Opinion ID: 78068
Heading Depth: 2
Heading Rank: 2

Heading: Breach of the Assignment Agreement Claim

Text: In granting summary judgment to MAC East, the district court first held that Shoney's sole discretion to withhold consent was subject to a commercial reasonableness standard. It then held that Shoney's refusal to consent was not commercially reasonable as a matter of law. Our analysis is guided by Homa-Goff Interiors, Inc. v. Cowden, 350 So.2d 1035 (Ala.1977), a splintered opinion of the Alabama Supreme Court involving a sublease approval clause. The lease in that case provided that [t]he Lessee shall not assign or sublease all or any part of the ... premises except by and with approval of the Lessor in writing. Id. at 1037. Two justices of the Alabama Supreme Court held that even where the lease provides an approval clause, a landlord may not unreasonably and capriciously withhold his consent to a sublease agreement. The landlord's rejection should be judged under a test applying a reasonable commercial standard. Id. at 1038 (the Jones opinion). Four justices concurred with this part of the Jones opinion in a special concurrence authored by Justice Beatty. Id. at 1039 (the Beatty opinion). The four justices for whom Justice Beatty wrote, however, also believed that the parties could expressly agree that the lessor's decision, for whatever reason, is binding. Id. at 1039 (Beatty, J., concurring specially). The opinion reasoned that if a reasonable and prudent businessperson would not object to the sublessee, the lessor will not be allowed to arbitrarily disapprove of him unless the parties have expressly bargained to give the lessor that power without regard to commercial standards. Id. at 1040 (Beatty, J., special concurrence extended). So, the justices for whom Justice Beatty wrote believed that a commercial reasonableness standard applied to lease approval clauses where the parties had not bargained to give the lessor [the power to arbitrarily disapprove] without regard to commercial standards. Id. Finally, three justices dissented in two different opinions. The dissenting justices maintained that Alabama courts had never read a commercial reasonableness standard into sublease approval clauses. Building on that theme, the dissenting justices also wrote that parties could contract to any standard they wished to govern a landlord's refusal to grant consent to a proposed sublease or assignment. Id. at 1039-40, 1041 (the dissenting opinions). We conclude that seven justices in Homa-Goff the justices of the Beatty and dissenting opinionsagreed that parties are free to contract to whatever standard they please to govern a landlord's withholding of consent to a proposed sublease or assignment. In the present case, unlike in Homa-Goff, the parties appear to have contracted for a standard by which approval to sublease should be judged the sole discretion standard. So the question becomes, what does sole discretion mean? Shoney's argues that sole discretion means that it has the unqualified right to withhold consent to a sublease. MAC East argues that even under a sole discretion standard, Shoney's may not arbitrarily and capriciously refuse consent. We find no clear, controlling precedent in Alabama law, and, on this appeal, deciding what sole discretion means is determinative as to the breach of contract claim. Because we find no controlling precedent and because this issue implicates Alabama's public policy interests in the alienability of commercial property, we certify the following question to the Alabama Supreme Court under Alabama Rule of Appellate Procedure 18: Under Alabama law, when an assignment contract gives the assignor sole discretion to withhold consent to the assignee's proposed sublease, is the assignor's exercise of that discretion subject to a commercial reasonableness standard, or any other standard? Our phrasing of the question is not intended to restrict the scope or inquiry by the Alabama Supreme Court. [I]f we have overlooked or mischaracterized any state law issues or inartfully stated ... the question[] we have posed, we hope the Alabama Supreme Court will feel free to make the necessary corrections. Tillman v. R.J. Reynolds Tobacco, 253 F.3d 1302, 1308 (11th Cir.2001) (quoting Spain v. Brown & Williamson, 230 F.3d 1300, 1312 (11th Cir.2000)).