In early 2015, we characterized a California court’s decision in a co-tenancy clause case as: “[A] California appellate court has found a typical lease provision to be an unenforceable penalty.” There, a tenant’s lease gave it the right to take a rent reduction and, after a period of time (if the landlord did not replace the lost co-tenant), it could terminate the lease. The California court allowed the tenant’s lease termination but made the tenant pay full rent during what was supposed to be the reduced rent period. Basically, it agreed with the landlord by holding that the substantial loss from the lower rent constituted an unenforceable penalty. For those interested in our description of that case and implied criticism as well, click HERE to step back to February 2015. [Read more…]
Cross A State Line And Co-Tenancy Failure Remedies Can Become Valid/Invalid
“Another Similar Major Tenant” – What Did You Say? A Co-Tenancy Failure Saga
Last week, we described, in some detail, a long story about a tenant seeking the benefit of a continuing co-tenancy provision in its lease and its landlord’s less than favorable response. We’re not going to repeat the “long story” this week. If you want to read it (to catch up, and you should), just click: HERE. Today, readers get the “short” version.
A shoe store’s lease gave it the right to pay reduced rent and even to terminate its lease if either of two particular businesses at the property vacated and were not timely replaced by “another similar major tenant.” The dispute, which was narrowed by a United District Court, but not resolved to conclusion, was whether a particular bible book store that replaced one of the designated “co-tenants,” a women’s fashion retailer, satisfied the criterion of being “another similar major tenant.” There were also issues of whether the shoe store’s long delay in “complaining” would adversely affect the specific remedies the tenant got under its lease.
The bible book store was long established in the marketplace and had relocated from a nearby location into the entire space occupied by the fashion retailer. Its sales in that same space exceeded those of the fashion retailer it replaced. [Read more…]
PrintSave Time And Money And Screw Up A Lease’s Co-Tenancy Provision
We don’t know where to start, but we’ll press ahead anyway. Last week, a November, 2013 federal court decision involving a co-tenancy provision in a shopping center lease was brought to our attention. It is captioned: Kleben Holding Company, LLC v. Ann Taylor Retail, Inc. and can be seen by clicking HERE.
At the outset, readers should note that the court’s decision was in the form of a “summary judgment.” For readers who don’t know, this means the court believed there were no disputed facts. In this case, there was no trial. The parties conducted their own investigations and the court thought, based on what was presented to it, that all the facts it needed for its decision were in front of the court and that there was no legitimate dispute about them. Although this procedural device is available throughout our court system, it isn’t often applied, especially by state courts. Federal courts, as is the case with this decision, are more willing to dispose of matters by summary judgment. Whatever be the situation with this dispute, on the face of it, the facts were pretty well set. [Read more…]
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