Clarifying Contract Impairment and State Oversight of University Direct‑Support Organizations: Commentary on Florida Atlantic University Board of Trustees v. Harbor Branch Oceanographic Institute Foundation, Inc.

Clarifying Contract Impairment and State Oversight of University Direct‑Support Organizations

Commentary on Florida Atlantic University Board of Trustees v. Harbor Branch Oceanographic Institute Foundation, Inc., Supreme Court of Florida (Dec. 4, 2025)

I. Introduction

This decision sits at the intersection of contract rights and the State’s authority to regulate entities that are structurally private but functionally part of the public university system: direct‑support organizations (DSOs). The Supreme Court of Florida was called on to decide whether two post‑contract changes to the governing legal framework:

  • A 2018 statutory amendment requiring university boards of trustees to approve all DSO board appointments; and
  • A Board of Governors (BOG) regulation requiring university boards to approve DSO budgets,

unconstitutionally “impair[ed] the obligation of contracts” in violation of article I, section 10 of the Florida Constitution.

The case arose out of a long‑running dispute between:

  • Florida Atlantic University Board of Trustees (FAU) – the governing board of the state university; and
  • Harbor Branch Oceanographic Institute Foundation, Inc. (the Foundation) – a nonprofit research foundation that, after financial difficulties, agreed in 2007 to become an FAU‑affiliated DSO under section 1004.28, Florida Statutes.

Their relationship was governed by a memorandum of understanding (MOU) that, among other things:

  • Gave FAU the right to appoint two members to the Foundation’s board; and
  • Gave the Foundation’s board “sole discretion” over how and when to make distributions of its funds, including distributions “to or for the benefit” of FAU.

After the Legislature and the BOG tightened oversight of DSOs (board appointment approval and budget approval), both sides went to court. The Foundation argued those changes unconstitutionally impaired the MOU. The trial court and the Fourth District Court of Appeal agreed as to board appointments, but not as to budget approval. The Florida Supreme Court reversed in part, siding with FAU on both issues.

The opinion is important for three reasons:

  1. It clarifies how Florida courts must identify the exact contractual right at stake before finding any “impairment” under the Contracts Clause.
  2. It reinforces that silence in a contract is not the same as a bargained‑for limitation on future legislative or regulatory power, especially in a heavily regulated, quasi‑public context such as DSOs.
  3. It harmonizes Florida’s historically strict contract‑impairment jurisprudence with a more modern balancing approach, particularly where the State is regulating entities that effectively function as arms of government.

II. Summary of the Opinion

A. Procedural posture and issues presented

The case reached the Supreme Court of Florida on:

  • FAU’s appeal from the Fourth District’s holding that section 1004.28(3) (requiring FAU board approval of all DSO board appointments) unconstitutionally impaired the MOU; and
  • The Foundation’s cross‑appeal challenging the validity, under the Contracts Clause, of BOG Regulation 9.011(4) (requiring FAU board approval of the Foundation’s budget).

A preliminary procedural issue also lurked in the background: the Foundation’s failure in the trial court to give notice of its constitutional challenge to the Attorney General as required by Florida Rule of Civil Procedure 1.071.

B. Holdings

The Court (Justice Couriel writing for the majority; Chief Justice Muñiz concurring specially) held:

