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Florida Court Issues Instructive Opinion in ‘Illegal’ Lease Case

Recently, a Florida court issued a decision in the case of Lucas Gaming, Inc v. Morris AR Associates and Barrick Enterprises, Inc. This case involved a landlord-tenant dispute, in which the tenant argued that a change in Florida law made their lease illegal, and thereby, unenforceable. In the end, the Court of Appeal for the Fourth District agreed with the tenant. This case serves as an important reminder for landlords, and any other business entering into an agreement, that Florida courts will not enforce ‘illegal’ contracts.

The Lease Was Legal When it Was Signed

In February of 2013, Lucas Gaming (tenant) entered into a lease with Morris AR Associates and Barrick Enterprises (landlords). Under the terms of the lease, the tenant was to operate a business known as “Vegas Fun” on the premises of the landlords. Essentially, the business was an adult-only arcade which included computerized slot machines. The slot machines accepted real money and in return, they paid out gift card prizes to the lucky winners. At the time that the lease was signed, this type of business operation was legal under Florida law. However, only two months later, in April of 2013, the state of Florida passed an amendment to gaming law which made gift card slot machines illegal. Lucas Gaming immediately closed up their business and vacated the property, despite the fact that they had time remaining on their lease. In response, the landlords sued for damages related to the breach of the lease. As a defense to the lawsuit, Lucas Gaming claimed that they should be legally excused from their lease obligations due to the recent change in Florida law. The court agreed with them, citing the restrictiveness of the lease and noting that the now illegal contract was no longer valid.

Illegal Contracts are Unenforceable

In this case, the court referenced the decision of Harris v. Gonzalez which explicitly states that illegal contracts will not be enforced by Florida courts. This is an important factor that all contracting parties need to keep in mind when making any type of agreement. The Lucas Gaming case is particularly noteworthy because the contract was perfectly legal at the time that it was signed. Still, the change in law impacts all contracts. There is no ‘grandfather’ clause that will protect signing parties. In this dispute, the impact of the legislative change fell on the landlord. However, that does not always need to be the case. In fact, the court in Lucas Gaming specifically noted that had the lease not been so restrictive, then the tenant would have had to continue abide by the terms. They would have still been responsible for the space, and would have had to attempt to operate a different type of business on the property or would have had to find an acceptable replacement tenant.

Do You Need Legal Assistance?

The passionate business litigation attorneys at Pike & Lustig, LLP have extensive experience helping Florida landlords protect their rights. If you are a Florida landlord involved in a dispute, or if you have any questions or concerns about drafting an enforceable lease, please contact our office today to set up a free legal consultation. Our firm serves landlords throughout South Florida, including in Miami and Boca Raton.

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