Northwood Associates, LLC v. Michael Ertel, in his official capacity as Secretary of State

FIRST DISTRICT COURT OF APPEAL
STATE OF FLORIDA
_____________________________

No. 1D18-10
_____________________________

NORTHWOOD ASSOCIATES, LLC,

Appellant,

v.

MICHAEL ERTEL, in his official
capacity as Secretary of State,
ERIN ROCK, in her official
capacity as Secretary of
Management Services, HALSEY
BESHEARS, in his official
capacity as Secretary of
Department of Business and
Professional Regulation, CHAD
POPPELL, in his official capacity
as Secretary of Department of
Children and Families, KEN
LAWSON, in his official capacity
as Executive Director of
Department of Economic
Opportunity, JASON M. ALLISON,
in his official capacity as State
Chief Information Officer,
RICHARD CORCORAN, in his
official capacity as the
Commissioner of Education,
DEPARTMENT OF STATE,
DEPARTMENT OF MANAGEMENT
SERVICES,
DEPARTMENT OF BUSINESS AND
PROFESSIONAL REGULATION,
DEPARTMENT OF CHILDREN AND
FAMILIES,
AGENCY FOR STATE
TECHNOLOGY, the FLORIDA
HOUSE OF REPRESENTATIVES,
and ML-CFC 2007-9
NORTH MONROE STREET,

Appellees.
_____________________________

On appeal from the Circuit Court for Leon County.
Karen Gievers, Judge.

January 22, 2019

LEWIS, J.

Appellant, Northwood Associates, LLC, appeals a final
judgment entered in favor of Appellees and argues that the trial
court erred in rejecting its claims that legislative proviso language
prohibiting any state funds from being used to pay it for leases it
had with several state agencies violated the Florida Constitution’s
prohibition against the impairment of contracts and the single
subject rule. For the following reasons, we reject Appellant’s
arguments and affirm.

FACTUAL AND PROCEDURAL HISTORY

As found by the trial court, Appellant had two leases with
three state executive branch agencies – the Department of
Management Services (“DMS”), the Department of Children and
Families (“DCF”), and the Agency for State Technology (“AST”) –
for office space at Northwood Centre. 1 In early March 2016, in

1 Although not relied upon by the trial court in ruling upon
the parties’ competing summary judgment motions, evidence
presented below by Appellees in response to Appellant’s summary
judgment motion described many of the issues that state
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considering the appropriation for various agencies, the Legislature
provided the tenant agencies with requested rent money but added
a proviso prohibiting them and the Department of Education
(“DOE”), “a Northwood tenant until 2009,” from paying any of the
appropriated funds to Appellant. Following the legislative action
and before the end of March 2016, the tenant agencies gave notice
to Appellant that they would be moving out June 30, 2016, due to
the Legislature not having provided the funding needed for rent.

The proviso language at issue as to DMS set forth:

No funds are appropriated in Specific Appropriations
2684 through 2845 for the payment of rent, lease or
possession of space for offices or any other purpose or use
at Northwood Centre, 1940 North Monroe Street,
Tallahassee, Florida, pursuant to State of Florida Lease
No. 720:0139, or any other lease, on behalf of any
department or agency of the State of Florida by the
Department of Management Services, notwithstanding
any lease or contract to the contrary. [DMS] is prohibited
from expending any specific appropriation from the
General Revenue Fund, any trust fund or from any other
source for the rent, lease or possession of any space for

employees faced while working at the leased premises. For
instance, a May 2015 report found loose fiberglass particulates,
very heavy, widespread active mold growth on duct systems, and
highly elevated endotoxin concentrations in flooring materials. A
July 2015 report “revealed severe and dangerous conditions at the
Northwood Centre similar to those reflected in [the] May 27, 2015,
report.” An October 2015 report found similar conditions.
Assessments in March and April 2016 confirmed the presence of
extensive microbial contamination throughout leased offices and
that the areas “were demonstrably impacted by bacterial
endotoxins in the carpet and active mold growth in the vast
majority of HVAC systems.” Cryptococcus found in samples
collected from some HVAC systems raised concerns of pathogenic
exposures, and at least one employee suffered from a lung infection
caused by the fungus. The leased premises also had issues with
bat guano, sewage, and insects.

