The Long And The Short Of It: The Invincible Lease

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There’s nothing like a mysterious title to draw the flies. Usually, Ruminations knows its destination before it begins each weekly journey. Not so today. Our long-ago set plan was to rant (once again) about the trees lost in the service of creating ever and ever longer agreements. Then, we saw a March 29, 2016 decision from the Court of Common Pleas for the State of Delaware that made us wonder if some agreements aren’t long enough. That opinion made us wonder if courts read our agreements as closely as we write them. That case, and we’ll rant about it soon enough, led us to think about some things written in a very fresh, April 27, 2016 decision from the United States Court of Appeals for the Second Circuit. Can we synthesize all of that? Frankly, “No.” That, however, won’t stop us.

Ruminations understands why the 1916 Manhattan (New York City) telephone directory would be considerably shorter than the 2016 directory (if there is such a thing). There are just a lot more people in Manhattan today than there were 100 years ago. On the other hand, Ruminations doesn’t understand why today’s real property lease is so much longer than a lease of 50 years ago. [Before shouting into your screen, focus on the “so much.”] Yes, we’ve learned a few things, mostly from how courts have treated poorly written leases, but the law hasn’t changed very much and, frankly, we aren’t that much smarter. [Leave out the “that much.”] We think that everyone wants to make his or her mark on the world and tries to do that by adding her or his own “touch” to the document in front of her or him. Isn’t anything good enough as presented?

John Locke wrote:

I will not deny, but possibly it might be reduced to a narrower Compass than it is; and that some Parts of it might be contracted: The way it has been writ in, by Catches, and many long Intervals of Interruption, being apt to cause some Repetitions. But to confess the Truth, I am now too lazy, or too busy to make it shorter.

Pascal wrote:

My Letters were not wont to come so close one in the neck of another, nor yet to be so large. The short time I have had hath been the cause of both. I had not made this longer than the rest, but that I had not the leisure to make it shorter then it is.

George Tullie wrote:

The Reader will I doubt too soon discover that so large an interval of time was not spent in writing this discourse; the very length of it will convince him, that the writer had not time enough to make a shorter.

William Cowper wrote:

If in this I have been tedious, it may be some excuse, I had not time to make it shorter.

Henry David Thoreau wrote:

Not that the story need be long, but it will take a long while to make it short.

And, the quotation that led us to find those above – Winston Churchill wrote:

If I had more time, I would have written a shorter letter.

[Note how the common lamentation gets progressively shorter.]

What is our excuse? Do we not have enough time to make our documents shorter? Ruminations thinks that’s only one of our profession’s “excuses,” though not one to be dismissed. We think the major (and most disturbing) reason is that we are afraid that we’ve left something out or that we will be criticized by others who can invent more provisions than Carter’s has liver pills. Roll this hypothetical in your mind. Suppose, within a mega-size, national brand law firm, a first year associate is given the task of updating the firm’s form lease or other document. Raise your hand if you think the existing document will come out shorter at the end of the process. We have no need to ask anyone to now lower their hand.

Now, we’ll turn our attention to that Delaware case, revealed at this time to be: McGinnis Commercial Real Estate Company v. Jankes, the one that can be found by clicking: HERE.

This is about a dispute adjudicated by a court after a one day trial where the landlord’s suit to collect $5,124.53 resulted in a judgment in its favor of $4,921.97. There was no attorney’s fee award. Think of the “net” recovery.

The controversy was over whether the cost to repair a small number of potholes or the installation of some parking signs was includable in common area maintenance costs. The court needed to interpret (some might say, surmise) the lease’s intent because the lease never really defined common area maintenance costs. Needless to say, it appears that the lease didn’t have anything to say about attorney’s fees or, if it did, the court didn’t.)

The court cited the only three relevant lease provisions, the ones it thought were relevant. The first, captioned, “COMMON AREA MAINTENANCE,” said that the “C.A.M. contribution shall be prorated to reflect Lessee’s share of “C.A.M. based on square footage … .” The other two provisions need to be seen in their flesh. So, here they are:

(22) EXTERIOR MAINTENANCE. Lessor is responsible for all exterior building maintenance[,] including roof, structural walls, and underground utilities.

(23) LESSOR’S OBLIGATIONS. Lessor hereby agrees to … (g) maintain and keep in a good state of repair the foundation, electrical wiring, piping and plumbing which are underground or overhead leading to the Property, exterior walls excluding any plate glass or glass windows or doors, and structural members of the building.