  1. Rule 1.071 non‑compliance: FAU waived any objection based on the Foundation’s failure to give rule 1.071 notice, because FAU itself asked the trial court to decide the constitutional issue. The Attorney General effectively waived participation by not intervening after being notified at the appellate stage. The Court expressly declined to adopt a broad rule that non‑compliance is always curable, but proceeded because it ultimately found no constitutional violation.
  2. Board appointment approval (statute):
    • The MOU provided only that FAU “will have two (2) appointees” on the Foundation’s board. It said nothing about FAU’s power to approve or veto other board members, or about the Foundation’s right to a majority of the board.
    • Section 1004.28(3) requires university boards of trustees to “approve all appointments” to DSOs’ boards. The Court emphasized the legal distinction between “appoint” and “approve.”
    • Because the MOU is silent on approval powers and broader board‑composition rights, the statute does not impair any contractual obligation. There is no contractual “right” for the statute to impair.
    • Even assuming some impairment, any such impairment is constitutionally tolerable given the State’s strong interest in overseeing DSOs and the modest, incremental nature of the oversight.
    • Result: The Fourth District is reversed on the board‑appointment issue; section 1004.28(3) is applied as written.
  3. Budget approval (BOG regulation):
    • The MOU addresses only the Foundation’s “sole discretion” to make distributions of its funds; it says nothing about its budget, and nothing about any right to operate free from university budget approval.
    • Budget approval (a forward‑looking plan of revenues and expenses) is distinct from the act of making a particular distribution of funds.
    • BOG Regulation 9.011(4), requiring FAU board approval of the Foundation’s budget, therefore does not impair any contractual right in the MOU.
    • Again, even if some impairment existed, it would be justified by the State’s interest in ensuring that DSO resources are used “to or for the benefit” of the university.
    • Result: The Fourth District is affirmed on the budget issue; the regulation stands.

C. Concurring opinion

Chief Justice Muñiz (joined by Justice Canady) concurred in the judgment and in the conclusion that any impairment is constitutionally permissible. He expressed some doubt about the majority’s “no impairment” characterization in light of Citrus County Hospital Board v. Citrus Memorial Health Foundation, Inc., but concluded that under the modern balancing approach (as reflected in Pomponio, Searcy Denney, and federal authority like Sullivan v. Nassau County Interim Finance Authority) any impairment here was reasonable and foreseeable in a heavily regulated sector.

III. Legal and Factual Background

A. Direct‑Support Organizations (DSOs) in Florida’s university system

Section 1004.28, Florida Statutes, defines a “university direct‑support organization” as a nonprofit corporation:

Organized and operated exclusively to receive, hold, invest, and administer property and to make expenditures to or for the benefit of a state university in Florida or for the benefit of a research and development park or research and development authority affiliated with a state university.

Key features of the DSO statutory framework include:

  • Exclusive purpose: DSOs may act only “to or for the benefit” of their affiliated state universities or related entities.
  • Regulation and oversight:
    • Section 1004.28(2)–(5) gives universities and the Board of Governors extensive oversight over DSO budgets, audits, use of university facilities, political activities, and governance.
    • Universities must be represented on DSO boards and executive committees; the university president must sit on both.
    • DSOs are subject to audits and information demands by multiple state entities (BOG, auditors, OPPAGA).
  • Benefits to DSOs: In exchange for their exclusive, regulated status, DSOs may use university property, facilities, and personnel.

Courts have repeatedly recognized the quasi‑public character of DSOs:

  • In Plancher v. UCF Athletics Association, the Florida Supreme Court held that the UCF DSO qualified as a state instrumentality entitled to limited sovereign immunity under section 768.28, Florida Statutes.
  • Several federal decisions have held DSOs to be “arms of the state” entitled to Eleventh Amendment immunity from federal suit.

Against this backdrop, the Foundation voluntarily agreed in 2007 to become FAU’s DSO, subjecting itself to that regulatory regime.

B. The 2007 MOU between FAU and the Foundation

After experiencing financial trouble, the Foundation entered into an MOU with FAU in 2007. Two provisions are particularly relevant:

  1. Board composition: “The [Foundation’s] board of directors will have two (2) appointees from FAU.”
  2. Distributions (grant‑making): “Foundation distributions shall be made in the sole discretion of the [Foundation] Board of Directors to defray the expenses of its operations, to restore restricted corpus and retire debt, and to or for the benefit of [the Foundation at FAU] or FAU.”

The MOU is otherwise silent about:

  • Who appoints the remaining board members;
  • Whether anyone has veto or approval power over board appointments;
  • Budget preparation or budget approval procedures; or
  • Any right of the Foundation to control a board majority or to be free from university budget oversight.