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 offices or other purpose or use at Northwood Centre . . .
pursuant to State of Florida Lease No. 720:0139, or any
other lease.

The proviso language was virtually identical as to the Department
of Business and Professional Regulation, DCF, AST, DOE, the
Department of Revenue, and the Department of State. The proviso
language for the Department of Economic Opportunity excluded
“State of Florida Lease No. 400:0070” from the prohibition.

In Count I of its Amended Complaint against Appellees,
Appellant sought a declaratory judgment and injunctive relief,
alleging that because the Legislature appropriated funds at the
request of the various lessees to fund the leases, the proviso was
an “unconstitutional impairment of the Northwood Centre Leases,
or any other lease agreement by the state for space within the
Northwood Centre, in violation of Article I, Section 10 of the
Florida Constitution.” In Count II, Appellant sought a declaratory
judgment and injunctive relief, alleging that the proviso was
invalid because “it violates the single subject requirements of
Article 3, section 12 of the Florida Constitution.” Counts III and
IV were breach of contract claims that Appellant later voluntarily
dismissed. Attached to the Amended Complaint was DMS’s Lease
Agreement with Appellant’s predecessor-in-interest, which had an
availability of funds provision stating, “The State of Florida’s
performance and obligation to pay under this contract is
contingent upon an annual appropriation by the Legislature. F.S.
255.2502.” 2

2 Section 255.2502, Florida Statutes (2017), provides in part:

No executive branch department or agency, public officer
or employee shall enter into any contract on behalf of the
state, which contract binds the state or its executive
agencies to the lease, rental . . . of office space . . . for a
period in excess of 1 fiscal year unless the following
statement is included in the contract: “The State of
Florida’s performance and obligation to pay under this
contract is contingent upon an annual appropriation by
the Legislature.”
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 Thereafter, Appellant filed a motion for summary judgment
as to Counts I and II. Appellees also filed motions for summary
judgment as to those counts. In the Order Denying Plaintiff’s
Motion for Summary Judgment as to Counts I and II and Granting
Defense Motions as to Counts I and II, the trial court set forth in
part:

1. The plaintiff’s motion for entry of final summary
judgment as to counts I and II is denied; the Court is
bound by the district court ruling in Benson v. State of
Florida, 194 So.3d 1048 (Fla. 1st DCA 2016).

2. The motions of the tenants, DOE and the House for
summary judgment against [Appellant] as to counts I and
II are granted; the Court is bound by the district court
ruling in Benson; supra.

The trial court subsequently entered a Final Judgment in favor of
Appellees. This appeal followed.

ANALYSIS

Application of Benson

A trial court’s order granting final summary judgment is
reviewed de novo to determine whether there are genuine issues
of material fact and whether the court properly applied the correct
rule of law. Glaze v. Worley, 157 So. 3d 552, 553-54 (Fla. 1st DCA
2015); see also Castleberry v. Edward M. Chadbourne, Inc., 810 So.
2d 1028, 1029 (Fla. 1st DCA 2002) (“Summary judgment is
appropriate if there is no genuine issue of material fact and if the
moving party is entitled to a judgment as a matter of law.”). The
interpretation of a constitutional provision is also a question of law
reviewable de novo. Fla. Dep’t of Revenue v. City of Gainesville,
918 So. 2d 250, 256 (Fla. 2005).

