Owner Wins

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What Happened: A car wash tenant insisted that it had made an oral agreement with the previous landlord limiting its obligation to pay to fixed rent only. But the new landlord didn’t buy it and insisted that the tenant also pay operating expenses and taxes. Even if there was an oral agreement, the lease plainly stated that rent amendments had to be in writing, it argued. Faced with “harassment” and threat of eviction, the tenant reluctantly coughed up the additional rent. But the dispute continued and the landlord sued to evict.

What Happened: A retail tenant asked out of its lease, and the landlord agreed. The result was a written termination agreement requiring the tenant to pay a $55,000 lump sum, as well as “all Minimum Guaranteed Rental, Tenant’s Common Area Maintenance Charge, Insurance Escrow Payment, and Tax Escrow Payment. . . . up to and including the Termination Date.” The tenant paid the lump sum but not the CAM charges.

What Happened: A Texas landlord leased a standalone building to a tenant for use as a restaurant. Even though the building needed a lot of work, the tenant accepted it “as is” without warranty of suitability for its intended restaurant use. The gamble came up snake eyes when the tenant discovered physical defects in the building while performing the construction work. The tenant stopped paying rent and claimed fraud when the landlord sued.

What Happened: An office tenant first became disenchanted when the HVAC system failed and it had to install a new air conditioning unit at its own expense. Two years later, the landlord had to bring in a contractor to completely replace the building’s terra cotta façade. The tenant stopped paying rent. When the landlord sued, the tenant claimed partial constructive eviction, among other things.

Ruling: The New York court dismissed the partial constructive eviction claim.

What Happened: A Texas owner paid $60,000 for a warehouse back in 1999. In 2014, he leased the property to a welding firm. After a short lease term, the building remained empty for several years with the owner steadily investing in improvements for future rentals. But in 2018, a transport company employee ruined his plans by running his truck into a telephone pole, starting an electrical fire that burned the entire place and everything in it to the ground. A jury found the company liable for the employee’s negligence and awarded the owner $500,000 in damages.

What Happened: After siding with the landlord on all claims, a New York court had one more issue to decide, namely, whether the lease clause requiring the tenant to pay 200 percent of base rent as holdover rent was enforceable. The tenant claimed that 200 percent was an unenforceable penalty; the landlord claimed it was a valid liquidated damages provision.

Ruling: The New York court ruled that the clause was enforceable.

What Happened: A lease required restaurant corporation tenant Crab House Ltd. to pay additional rent if it or any “affiliated company” were to open a competing business within a five-mile radius. A couple of years later, Crab House was acquired by Landry’s Seafood Restaurants. Landry’s opened a seafood restaurant within the five-mile radius, and the landlord sued for $2.5 million in extra rent.

What Happened: A lease provided that it would expire in July 2016 unless the tenant exercised its renewal option. The tenant acknowledged that it never provided the required written notice but contended that it renewed via its conduct, noting that the landlord accepted its monthly rent without objection for years after the purported expiration date. When the landlord sought to raise the rent, the tenant sued for over $250,000 in damages for a laundry list of alleged lease violations.

What Happened: A 70-year-old supermarket employee who just finished her shift stepped into a pothole while walking to her car. The workers comp board rejected her claim for benefits. Citing provisions in the supermarket’s lease making the landlord responsible for maintaining the shopping center parking lot and other common areas, the board concluded that the employer/supermarket didn’t control the parking lot where the injuries occurred. The employee appealed.

Ruling: The New Jersey state court reversed the board’s ruling.

What Happened: Two years into its five-year term, a tenant leasing space for use as an airport hangar exercised its right to terminate early, without penalty, upon 180 days’ notice. The plan was for the tenant to remain in the space until the sides reached agreement on a new lease for a larger hangar. But after months of unsuccessful negotiation, the landlord decided enough was enough.