C. Regulatory and statutory changes after the MOU

  1. 2009 BOG Regulation 9.011(3) (now 9.011(4)) – budget approval
    The BOG amended its DSO regulation in 2009 to require that DSO budgets be “approved by the organization’s governing board and the university board of trustees.” This added express trustee approval on the budget side.
  2. FAU’s assertion of control (2017)
    In 2017, FAU sought to increase its operational and budgetary control over the Foundation, including:
    • Transferring key back‑office functions (legal, communications, accounting, auditing, development, staffing) to FAU;
    • Eliminating the Foundation’s CEO position and installing FAU’s Vice President for Research as the Foundation’s president.
    Concerned about losing its functional autonomy, the Foundation sued for declaratory relief regarding its budgetary independence.
  3. 2018 Florida Excellence in Higher Education Act – board appointment approval
    In 2018, the Legislature amended section 1004.28(3) to add:
    The university board of trustees shall approve all appointments to any direct‑support organization not authorized by this subsection.
    FAU then directed the Foundation to submit all board nominees for trustee approval. The Foundation refused, triggering FAU’s declaratory judgment action and the resulting constitutional clash.

D. Trial court and Fourth District decisions

The trial court:

  • Found both the board‑composition provision and the distribution clause in the MOU to be latently ambiguous, allowing the use of parol (extrinsic) evidence.
  • Accepted evidence that the parties “clearly understood and agreed” that:
    • FAU would be limited to two board appointees and “would not be entitled to have any other ‘say‑so’ in the Foundation board membership”; and
    • The Foundation board would have “exclusive discretion” over grants/distributions.
  • Held that:
    • Section 1004.28(3) unconstitutionally impaired the MOU by effectively rewriting the agreement through the new trustee‑approval requirement; and
    • BOG Regulation 9.011(4) did not impair the MOU, because the MOU did not address budget approval.

The Fourth District largely adopted the trial court’s reasoning. It held:

  • The statute “effectively rewrote the parties’ contract” on board appointments and was unconstitutional under the Contracts Clause.
  • The BOG’s budget‑approval regulation did not impair the MOU because the MOU did not contain any budget‑approval term.

FAU appealed, and the Foundation cross‑appealed. The Attorney General appeared as amicus curiae in the Florida Supreme Court.

IV. Detailed Analysis

A. Procedural Threshold: Florida Rule of Civil Procedure 1.071

1. The rule and the defect

Rule 1.071 requires any party challenging the constitutionality of a state statute (or local charter/ordinance) to:

  1. File a notice of constitutional question; and
  2. Serve the notice and the pleading raising the challenge on the Attorney General (or relevant state attorney) by certified or registered mail.

The Foundation did not comply in the trial court, even though it asserted an article I, section 10 challenge as an affirmative defense. In Lee Memorial Health System v. Progressive Select Insurance Co., the Court had previously faulted the district court for reaching a Contracts Clause challenge where the Attorney General had not been notified under rule 1.071.

2. Waiver by FAU and practical waiver by the Attorney General

The Supreme Court held that:

  • FAU waived any objection to the lack of rule 1.071 notice by:
    • Failing to raise the issue below; and
    • Affirmatively asking the trial court to decide the statute’s constitutionality.
    This aligns with lower‑court authority (e.g., State Farm Mut. Auto. Ins. v. Warren) holding that a party that invites a ruling on constitutionality cannot later complain that the Attorney General was not joined or notified.
  • The Attorney General effectively waived her right to participate:
    • The Foundation eventually served notice under the appellate rule (Fla. R. App. P. 9.425);
    • The Attorney General chose not to appear in the Fourth District; and
    • She did appear as amicus in the Supreme Court.

The Court was careful to say:

  • It was not deciding that failure to comply with rule 1.071 is always curable by later appellate conduct.
  • It was not holding that a state litigant can waive the Attorney General’s right to notice or participation.

But because the Court ultimately upheld the challenged statute and regulation, the procedural issue did not control the outcome. Still, the case underscores that:

  • Litigants must comply with rule 1.071 in the trial court; and
  • State actors who litigate a constitutional issue to judgment cannot sit on a notice‑defect only to deploy it opportunistically on appeal.