Appellant first argues on appeal that the trial court erred in
relying upon Benson v. State, Department of Corrections, 194 So.
3d 1048 (Fla. 1st DCA 2016). There, the appellants appealed a
summary judgment order entered in favor of the appellee that
concluded that the appellee did not breach a lease for office space

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owned by the appellants. Id. at 1049. In 2007, the appellee agreed
to lease office space from the appellants for a term extending
through 2015. Id. In accordance with section 255.2502, the lease
included a provision making the appellee’s “performance and
obligation to pay under [the] contract ... contingent upon an annual
appropriation by the Legislature.” Id. The parties’ relationship
proceeded relatively smoothly until fiscal year 2011-2012 when the
Legislature cut the appellee’s funding for leases by more than $1
million and included a proviso prohibiting the appellee from
paying rent for leased property “vacant on or after July 1, 2011,
and for which it has been determined by the Secretary of the
department that there is no longer a need.” Id. at 1049-50. The
appellee responded to the cuts by assembling a task force to
identify the unnecessary leases, which recommended consolidating
the Palm Bay office leased from the appellants. Id. at 1050. The
appellee then undertook to relocate its staff and equipment from
the Palm Bay office. Id. Once the appellee completed the move, it
notified the appellants that the “Secretary of the Department of
Corrections has determined the space is no longer needed.” Id.
After the appellee ended its lease, the appellants filed suit,
alleging that the appellee had breached the lease and that the
legislative proviso violated the Florida Constitution. Id. The
appellee successfully moved for summary judgment. Id.

The appellants argued on appeal as follows: (1) the trial court
erred in granting summary judgment as the proviso unlawfully
impaired their contractual rights; (2) summary judgment was
entered in error because the Legislature unlawfully delegated its
legislative authority to the appellee in the proviso; (3) summary
judgment was improper because the appellee breached the
contract; (4) reversal was warranted even if the proviso was valid
because the appellee applied it in a constitutionally defective
manner; and (5) the proviso as applied violated the single subject
rule. We rejected the arguments, finding that the central issue in
the appeal was whether the availability of funds provision excused
the appellee’s obligation to perform after April 2012. Id. Under
the circumstances present in the case, we concluded that the
appellee did not breach its lease because the availability of funds
provision excused it from its obligation to pay and perform. Id.
As for the appellants’ constitutional claims, we set forth, “Finally,
we find no merit in the Bensons’ various other arguments that the

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proviso and the Department’s actions violated the Florida
Constitution.” Id.

Appellant argues that this case is distinguishable from
Benson because, unlike in that case where there was a budget
reduction, the Legislature fully funded the tenant agencies’ lease
obligations but prohibited any payment to Appellant. We find this,
however, to be a distinction without a difference. In Benson, the
agency was prohibited from paying rent for certain leased
property. Similarly, in this case, the proviso prohibited the tenant
agencies from paying rent for certain leased property. As the
supreme court has explained, “The state may not employ state
funds unless such use of funds is made pursuant to an
appropriation by the Legislature.” Am. Home Assurance Co. v.
Nat’l R.R. Passenger Corp., 908 So. 2d 459, 474 (Fla. 2005). Article
VII, section 1(c) of the Florida Constitution, which provides that
“[n]o money shall be drawn from the treasury except in pursuance
of appropriation made by law,” “secures to the Legislature (except
where the Constitution controls to the contrary) the exclusive
power of deciding how, when, and for what purpose the public
funds shall be applied in carrying on the government.” Id. at 474-
75 (quoting State ex rel. Kurz v. Lee, 163 So. 859 (1935)). Based
upon the foregoing, we find no merit in Appellant’s argument that
the trial court erred in relying upon Benson when rejecting its
constitutional challenges to the proviso. However, even if Benson
was not controlling, rejection of Appellant’s arguments would still
be warranted.

Impairment of Contract Claim

Appellant contends that the proviso violates article I, section
10 of the Florida Constitution’s prohibition against laws impairing
contracts. The supreme court has explained that “[t]o impair a
preexisting contract, a law must ‘have the effect of rewriting
antecedent contracts’ in a manner that ‘chang[es] the substantive
rights of the parties to existing contracts.’” Searcy, Denney,
Scarola, Barnhart & Shipley v. State, 209 So. 3d 1181, 1192 (Fla.
2017). An impairment may be constitutional if it is reasonable and
necessary to serve an important public purpose. Id.

