Opinion ID: 55754
Heading Depth: 2
Heading Rank: 1

Heading: The Lease Agreement

Text: Under de novo review, was the district court correct when it denied BBFI’s counterclaim for breach of the three-year land lease agreement with CASC? With virtually no discussion, the district court agreed with CASC and found the lease agreement “to be a nullity and consequently unenforceable.” We determine that this finding of the district court is incorrect and, for the following reasons, reverse. CASC argues in its brief that the lease agreement, entered into evidence as Defendants’ Exhibit 2: . . . was never consummated, no consideration was given to [CASC] nor did either of the parties understand and agree that its existence was controlling . . . there was no meeting of the minds which is required in any basic contract before the same may be enforced . . . [t]he fact is, the lease was simply a proposal or a plan. The Lease was never implemented – [CASC] never took possession of the land or the equipment and the land was never farmed pursuant to the lease . . . Barrentine testified that the lease became unnecessary because a different means of financing the Baggetts was achieved . . . Therefore, just as before, the previous financial arrangement – the open account arrangement – continued as it had since 1997 notwithstanding the existence of the lease document in 1999. The parties then intentionally continued the open account arrangement and disregarded all terms of the lease as if it had never been executed. CASC never made payment to BBFI or the Baggetts under the specific terms of the lease, nor did BBFI ever demand payment of the 17 We find the remaining three issues raised upon appeal to be without merit. These are affirmed without discussion. 10 lease payments or declare [CASC] in default under the terms of the lease for nonpayment. Neither BBFI nor the Baggetts ever physically leased the property in question to [CASC], nor did [CASC] ever take possession of the land, direct the farming on the land, or apply for any government subsidies on the land. Thus by mutual agreement and action, [BBFI, the Baggetts] and [CASC] understood and agreed it was never a binding agreement between them, and BBFI could not even identify how [CASC] allegedly breached the lease. In short, though the parties may have executed the document which was entitled a lease, the undisputed facts in the record show that neither of the parties ever acknowledged or honored the terms of the lease in any regard . . . The lease was never implemented. We find these arguments to be without merit. The record clearly demonstrates a valid, enforceable lease agreement signed between the parties, properly witnessed and notarized. The lease is a viable document. It is not a nullity. It was not a proposal. It was not a plan. It was a lease. Perhaps CASC never actually intended to lease the land from the Baggetts and BBFI with whom it entered the lease. See United States v. Blankenship, et al., 382 F.3d 1110, 1134 (11th Cir. 2004). Even if that were true, the lease did nothing more than give CASC the legal right to lease the land and to sue for breach of contract of BBFI or the Baggetts if they refused to carry through with their promises. Id. “The strong likelihood that neither party subjectively intended to carry through on [this] . . . lease[] does nothing to undermine [its] legal efficacy. The enforceability of a contract depends on its objective representations rather 11 than parties’ subjective intentions.” Id. (citing United States v. Weaver, 905 F.2d 1466, 1473 (11th Cir. 1990) (“What controls is upon what the parties agreed, not upon what they did not agree. The contract, once created, is to be interpreted in accordance with the objective import of its unambiguous terms.”)). Turning to the judgment of the district court, the district court seems to have overlooked the role of Barrentine in this lease transaction. Recall that Barrentine was the president of CASC in dealing with the Baggetts and BBFI for almost two decades. He signed the binding lease agreement as CASC’s agent in his capacity as president of the corporation. It appears from the record to be well established that CASC found Barrentine, its officer, to be dealing improperly or even fraudulently. It is patently obvious that CASC would prefer not to be bound by Barrentine’s activities, however, Barrentine was held out to the farmers as CASC’s agent upon whom they should rely in dealing with CASC. They had done so faithfully for seventeen years. Recall that trust was an instrumental part of this relationship as the brothers could neither read nor write. When CASC broke its relationship with Barrentine, Searle became CASC’s president. Searle’s recount of the situation according to his testimony in the record was that the Baggetts were owed the three lease payments by CASC. 12 Like Searle, we conclude that there is no real dispute in the record. The terms of the lease agreement are unambiguous. See Weaver, 905 F.2d at 1473. Barrentine discovered and used the ILF processes to obtain, on behalf of CASC, monies necessary to cover the lease amounts due BBFI and the Baggetts, and the Baggetts were never paid the money Barrentine received from the ILF. Other than the fervent wish by the current executives at CASC that Barrentine had never entered into this lease agreement as the agent of CASC, there is no evidence that this lease agreement was anything but a binding legal contract. See Blankenship, 382 F.3d at 1134. CASC suggests in its brief and at oral argument that it should be relieved of any and all obligations owing under the lease for failure of the Baggetts (as Landlord) to have given written notice that some obligation of CASC (as Tenant) had not been done and had been done unknowingly. An example of such obligation would be, e.g., properly maintaining a storage facility from falling into disrepair on the leased premises. There is no assertion anywhere in the record that this litigation involves any default on the part of CASC, except its failure to pay the amount due under the 13 terms of the lease.18 Neither is it suggested that CASC did not know whether or not it had made payments, under a lease it now claims to be a nullity. Obviously CASC is disturbed by a legal document entered into on its behalf by its now defunct, and apparently unfaithful, former president Barrentine. CASC cannot say it did not have notice. Under the lease, it was required to make lease payments. If, as it conclusively appears, CASC made no lease payments, it knew of that default. Even Barrentine’s successor at CASC, Brent Searle, testified that he had actual notice that CASC had not paid the Baggetts any money due under the lease, notwithstanding that Barrentine told Searle that at lease one payment of $832,458 had been paid to them. Clearly Searle, as company representative, had actual notice. Any further notice requirements were clearly waived. The lease at issue actually created the legal rights it purported to create; the creation of such legal rights is the sole purpose of a contract. See Blankenship, 382 F.3d at 1134. A contract is nothing more, and nothing less, than what it actually states. Id. The undisputed facts demonstrate that CASC is liable to BBFI 18 It is hornbook law, that, except to the extent a tenant is legally excused from doing so, there is a breach of the tenant’s obligation if he fails to pay the rent reserved in the lease on or before the date the rent is due. See Restatement (Second) of Property: Landlord & Tenant § 12.1(1) (2007). Except to the extent the parties to a lease validly agree otherwise, if there is a breach of the tenant’s obligation to pay the rent reserved in the lease, the landlord may recover from the tenant the amount of the rent that is due. Id. at § 12.1(2)(a). 14 under the lease in the amount of three payments of $832,458, or $2,497,374.