B. Contracts Clause Framework: Identifying the Contractual Right

1. Constitutional standard and presumption of validity

Article I, section 10 of the Florida Constitution tracks the federal Contracts Clause: “No bill of attainder, ex post facto law or law impairing the obligation of contracts shall be passed.” The Court reiterated two core principles:

  • Legislation enjoys a strong presumption of constitutionality; courts must construe statutes to avoid invalidation where possible (Florida Department of Revenue v. Howard).
  • In Contracts Clause analysis, the first task is to identify the precise contractual right allegedly impaired and the nature of the alleged impairment (Keystone Bituminous Coal Ass’n v. DeBenedictis; General Motors Corp. v. Romein).

As the majority framed it, if there is no contractual term on the specific point, there is nothing to impair.

2. Florida’s balancing approach: Pomponio and its progeny

Florida’s seminal decision in Pomponio v. Claridge of Pompano Condominium, Inc. famously said “virtually no degree of contract impairment is tolerable,” but it also:

  • Recognized that some impairment is tolerable; and
  • Adopted a balancing test weighing:
    • The degree of impairment of contractual rights; against
    • The source of the State’s authority and the nature of the “evil” it seeks to remedy.

Later cases (notably Searcy, Denney, Scarola, Barnhart & Shipley v. State) reaffirm that:

An impairment may be constitutional if it is reasonable and necessary to serve an important public purpose.

The majority used this framework in the alternative (assuming some impairment), and the concurrence leaned on it more directly.

C. Board Appointments: “Appointment” vs “Approval” and Contractual Silence

1. The MOU text and the Court’s textualist starting point

The central contractual clause: “The [Foundation’s] board of directors will have two (2) appointees from FAU.”

The Court emphasized:

  • This clause only gives FAU the right to appoint two directors.
  • It does not address:
    • Who appoints the other directors;
    • Whether those appointments are subject to any approval or veto;
    • The right of the Foundation to a specific share or majority of the board; or
    • Any bar on additional FAU involvement in board composition.

Thus, on its face, the MOU creates:

  • A specific FAU right (to appoint two directors); and
  • No further allocation of appointment or approval powers.

2. Appointment vs approval as distinct legal powers

Section 1004.28(3) requires that the “university board of trustees shall approve all appointments” to a DSO’s board. The Court drew a sharp distinction between:

  • Appointment – choosing/designating someone for office; and
  • Approval – giving formal sanction or confirmation to an existing choice.

Invoking both Black’s Law Dictionary and constitutional examples, the Court analogized:

  • Under the U.S. Constitution, the President appoints principal officers, but the Senate must approve (give “advice and consent”) to those appointments. The Senate’s approval power does not convert presidential appointees into “Senate appointees.”
  • Similarly, under the Florida Constitution, members of the Fish and Wildlife Conservation Commission are “appointed by the governor, subject to confirmation by the senate.” The Senate’s confirmation power does not negate the Governor’s appointment power.

The Court thus held:

  • The MOU’s grant to FAU of two “appointees” is unaffected by a later statute giving FAU’s board of trustees approval power over all appointments, including those of non‑FAU appointers.
  • The statute does not remove FAU’s two appointments nor contradict any MOU clause regarding approval of the remaining board seats—because none exists.

3. Rejecting “latent ambiguity” and parol evidence

The trial court had found “latent ambiguities” in the MOU and relied on extrinsic evidence to infer that the parties intended:

  • FAU’s involvement with board membership to be strictly limited to its two appointees; and
  • The Foundation to control the remaining board seats without any FAU “say‑so.”

The Supreme Court implicitly rejected that approach. It explained:

  • A latent ambiguity arises when contract language is facially clear but an external fact reveals that the term could have multiple meanings (e.g., two streets with the same name in different cities).
  • Here, the contract’s wording is clear and simply silent on approval powers and broader board‑control rights.
  • Silence does not equal ambiguity, and courts may not use parol evidence to create contractual rights or limitations the parties did not express. As the Court put it, where a contract is “simply silent as to a particular matter, courts should not, under the guise of construction, impose on the parties contractual rights and duties which they themselves omitted” (quoting Southern Crane Rentals, Inc. v. City of Gainesville).