In support of its argument, Appellant cites Chiles v. United
Faculty of Florida, 615 So. 2d 671, 672 (Fla. 1993), where various
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public employee unions challenged the Legislature’s decision to
eliminate pay raises that it had previously authorized. In ruling
in favor of the unions and noting that the State was clearly a party
to the contract, the supreme court set forth in part, “Once the
executive has negotiated and the legislature has accepted and
funded an agreement, the state and all its organs are bound by
that agreement under the principles of contract law. The act of
funding through a valid appropriation is the point in time at which
the contract comes into existence.” Id. at 672-73. In Searcy,
Denney, Scarola, Barnhart & Shipley, another case relied upon by
Appellant, the supreme court stated that “once that [legislative]
discretion has been exercised by enactment of a claims bill
awarding payment of all or part of an excess judgment for damages
. . ., the Legislature may not impair the preexisting contract rights
of the parties for attorneys’ fees as occurred by the fee and cost
limit imposed in the claims bill in this case.” 209 So. 3d at 1195.

As Appellees point out, Appellant’s reliance upon Chiles and
Searcy is misplaced as neither dealt with leases entered into by
state agencies and an availability of funds clause. Moreover, while
Appellant makes the general argument that no valid contract
exists where one party retains the option of fulfilling or declining
to fulfill its obligations under the contract, this is not a situation
where the leases gave the tenant agencies the choice to abandon
their contractual obligations. Instead, this is a situation where
Appellant chose to enter into the lease agreements that were
contingent upon legislative appropriation. As a result of doing so,
Appellant was never guaranteed that the leases would be funded
for each of the years in question. In addition, Appellant’s
argument that there was no legitimate public purpose behind the
proviso ignores the situation that many state employees faced
while working at the leased premises. This was not, contrary to
Appellant’s contention, a scenario where the Legislature
indiscriminately chose to target certain agency leases.

Appellant also argues that article I, section 10 would prohibit
the Legislature from passing a general law saying that “[a]ll
contracts for lease of space at Northwood Centre are terminated”
and that the Legislature should not be permitted to do indirectly
what it cannot do directly. The difference between the two
scenarios, however, is that the Legislature is the state entity

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holding the power to appropriate funds. See State v. Fla. Police
Benevolent Ass’n, 613 So. 2d 415, 418-19 (Fla. 1992) (noting that
the Legislature has the exclusive right to appropriate funds).

In Florida Department of Health and Rehabilitative Services
v. Southern Energy, Ltd., 493 So. 2d 1082, 1082 (Fla. 1st DCA
1986), the appellant agency sought review of a final judgment that
found liability for breach of contract and contended that the trial
court erred in invoking equity to circumvent a “subject to
appropriation” clause in the contract. We reversed, noting that the
contract between the parties made purchases for future years
contingent on legislative appropriation. Id. We noted that the
Legislature alone has power to appropriate funds and that the
appellee had unequivocal notice that the contract was subject to
appropriation “for future years.” Id. at 1084. Here, as stated,
Appellant was on notice that the continuation of the leases was
subject to legislative appropriation. Therefore, we reject
Appellant’s argument that the Legislature’s decision not to
appropriate money for the leases constituted a contractual
impairment. The Legislature neither rewrote the leases nor
altered the parties’ rights under the leases.

