Aldana v. Colonial Palms Plaza, Ltd.
591 So.2d 953, 1991 Fla. App. LEXIS 10791, 17 U.C.C. Rep. Serv. 2d (West) 894 (1991)
Rule of Law:
A general anti-assignment clause in a contract prohibiting the assignment of 'the contract' itself typically prevents only the delegation of contractual duties, not the assignment of rights to receive payments, unless the clause explicitly states otherwise.
Facts:
- Colonial Palms Plaza, Inc. (Landlord) and Abby's Cakes On Dixie, Inc. (Tenant) entered into a commercial lease agreement for space in a shopping center.
- The lease included a provision where Landlord agreed to pay Tenant a construction allowance of up to $11,250 upon Tenant's satisfactory completion of certain premises improvements.
- Before completing the improvements, Tenant assigned its right to receive the first $8,000 of the construction allowance to Robert Aldana (Assignee).
- In return for the assignment, Assignee Aldana loaned Tenant $8,000 to finance the construction.
- Assignee Aldana recorded the assignment and sent notice of the assignment by certified mail to Landlord.
- After Tenant completed the improvements to the rented premises, Landlord ignored the assignment and paid the entire construction allowance directly to Tenant.
Procedural Posture:
- Robert Aldana (Assignee) sued Colonial Palms Plaza, Inc. (Landlord) to recover the money due pursuant to the assignment.
- The trial court granted Colonial Palms Plaza, Inc.'s motion for summary judgment, ruling in favor of the Landlord.
- The trial court also awarded Colonial Palms Plaza, Inc. attorney's fees and costs.
- Robert Aldana (Appellant) appealed the adverse summary judgment and the order awarding attorney's fees and costs to the District Court of Appeal of Florida, Third District.
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Issue:
Does a general anti-assignment clause in a commercial lease, which states 'TENANT agrees not to assign... this Lease, in whole or in part,' prevent the tenant from assigning its right to receive a construction allowance payment under that lease?
Opinions:
Majority - Per Curiam
No, a general anti-assignment clause in a commercial lease prohibiting assignment of 'this Lease, in whole or in part' does not prevent the assignment of the right to receive a construction allowance payment under that lease. The court first rejected the Assignee's argument that Article 9 of the Uniform Commercial Code (UCC) invalidated the anti-assignment clause, explaining that leases, being interests in real estate, are generally excluded from Chapter 679 (Florida's UCC) by subsection 679.104(10), making subsection 679.318(4) inapplicable. The court then agreed with the Assignee's alternative argument, holding that under ordinary contract principles, the lease provision only prevented the assignment of contractual duties, not the right to receive payments. Citing the Restatement (Second) of Contracts, § 322(1), the court reasoned that a prohibition against assigning 'the contract' typically bars only the delegation of performance duties by the assignor, not the assignment of rights to receive payments, unless the contract explicitly indicates the contrary. Since the Tenant assigned only a right to receive payment and not the lease itself or its duties, and the Landlord had proper notice of the assignment, the assignment was valid and binding on the Landlord. Therefore, the trial court erred in granting summary judgment for the Landlord.
Analysis:
This case provides a crucial interpretation of general anti-assignment clauses, distinguishing between the assignment of contractual duties and the assignment of the right to receive payments. It reinforces the principle that contract language must be specific if it intends to prohibit the assignment of payment rights, thereby protecting the fluidity of commercial transactions. Future cases involving similar anti-assignment clauses will likely rely on this precedent to allow assignments of payment rights unless the clause contains unequivocal language to the contrary. The case also clarifies the limited applicability of UCC Article 9 to real estate leases.