With those three lease provisions selected, the court proceeded to decide whether two rounds of pothole repairs (at $1,200 and $1,900) and the installation of thirty-minute limit parking signs (at $1,295) were part of the property’s common area maintenance costs for which the tenant was to pay a share.

Nowhere does it appear that the landlord’s lease described the constituent elements of common area maintenance costs or even what “C.A.M.” meant. The best leap one could make by reading the lease was that it stood for what you think it stood for, but not with the word “costs” anywhere to be found. That didn’t bother the court. It assumed that the world knew that C.A.M. was a dollar figure, not a description of an activity. What the court focused on was the meaning of “maintenance,” lamenting that the lease did not define that word. It found that word in the two cited lease provisions, (22) and (23), and it ruled that the disputed charges were legitimate costs to maintain the property.

Interestingly, it didn’t note that the “maintenance” called for in those provisions had nothing to do with common areas where the potholes were to be found and where the parking signs were erected. Ruminations would have found for the tenant.

Yes, that lease was too short. But, it wasn’t short of the elaborate provisions we’ve come to find on pages 78 through 91 of what our leases have grown to become. It was just plain too short. Any good lease from 1950 would have done the trick.

[Since we’ll never return to this case, another common error could be found in just the 100 or so words of the lease quoted within the court’s decision. It described the tenant’s share of “C.A.M.” as being “.01653,” but it appears the tenant occupied 16.53% of the shopping center’s leasable floor area. That would be “0.1653.” This kind of error is far, far too common in our documents. We spend a lot of time obsessing over whether it should be: “reasonable efforts” or “commercially reasonable efforts,” but don’t check ordinary, elementary school arithmetic.]

That leads us to the other case that intrigued us this week, the one in the Second Circuit. We will tell about it next week because we think it will be instructive to those of us who worry about default provisions, notices, and rights to cure. But, for today, we take our leave with this quotation (from within an internally cited case). It bears on another downside of writing long, hyper-legal agreements:

“Sophisticated lawyers … must be presumed to know how to use parallel construction and identical wording to impart identical meaning when they intend to do so, and how to use different words and construction to establish distinctions in meaning.”

Does that whet your appetite? It does ours.

We have 10 complimentary registrations for a May 26 (1 pm until 2:30 pm) $297 webinar covering lease guaranties and guaranty limitations. We’ll dispense them to the first 10 requestors. Email: imeislik@meislik.com if you are interested.

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Comments

  1. Peggy Israel says:

    Ira, over time humans complicate EVERYTHING. It’s not just our industry. Any industry that has “specialists” speaks to this principal. If you’ve worked with any one tenant’s or developer’s lease form over a long period of time, you can track the progression of the form from simple to complex. Why? Because something goes wrong and a unanticipated cost is incurred and the CFO type demands that “this must never happen again”…and another provision gets added. These aren’t driven as much by court cases (there is some of that) as by internal corporate cost control pressures. So much additional “burn the developer” language came out of the Great Recession on the tenant side. We also have to respond to increasing complication in the peripheral industries that intersect with our leases (insurance, construction, lenders and so forth). I love retail real estate leasing, but @ 80 pages of gotcha clauses is pretty tedious to review for anyone (which I suppose makes us attorneys even more valuable).

  2. Tim Scott says:

    One huge problem of the ever lengthening contract is an issue most lawyers seem oblivious too. That is the problem of drafting-caused reader confusion. Much of the wordiness is lazy, passive voice drafting, by people who think if you say it once, saying it in more words or more times in different words makes it better. Contracts should be written to be read and understood not by the other lawyer, but by business people and unfortunately by judges, who all too often never did commercial work and don’t have a context for deals or contracts.
    Ultimately, our job is communications. When the business people don’t understand a contract, the meeting of the minds is weak and disputes can flare; when the judge can’t understand it, you can forget about what you think is the obvious intent. By careful drafting, active voice, reduction of repetition and formatting and style changes, I can generally knock 20-30% of the pages out of even a reasonable document and sometime much more, without dropping any of the concepts and, at least in my estimation, increasing clarity and making intent more obvious. While I still have clients who don’t want to read contracts, I have many who have expressed gratitude that they could understand it when they did their review.

  3. Fred Frank says:

    Being able to knock out 20-30% is a real benefit to kl.

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