Single Subject Claim

Appellant next contends that the proviso violates the single
subject provision of article III, section 12 of the Florida
Constitution, which provides, “Laws making appropriations for
salaries of public officers and other current expenses of the state
shall contain provisions on no other subject.” As part of the
Legislature’s authority to enact appropriations and reasonably
direct their use, it may attach qualifications or restrictions to the
use of appropriated funds. Brown v. Firestone, 382 So. 2d 654, 663
(Fla. 1980). In accordance with article III, section 12, a general
appropriations bill must deal only with appropriations and
matters properly connected therewith. Id. The first of two major
considerations underlying the one-subject requirement is the need
to prevent logrolling in appropriations bills. Id. The second reason
behind the requirement is to ensure the integrity of the legislative
process in substantive lawmaking. Id. at 664. “Our state
constitution demands that each bill dealing with substantive
matters be scrutinized separately through a comprehensive

9
process which will ensure that all considerations prompting
legislative action are fully aired.” Id. Given such, appropriations
bills “must not change or amend existing law on subjects other
than appropriations.” Id. Article III, section 12 “will countenance
a qualification or restriction only if it directly and rationally
relates to the purpose of an appropriation and, indeed, if the
qualification or restriction is a major motivating factor behind
enactment of the appropriation.” Id.

In support of its single subject argument, Appellant relies in
part upon Florida Pharmacy Association v. Lindner, 645 So. 2d
1030, 1031 (Fla. 1st DCA 1994), wherein we reviewed a judgment
declaring an appropriations proviso unconstitutional and held in
part, “[W]e conclude that the effect of the subject proviso was to
impermissibly alter or modify existing substantive law concerning
the procurement of cost-efficient health insurance benefits for
State of Florida employees.” Id. at 1032. Specifically, the
legislative directive encompassed within the proviso was found by
this Court to essentially nullify the competitive procurement
requirements found within section 110.123, Florida Statutes, and,
thus, tacitly amend existing law. Id. As such, we affirmed. Id. at
1033.

Appellant also relies upon Department of Education v. Lewis,
416 So. 2d 455, 459 (Fla. 1982), where the proviso at issue provided
that no appropriated funds could be used to finance any state-
supported public or private postsecondary education institutions
that chartered or gave official recognition or assistance to or
provided meeting facilities for any group or organization that
recommended or advocated sexual relations between persons not
married to each other. In holding that the proviso violated article
III, section 12 of the Florida Constitution, the supreme court set
forth, “[T]he proviso attempts to make substantive policy on the
governance of postsecondary educational institutions. Thus, it
amends a whole host of statutes pertaining to the operation of
public colleges and universities and the regulation of private
colleges and universities.” Id. The supreme court also determined
that the proviso was not directly and rationally related to the
appropriation of state funds to postsecondary institutions and
students but was instead designed to further a legislative objective
unrelated to such funding. Id.

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 The factual situation involved in this case is far different from
Lindner and Lewis. The Legislature did not alter substantive law
in this case as it was found to have done in Lindner. Nor is the
situation in this case one where the Legislature was attempting to
make substantive policy in an appropriations bill as was done in
Lewis. Instead, the Legislature chose not to appropriate money to
certain leases because of the conditions at the leased premises,
which is something that it was statutorily authorized to do.

Appellant also cites section 255.249(4), Florida Statutes,
which governs the lease of space by state agencies and directs DMS
“to the extent feasible, [to] coordinate the vacation of privately
owned leased space with the expiration of the lease on that space”
and “when a lease is terminated before expiration of its base term,
[it] will make a reasonable effort to place another state agency in
the space vacated.” As Appellees contend, however, in a situation
where it is the conditions of the leased premises that caused the
termination of the lease, it would not be feasible or reasonable for
DMS to place another state agency in the “space vacated.”

