By Jeffrey T. Donner, Esq.

Commercial lease disputes often arise from the gap between what the parties discussed before signing and what the final lease actually says. Emails, expectations, business assumptions, and “everybody knew what we meant” arguments can become very attractive after a deal falls apart. But under Florida contract law, those arguments usually run into a hard wall: the written agreement.

The Third District Court of Appeal’s recent decision in Bal Harbour Shops Marketplace, LLC v. ORU Associates, Inc. is a useful reminder of that principle. The case involved a short-term commercial lease, a failed retail pop-up plan, delayed permitting, prepaid rent, a security deposit, and a landlord’s argument that the tenant breached the implied covenant of good faith and fair dealing by failing to open quickly enough.

The trial court accepted the landlord’s theory after a bench trial. The Third DCA reversed.

The appellate court’s holding is important for commercial landlords, tenants, brokers, and litigators because it reinforces two basic but often overlooked rules: first, courts enforce unambiguous lease language as written; and second, the implied covenant of good faith and fair dealing cannot be used to create obligations that the contract itself does not contain.

The Lease Dispute

Bal Harbour Shops Marketplace leased first-floor commercial space from ORU Associates in Ocean Reef, Monroe County. The business plan was to operate a physical retail pop-up connected to the Bal Harbour Shops Marketplace concept. The lease was short-term, running initially to April 30, 2021, with an option to extend to April 30, 2030.

The lease contained several provisions that later became critical.

First, the tenant had the right, “for any or no reason,” to terminate the lease on thirty days’ notice during the initial term. Second, the rent commencement date was tied to two conditions: Bal Harbour’s substantial completion of its “Initial Work” and its opening for business in the leased premises. Third, the lease allowed initial cosmetic renovations, including furniture, fixtures, equipment, floors, lighting, and painting. Fourth, the lease contained an integration clause stating that the lease contained the entire agreement between the parties.

Bal Harbour paid the first month’s rent and a security deposit. It then attempted to move the project forward but encountered permitting and fire-code issues. Ultimately, Bal Harbour terminated the lease before opening and demanded the return of its prepaid rent and security deposit. ORU refused.

The lawsuit followed.

The Landlord’s Theory: The Tenant Was Supposed to Open Quickly

ORU argued that Bal Harbour was not entitled to recover the prepaid rent and deposit because Bal Harbour had breached the lease. Its theory was not simply that rent had commenced under the literal language of the lease. Instead, ORU relied heavily on the idea that Bal Harbour had agreed—based on pre-contract discussions and emails—to perform only the “absolute minimum” improvements necessary to open quickly for the Ocean Reef season.

That theory had practical appeal. The landlord believed the tenant should have done a simpler buildout, opened quickly, and started paying rent. From a business perspective, that may have been what ORU expected.

The problem was that the lease did not say that.

The trial court nevertheless found for ORU. It concluded that Bal Harbour had opened for business upon execution of the lease because it was a commercial landlord-type entity that intended to sublease portions of the space and had begun discussions with potential subtenants. The trial court also found that Bal Harbour breached the implied covenant of good faith and fair dealing by failing to timely perform the minimum work necessary to open and commence rent.

The Third DCA rejected both conclusions.

The Third DCA’s First Point: “Opening for Business” Means Opening for Business

The rent commencement provision was straightforward. Rent began when Bal Harbour substantially completed its initial work and opened for business in the leased premises.

The Third DCA held that the rent commencement date had not occurred. The tenant had not opened a pop-up store. It had not displayed and sold goods. It had not begun the retail use contemplated by the lease. The fact that Bal Harbour may have been planning, negotiating, or trying to line up subtenants did not mean it had opened for business in the leased premises.

That point matters. In commercial leasing, parties often use milestone-based rent commencement provisions. Rent may begin upon delivery, permit issuance, substantial completion, opening for business, or some combination of events. Courts will usually enforce those triggers as written. If a landlord wants rent to begin on delivery, it should say so. If rent begins regardless of whether the tenant opens, the lease should say so. If the tenant must open by a date certain or face default, the lease should say so.

Here, the lease tied rent commencement to actual opening after initial work. The court was not willing to treat preparatory business activity as the same thing as opening the retail operation contemplated by the lease.

That is the correct result. A business can negotiate, design, permit, market, and plan without being “open for business” in the leased premises. Treating those preparatory steps as an opening would drain the lease language of its ordinary meaning.

The Third DCA’s Second Point: Pre-Contract Emails Cannot Rewrite an Integrated Lease

The trial court also relied on pre-contract communications suggesting that the tenant was supposed to do the “absolute minimum” necessary to open quickly. But the lease had an integration clause. It also expressly allowed initial cosmetic renovations, including changes to floors, lights, painting, and installation of furniture, fixtures, and equipment.

