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by Ron Davis

A big share of the condemnation proceeds that the state of Florida paid to the owners of a Lakeland shopping center must go to the center’s major tenant.

The tenant is the supermarket chain Winn-Dixie Stores, Inc., which operates a store at the center under a long-term lease. The condemnation has taken a large portion of the center’s parking lot, used in large part by Winn-Dixie, and earmarked it for highway improvements.

At issue has been $2,640,000 that the state paid to the shopping center owners. Staking a claim for part of that money, Winn-Dixie has based its argument on lost customer parking resulting from the condemnation. Winn-Dixie has pointed out that it had an interest in the parking area because the shopping center owners require payment of additional rent for that area’s monthly maintenance and repair.

The shopping center owners replied that Winn-Dixie’s interest in its store does not include the parking area. The lease, signed prior to construction of the facility, describes the leased premises simply as “that certain store building…and the land on which the same shall stand…which store building and related improvements are to be constructed….”

Based on that description, the shopping center owners argued, Winn-Dixie’s leasehold interest does not include the parking area.

In ruling in favor of Winn-Dixie, a Florida appellate court explained, “The lease, taken as a whole, contemplates a leasehold interest [by Winn-Dixie] in the common areas of the shopping center. First, the lease refers to the leased premises as the ‘store building and related improvements.’ ‘Related improvements’ include the specifications for the parking area. Second, the terms of the lease indicate that its continuation or termination was contingent upon the availability of adequate parking. Third, the lease requires Winn-Dixie to pay 10 cents per square foot ‘as additional rent’ to assist the landlord in maintaining and repairing the common areas.

“Therefore,” the judges added, “when read as a whole, the express terms of the lease indicate that Winn-Dixie bargained for an interest in the parking area of the shopping center and deserves compensation for loss of that area.” (Winn-Dixie Stores, Inc. v. Department of Transportation, 839 So.2d 727)

Decision: March 2003
Published: August 2003

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