Appellant next argues that the proviso is not rationally
related to or a major motivating factor for the underlying
appropriations. According to Appellant, the proviso furthers an
alternative legislative objective wholly unrelated to the funding of
the tenant agencies. However, Appellant fails to explain how the
legislative objective, which was to stop using state funds for the
premises at issue given the conditions therein, was unrelated to
the funding of the tenant agencies. Indeed, the legislative
objective was entirely related to funding the tenant agencies’
rental needs. See Div. of Admin. Hearings v. Sch. Bd. of Collier
Cty, 634 So. 2d 1127, 1129 (Fla. 1st DCA 1994) (“The Florida
Constitution’s mandate that appropriations bills ‘contain
provisions on no other subject’ requires only that the
appropriations bill not amend existing law on subjects other than
appropriations, and that a qualification or restriction rationally
relate to the purpose of the appropriation. . . . The provisos concern
only the appropriations process and related budgeting
mechanisms.”)

Appellant lastly contends that the legislative process
surrounding the addition of the proviso further supports the

11
conclusion that the single subject requirement was violated.
Appellant points to the fact that the proviso was added “late” in
the 2016-2017 budget conference process. As Appellant points out,
the supreme court has reviewed legislative history in determining
whether the Legislature violated the single subject requirement.
See State v. Thompson, 750 So. 2d 643, 648 (Fla. 1999) (“Further,
a review of the legislative history surrounding chapter 95-182
supports a finding that the chapter law does not meet the
requirements of the single subject rule.”). However, in Thompson,
the supreme court found it clear that certain sections in a chapter
law addressed two different subjects – career criminals and
domestic violence. Id. Here, in contrast, the proviso, which
specifically addresses appropriations, was included within the
general appropriations law. Moreover, in Environmental
Confederation of Southwest Florida, Inc. v. State, Department of
Environmental Protection, 886 So. 2d 1013, 1014-15 (Fla. 1st DCA
2004), we noted Thompson in addressing a single subject challenge
but set forth:

The doctrine of separation of powers as well as mutual
respect for an equal branch of government require this
court to read the language in . . . Thompson as standing
for the proposition that legislative history may provide
some support for determining that an act that is
questionable on its face may be unconstitutional. Such
legislative history, however, is not an independent reason
for determining that a violation of the single subject rule
has occurred. . . . Thus, as our supreme court has wisely
stated in the past, it is the court’s job to review the final
product of the legislature rather than its internal
operating procedures.

See also Corcoran v. Geffin, 250 So. 3d 779, 785 (Fla. 1st DCA 2018)
(“[A]sking the trial court to find that the Legislature was
constitutionally required to appropriate specific funds for a specific
purpose is akin to asking the court to dictate appropriations.”);
Browning v. Fla. Prosecuting Attorneys Ass’n, 56 So. 3d 873, 874-
75 (Fla. 1st DCA 2011) (reversing the trial court’s determination
that the budgetary proviso, which prohibited the payment of
Florida Bar dues from funds appropriated to state agencies, was
unconstitutional, where the proviso did not conflict with Florida

12
law). In reviewing the proviso, or the Legislature’s “final product,”
we find no violation of the single subject requirement.

CONCLUSION

For the reasons expressed herein, we reject Appellant’s
constitutional arguments. The trial court did not err in entering
judgment in favor of Appellees in this case. We, therefore, affirm
the Final Judgment.

AFFIRMED.

RAY and M.K. THOMAS, JJ., concur.

_____________________________

Not final until disposition of any timely and
authorized motion under Fla. R. App. P. 9.330 or
9.331.
_____________________________

J. Michael Huey, D. Ty Jackson, and George T. Levesque of
GrayRobinson, P.A., Tallahassee, for Appellant.

Ashley Brooke Moody, Attorney General; Amit Agarwal, Solicitor
General; Rachel Nordby, Senior Deputy Solicitor General; Edward
M. Wenger, Chief Deputy Solicitor General, Tallahassee, for
Appellees Department of Management Services, Department of
Business and Professional Regulation, Department of Children
and Families, Department of Economic Opportunity, and Agency
for State Technology.

James L. Richmond, Assistant General Counsel, Florida
Department of Education, Tallahassee, for Appellee Richard
Corcoran.

Adam S. Tanenbaum, General Counsel, Tallahassee, for Appellee
Florida House of Representatives.

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