The Third DCA held that the trial court erred by using pre-contract emails to define “Initial Work” more narrowly than the lease itself allowed. The lease did not limit Bal Harbour to the absolute minimum work necessary to open. The appellate court therefore concluded that the trial court’s definition of “Initial Work” was inconsistent with the actual lease language.

This is one of the most useful lessons from the case.

Commercial parties frequently negotiate in a messy, practical way. They exchange emails. They discuss schedules. They make assumptions. One side says, “We just need to get open quickly.” The other side says, “We’ll do the minimum necessary.” Everyone wants the deal to happen. But once the final contract is signed, the operative question is not what one party hoped, expected, or inferred. The question is what the contract says.

If a business expectation is important, it belongs in the contract. If it is not in the contract, a party should not assume a court will save it later through testimony, emails, or generalized notions of commercial fairness.

The Implied Covenant of Good Faith Has Limits

The most significant legal issue in the case is the implied covenant of good faith and fair dealing.

Florida law recognizes an implied covenant of good faith and fair dealing in contracts. But it is not an independent, free-floating duty to behave in a way the other side later considers fair. The covenant must relate to the performance of an express contractual term. It cannot be used to add a new obligation that the parties did not include in their agreement.

That principle doomed ORU’s good-faith theory.

The lease did not expressly require Bal Harbour to perform only the “absolute minimum improvements necessary” to open. The lease did not impose a hard opening deadline. The lease did not state that rent would begin if Bal Harbour could have opened sooner by choosing a simpler renovation plan. And the lease gave Bal Harbour a termination right during the initial term.

The Third DCA therefore held that the trial court erred in finding a breach of the implied covenant. Bal Harbour had attempted to obtain permits for its initial work, encountered delays, and exercised its contractual termination right. The landlord may have believed the tenant should have acted differently, but the implied covenant could not be used to transform that belief into a lease obligation.

That is the key takeaway: good faith enforces the contract; it does not rewrite it.

Why This Case Matters in Commercial Litigation

This case is not just about one luxury retail pop-up in Monroe County. It is about a common problem in commercial disputes: a party loses the benefit of the bargain it thought it had, then tries to recover that lost expectation through implied duties, course-of-dealing arguments, or pre-contract communications.

Sometimes those arguments work. But they work only when they are tied to actual contract language, ambiguity, waiver, estoppel, fraud, or some other recognized legal doctrine. They do not work merely because one side can tell a sympathetic story about what it expected.

The case also illustrates the importance of appellate review in bench trials. Trial courts receive evidence, assess credibility, and make factual findings. But contract interpretation remains a question of law when the contract is unambiguous. The Third DCA was willing to reverse because the trial court’s judgment rested on a construction of the lease that the appellate court found inconsistent with the lease itself.

That matters to litigators. A bench trial judgment does not become immune from reversal merely because testimony was taken. If the ultimate ruling turns on an erroneous legal interpretation of an unambiguous contract, the appellate court can and should correct it.

Practical Drafting Lessons for Landlords and Tenants

For landlords, the lesson is simple: if rent must begin by a date certain, say so. If the tenant must open by a certain date, say so. If only minor non-permitted work is allowed before opening, say so. If the tenant’s failure to pursue the quickest possible opening is a default, say so. Do not rely on pre-signing emails or business understandings to supply terms that are missing from the lease.

For tenants, the case shows the value of precise rent commencement language and termination rights. Bal Harbour’s position was strong because the lease tied rent commencement to defined events and gave it an express termination right. The tenant also benefited from the integration clause, which prevented the landlord from converting pre-contract discussions into binding limitations not found in the lease.

For both sides, the case is a warning about vague project milestones. Words like “initial work,” “substantial completion,” “open for business,” and “permitted use” should be drafted with care. If those terms are left undefined or loosely defined, a dispute can become expensive quickly.

The Bottom Line

Bal Harbour Shops Marketplace v. ORU Associates is a strong Florida contract case because it applies old principles to a very practical commercial dispute. The written lease controlled. The rent commencement date did not occur because the tenant had not completed its initial work and opened for business. Pre-contract emails did not override the integrated lease. And the implied covenant of good faith and fair dealing could not create a new obligation to perform only the “absolute minimum” work necessary to open quickly.

The Third DCA reversed the judgment for ORU and remanded with instructions to enter judgment for Bal Harbour, award Bal Harbour its prepaid rent and security deposit, and find Bal Harbour to be the prevailing party.

For commercial parties, the message is direct: if the point matters, put it in the contract. For commercial litigators, the message is just as important: when the contract is clear, do not let the case become a referendum on expectations that never made it into the deal.