In short: the MOU’s silence on approval rights is not an ambiguity inviting extrinsic evidence; it is an absence of rights on that subject.

4. The negative‑implication canon and why it fails here

The Foundation tried to invoke the canon of expressio unius est exclusio alterius (the expression of one thing implies the exclusion of others). Its argument: because the MOU expressly mentions “two appointees from FAU,” it must implicitly exclude any other FAU participation in board selection or approval.

The Court responded with caution, relying on both its own precedent (Alachua County v. Watson) and U.S. Supreme Court authority (Barnhart v. Peabody Coal Co.; Chevron U.S.A. Inc. v. Echazabal):

  • The negative‑implication canon applies only when the items listed form an “associated group or series” such that omitting an item can fairly be read as a deliberate exclusion.
  • There must be a “natural association of ideas” where what is expressed stands in “strong contrast” to what is omitted.

Applied here:

  • Specifying that the board “will have two appointees from FAU” does not obviously express all modalities of FAU involvement in board governance.
  • The clause naturally implies a limit on the number of appointments FAU may make, but not a prohibition on FAU’s participation in other capacities (such as approval of other appointees).
  • Reading the clause as barring FAU from any approval role over non‑FAU appointees stretches the canon beyond its proper interpretive function into what the Court called “an editorial device” rather than a guide to meaning.

The Court thus refused to infer:

  • A right of the Foundation to appoint a board majority free from FAU oversight; or
  • A prohibition on FAU’s board‑approval power beyond its two appointees.

5. Distinguishing Citrus County Hospital Board v. Citrus Memorial Health Foundation, Inc.

In Citrus County, the Court held that a special law impermissibly impaired a contract between a public hospital board and a foundation by adding new accountability and financial‑responsibility obligations “mentioned nowhere in the parties’ agreements” and beyond the legal framework existing at contract formation.

The Foundation argued that the situation here was analogous: the statute added a trustee‑approval requirement not found in the MOU or the then‑existing law.

The Court distinguished Citrus County on two grounds:

  1. No contractual right worsened or weakened: The definition of “impairment” adopted in Citrus County was:
    To make worse; to diminish in quantity, value, excellency, or strength; to lessen in power; to weaken.
    Here:
    • No express MOU right was “made worse” by the trustee‑approval statute.
    • The only “right” allegedly diminished—a right of the Foundation to appoint a majority of the board without FAU involvement—does not appear in the MOU.
  2. Different analytical posture: Citrus County did not apply the Pomponio balancing test, whereas here the Court assumed arguendo that, even if an impairment existed, it would be subject to—and pass—Pomponio’s reasonableness/necessity analysis.

6. Articles of incorporation, bylaws, and obligations “imposed by law”

The Foundation argued that its right to appoint a board majority was imported into the MOU by operation of section 617.0202(1)(d), Florida Statutes (2007), which required nonprofit articles of incorporation to state how directors are elected or appointed. The Foundation’s articles at that time provided for a five‑member board, of which FAU could appoint only two.

Two key responses from the Court:

  • It accepted the general rule that “the laws which exist at the time and place of the making of a contract enter into and become a part of the contract” (Brandt v. Brandt), but then drew a critical distinction:
    • Constitutional contract‑impairment protections do not apply to obligations “imposed by the law without the assent of the party bound” (Florida Sheriffs Ass’n v. Department of Administration, citing Anders v. Nicholson).
    • In other words, regulatory conditions that automatically apply to an entity by statute are not the kind of bargained‑for contract rights protected by article I, section 10.
  • The Foundation’s own articles underscored that it operated “exclusively” for FAU’s benefit and “so far as is or may be permitted” by Florida law. The organization therefore accepted ongoing statutory change as part of the bargain, particularly given its DSO status.

7. Retroactivity

The Foundation framed section 1004.28(3) as a retroactive impairment of vested contractual rights (dating from 2007). The Court rejected that characterization by applying Metropolitan Dade County v. Chase Federal Housing Corp.:

  • A statute is not retroactive merely because it applies to relationships that pre‑date its enactment.
  • It is retroactive only if it attaches “new legal consequences to events completed before its enactment.”

