The appellant, Robert Aldana, appeals an adverse summary judgment in favor of appellee, Colonial Palms Plaza, Inc.

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The appellant, Robert Aldana, appeals an adverse summary judgment in favor of appellee, Colonial Palms Plaza, Inc. and an order awarding Colonial Palms Plaza, Inc. attorney’s fees pursuant to the offer of judgment rule. We reverse.

   Colonial Palms Plaza, Inc. [Landlord], entered into a lease agreement with Abby’s Cakes On Dixie, Inc. [Tenant] for commercial space in a shopping center. The lease included a provision in which Landlord agreed to pay Tenant a construction allowance of up to $11,250 after Tenant satisfactorily completed certain improvements to the rented premises.

   Prior to the completion of the improvements, Tenant assigned its right to receive the first $8,000 of the construction allowance to Robert Aldana [Assignee]. In return, Assignee loaned Tenant $8,000 to finance the construction. Assignee recorded the assignment and sent notice to the assignment by certified mail to Landlord.

   When Tenant completed the improvements to the rented premises, Landlord ignored the assignment and paid Tenant the construction allowance. Assignee sued Landlord for the money due pursuant to the assignment. The trial court granted Landlord’s motion for summary judgment. The trial court also awarded Landlord attorney’s fees pursuant to the offer of judgment rule, [citation], and costs pursuant to [citation].

   Landlord relies on an anti-assignment clause in the lease agreement to argue that the assignment was void and unenforceable. The clause states in part:

TENANT agrees not to assign, mortgage, pledge, or encumber this Lease, in whole or in part, or to sublet the whole or any part of the DEMISED PREMISES, or to permit the use of the whole or any part of the DEMISED PREMISES by any licensee or concessionaire, without first obtaining the prior, specific written consent of LANDLORD at LANDLORD’S sole discretion. * * * Any such assignment, encumbrance or subletting without such consent shall be void and shall at LANDLORD’S option constitute a default.

*** 

   Assignee argues * * * that under ordinary contract principles, the lease provision at issue here does not prevent the assignment of the right to receive contractual payments. We agree.

   So far as pertinent here, the lease provides that ‘‘TENANT agrees not to assign * * * this Lease, in whole or in part. * * *’’ Tenant did not assign the lease, but instead assigned a right to receive the construction allowance.

   The law in this area is summarized in Restatement (Second) of Contracts, §322(1), as follows:

Unless the circumstances indicate the contrary, a contract term prohibiting assignment of ‘‘the contract’’ bars only the delegation to an assignee of the performance by the assignor of a duty or condition.

   As a rule of construction, in other words, a prohibition against assignment of the contract (or in this case, the lease) will prevent assignment of contractual duties, but does not prevent assignment of the right to receive payments due— unless the circumstances indicate the contrary. [Citations.]

   Landlord was given notice of the assignment. Delivery of the notice of the assignment to the debtor fixes accountability of the debtor to the assignee. [Citation.] Therefore, Landlord was bound by the assignment. [Citation.] The trial court improperly granted final summary judgment in favor of Landlord and the judgment must be reversed. Consequently, the trial court’s award of attorney’s fees and costs to Landlord must also be reversed. The cause is remanded for further proceedings consistent herewith.

   Reversed and remanded.

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Smith and Roberson Business Law

ISBN: 978-0538473637

15th Edition

Authors: Richard A. Mann, Barry S. Roberts

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