections, were the right measure.
The tenant lost its cross-issues. Whether it would have renewed the lease was a fact question, and the trial judge’s finding that renewal-period profits were too speculative was not clearly erroneous, though the panel hinted it might have ruled otherwise. The court also upheld dismissal of the tenant’s lis pendens and equitable lien claim, because a lease clause limiting recovery to the landlord’s interest in the plaza does not give the tenant an interest in the land, and it upheld denial of a contingency fee multiplier.
The Law
A constructive eviction is a breach of the covenant of quiet enjoyment. Contract damages aim to put the injured party where it would have been had the contract been performed, but not in a better position. Florida follows W.W. Gay Mechanical Contractor, Inc. v. Wharfside Two, Ltd., 545 So. 2d 1348 (Fla. 1989): lost profits are recoverable, even for a newer business, if the defendant caused the loss and there is a reasonable standard to measure it. When a business is completely destroyed, market value at the date of loss is usually the measure, and a plaintiff cannot recover both.
For nonresidential leases, section 83.201 gives a tenant a statutory path when the lease puts repairs on the landlord and the premises become wholly untenantable: written notice, at least 20 days to repair, rent withholding, and the option to terminate. That remedy is cumulative to common-law claims like those in this case.
Lessons
- Tenants: document leaks, notices and lost sales from day one; lost profits require a yardstick built from real numbers.
- Unexercised renewal options are not automatic damages; build evidence that renewal was reasonably certain.
- A lease clause limiting recovery to the landlord’s interest in the property does not support a lis pendens.
- Landlords: a known roof problem left unfixed can turn into a six-figure lost-profits judgment plus fees.
Watch the Oral Argument
This is the recording of the actual oral argument, posted on the channel. What lawyers and judges say at argument is not the ruling; the decision is summarized above.
Leaky Roof Killed the Deli — Lost Profits or Value? | Katz Deli v. Waterways Plaza, 3D12-3409
Go Deeper
Frequently Asked Questions
Can a commercial tenant recover lost profits when a landlord fails to make repairs in Florida?
Yes, if the landlord breached a repair duty and the breach caused the loss. The tenant must prove lost profits with reasonable certainty using a reliable yardstick, such as sales history and expert projections. In Katz Deli, the court affirmed about $800,000 in lost profits after a leaking roof forced the tenant out.
What is constructive eviction in a Florida commercial lease?
Constructive eviction happens when the landlord’s acts or failures make the premises unusable for their purpose and the tenant leaves within a reasonable time. Florida treats it as a breach of the covenant of quiet enjoyment, so the tenant can recover contract damages.
Is a destroyed business owed lost profits or its market value?
Usually market value on the date of loss if the business was completely destroyed at once, and not both. But Katz Deli held that when a continuing breach slowly wears a business down, lost profits can be the proper measure because there is no clean date of loss and market value would not make the owner whole.
Can a tenant get damages for lease renewal options it never exercised?
Possibly, but only if renewal and the resulting profits were reasonably certain. That is a fact question for the trial judge or jury. In Katz Deli, the trial court found renewal-period profits too speculative, and the appellate court would not overturn that finding.
Talk to a Florida landlord-tenant and real estate lawyer
Weidner Law, P.A. handles Florida lease, eviction and real estate disputes from St. Petersburg. If you need a real estate litigation lawyer, call (727) 954-8752 or email weidner@mattweidnerlaw.com.
Read the law yourself, free: every Florida statute and court rule is on floridarules.net.
This article is general information about Florida law, not legal advice about your situation. Reading it, watching the videos, or contacting the firm does not create an attorney-client relationship. Every case turns on its own facts, and past results do not guarantee a similar outcome. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