Section 1004.28(3), by its terms, governs only future board appointments. It does not invalidate past appointments or alter the legal effect of previously completed events. Therefore, it is not retroactive in the constitutionally problematic sense.

8. Alternative holding: Even if there were impairment, it is constitutionally tolerable

Having concluded that no contractual right was actually impaired, the majority nevertheless performed an abbreviated Pomponio-type balancing:

  • Degree of impairment: At most, modest adjustment of governance to require trustee approval of future board appointments in a context where the entity is statutorily understood to operate for the university’s benefit and already subject to significant oversight.
  • State’s interests:
    • DSOs are heavily regulated and closely integrated with the state university system.
    • They hold and disburse large sums of money for state purposes.
    • The State has an obvious and important interest in ensuring appropriate governance and accountability.

Given this, any incremental impairment is “no greater than necessary” to serve legitimate public objectives.

D. Budget Approval: Distinguishing Budgets from Distributions

1. Textual distinction

The MOU grants the Foundation board “sole discretion” over “distributions” of funds. The BOG regulation requires FAU board approval of the Foundation’s budget. The Court treated these as different concepts:

  • Budget: “A statement of an organization’s estimated revenues and expenses for a specified period, usually a year.”
  • Distribution: “The act or process of apportioning or giving out” funds.

While the budget may constrain the universe of possible distributions, they are not the same legal act. Having a veto over the budget does not necessarily deprive the Foundation of its discretion to make specific distributions within that budgetary framework.

2. Analogy to Alachua County v. Watson

The Court analogized to Alachua County v. Watson, where:

  • The county’s power to set a Sheriff’s budget at the “object level” did not violate the Sheriff’s constitutional independence in matters of personnel and operations.

Similarly, FAU’s power to approve the Foundation’s budget does not eliminate the Foundation’s contractual discretion over distributions. That discretion continues to operate within the fiscal constraints of an approved budget, just as the Sheriff’s operational autonomy operates within a county‑approved budget.

3. No contractual term on budget approval

Once again, the MOU is silent on budget preparation or approval. Thus:

  • There is no express contract right for the BOG regulation to impair.
  • The budget‑approval requirement instead fits comfortably within the pre‑existing statutory scheme that required DSOs to operate “to or for the benefit” of their universities and to submit to financial oversight.

4. Alternative balancing analysis

Even if one treated the budget‑approval regulation as limiting the practical scope of the Foundation’s distribution discretion, the Court signaled that such limitation would still pass constitutional muster:

  • The State’s interest in ensuring that DSO funds are spent exclusively “to or for the benefit” of state universities is substantial.
  • Requiring budget approval is a reasonable and moderate means of furthering that interest, not a drastic or confiscatory intrusion on the MOU.

Accordingly, the Court affirmed the Fourth District’s judgment that BOG Regulation 9.011(4) does not unconstitutionally impair the MOU.

E. The Concurring Opinion: Foreseeability and Heavily Regulated Sectors

Chief Justice Muñiz agreed with the result but took a somewhat different route:

  • He expressed uncertainty that, under Citrus County, the Act and the Regulation should be classified as non‑impairments. After all, they impose accountability measures “mentioned nowhere in the parties’ agreements” and beyond the legal regime in place at contract formation—just as in Citrus County.
  • But he concluded that, even if they are impairments, they are constitutionally permissible under the modern Contracts Clause framework, citing:
    • Searcy Denney (Florida) and
    • Sullivan v. Nassau County Interim Finance Authority (Second Circuit).

Drawing on Sullivan, he highlighted:

  • The reasonableness of contractual expectations depends on:
    • Whether legislative action was foreseeable; and
    • Whether the entity operates in a heavily regulated industry.
  • DSOs are by design heavily regulated entities holding and spending large sums for state universities, which made further oversight measures foreseeable when the Foundation chose to become a DSO in 2007.

He emphasized:

  • The DSO statute in 2007 already gave universities board seats and financial‑oversight powers.
  • The 2018 Act and the budget‑approval regulation were incremental, system‑wide measures that built on an existing oversight structure.
  • The State’s interest in facilitating effective oversight of DSOs is “self‑evident.”

Under this lens, any impairment is:

  • Moderate in degree;
  • Foreseeable to a sophisticated entity entering a regulated, quasi‑public space; and
  • Justified by important public purposes.

V. Complex Concepts Simplified

1. Contracts Clause / “Law impairing the obligation of contracts”

The Contracts Clause in article I, section 10 prevents the State from passing laws that substantially undermine existing contract rights. But it does not freeze all private agreements against any subsequent regulation. In broad terms:

  • Step 1: Is there a specific contractual right or term on the topic the law addresses?
  • Step 2: Does the law impair that right—i.e., make it worse, weaker, or impossible to exercise?
  • Step 3: If so, is the impairment reasonable and necessary to serve an important public purpose, especially in a heavily regulated area?

If there is no contractual term on the point, there is nothing for the statute to impair.

2. Direct‑Support Organization (DSO)

A university DSO is:

  • A nonprofit created under Florida law;
  • Whose only function is to hold, invest, and spend money to benefit a specific state university or related research entity; and
  • Which receives significant benefits (use of university property, staff) in exchange for accepting extensive state and university oversight.

Though technically private corporations, DSOs are treated as arms of the State for many purposes (sovereign immunity, Eleventh Amendment immunity, etc.).

3. Latent ambiguity and parol evidence

  • Latent ambiguity: A situation where contract language appears clear, but some external fact shows it could reasonably mean two different things (e.g., “the green house on Oak Street,” when there are two such houses).
  • Parol (extrinsic) evidence: Evidence outside the written contract (such as negotiations, oral statements, or background documents) used to clarify ambiguous terms.

Courts may use parol evidence to resolve real ambiguities, but cannot use it to:

  • Fill in gaps that the parties left unaddressed; or
  • Create new obligations or limitations that are not suggested by the text.

4. Negative‑implication canon: expressio unius est exclusio alterius

This interpretive principle says that:

When a text lists some things, it may imply that other, similar things not listed are excluded.

But it is only reliable when:

  • The listed items form an obvious group or category; and
  • It would be natural to read the list as complete.

Used carelessly, the canon lets courts “edit” contracts or statutes rather than interpret them. The Court declined to use it in that way here.

5. Retroactivity

A law is retroactive in the problematic sense when it changes the legal consequences of actions that are already complete. A law is generally not retroactive simply because:

  • It is applied to ongoing relationships that began before the law was enacted; or
  • It governs future conduct under pre‑existing contracts.

Section 1004.28(3) only governs future board appointments; it does not disturb past appointments or past distributions.

6. Obligations “imposed by law” vs. contractual obligations

The Contracts Clause protects voluntarily assumed, bargained‑for contractual obligations—not regulatory obligations that the law imposes on entities whether they like it or not. When the legislature modifies such regulatory obligations prospectively:

  • The change may affect how contracts operate in practice;
  • But it is not necessarily “impairing” a contractual obligation within the meaning of article I, section 10.

7. Heavily regulated industry and foreseeability

In a heavily regulated context (such as public finance, utilities, or DSOs), sophisticated parties are presumed to understand that:

  • Further regulation is likely;
  • The State may tighten oversight or accountability mechanisms over time; and
  • Their expectations must account for that regulatory risk.

Courts are more likely to view such regulatory changes as foreseeable and thus less likely to treat them as unconstitutional impairments of contract.

VI. Impact and Significance

A. For DSOs and state universities

The decision confirms and strengthens:

  • The validity of section 1004.28(3)’s trustee‑approval requirement for all DSO board appointments; and
  • The validity of BOG Regulation 9.011(4)’s requirement that university boards approve DSO budgets.

Practically, this means:

  • Universities enjoy broad oversight over:
    • Who sits on the boards of their DSOs; and
    • The overall budgetary framework under which DSOs operate.
  • DSOs may retain some operational discretion (e.g., how to make specific distributions within an approved budget), but cannot claim that pre‑existing agreements shield them from system‑wide governance reforms that leave their express contract rights intact.
  • Any MOU between a university and a DSO will naturally be read against the backdrop of section 1004.28 and BOG regulations, which are expected to evolve.

B. For Contracts Clause jurisprudence in Florida

This opinion refines and, to some degree, narrows the circumstances in which Florida’s Contracts Clause will invalidate state regulation:

  • It emphasizes textual precision: courts must identify a specific contractual right allegedly impaired; vague expectations or structural assumptions will not suffice.
  • It rejects the use of parol evidence and aggressive negative‑implication reasoning to manufacture contractual rights that are not fairly expressed in the text.
  • It reaffirms—and applies in the alternative—the Pomponio balancing test, aligning Florida more closely with federal Contracts Clause doctrine.
  • The concurrence openly acknowledges that some post‑contract statutory enhancements of accountability measures can be “impairments” but still be justified and constitutional when they:
    • Are foreseeable;
    • Apply generally; and
    • Serve an important public purpose in a heavily regulated field.

Taken together, the majority and concurrence move Florida law away from a rigid, near‑zero‑tolerance approach to impairment and toward a more nuanced, context‑sensitive standard, at least in the public‑entity context.

C. For contract drafting and negotiation

The case underscores several drafting lessons:

  • If a private or quasi‑public entity wants to insulate itself from future regulatory changes in specific respects, it must:
    • Express those protections clearly and explicitly in the contract; and
    • Recognize that courts will be reluctant to infer them from silence or generalized expectations.
  • General statements about “sole discretion” (e.g., over distributions) will not necessarily be read to bar complementary oversight mechanisms (such as budget approval).
  • References to current law (or statements that an entity will operate “as permitted by law”) may weaken future claims that subsequent statutory changes are unforeseen or impermissibly retroactive.

D. For procedural practice: Rule 1.071

Although the Court declined to rest its holding on rule 1.071, the decision nonetheless sends signals:

  • Plaintiffs and defendants must be vigilant to comply with the notice requirement at the outset of a constitutional challenge.
  • State entities that actively litigate constitutionality in the trial court are likely to be deemed to have waived rule‑based notice defects on appeal.
  • The Attorney General retains independent authority to insist on compliance or to waive participation, but silence after proper appellate notice will be treated as a form of waiver.

VII. Conclusion

Florida Atlantic University Board of Trustees v. Harbor Branch Oceanographic Institute Foundation, Inc. is a significant clarification of Florida’s Contracts Clause jurisprudence as applied to entities that operate in close partnership with the State. The Supreme Court of Florida held that:

  • The 2018 statutory requirement that university trustees approve all DSO board appointments does not impair any contractual right in the 2007 MOU between FAU and the Foundation, because the MOU addresses only FAU’s right to appoint two board members and is silent on approval or broader board‑composition rights.
  • The BOG regulation requiring trustee approval of the Foundation’s budget likewise does not impair the MOU, which speaks only to the Foundation’s discretion to make distributions—not to its budgetary process or oversight.
  • Even if these measures could be viewed as impairments, they are reasonable, incremental regulations serving important public purposes in a heavily regulated, quasi‑public domain.

The decision teaches that:

  • Courts will not infer contractual rights from silence or from broad notions of “understanding,” especially where public oversight is at stake.
  • Parties who enter into relationships embedded in a statutory and regulatory framework, like DSOs in the state university system, cannot reasonably expect their agreements to freeze the law in place.
  • The State retains considerable space to adjust accountability and governance structures for public‑purpose entities without running afoul of article I, section 10—so long as it does not directly contradict or drastically undermine specific, bargained‑for contract terms.

In reaffirming both careful contract interpretation and a balanced approach to contract impairment, this opinion strengthens the Legislature’s and the Board of Governors’ ability to regulate DSOs and similar entities, while preserving meaningful (but not absolute) constitutional protection for contractual obligations in Florida.

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