The Law

Church is not Commercial Use by Ron Davis A Christian church group has lost its battle to lease anchor-store space at a California commercial shopping center. The shopping center, located in Redding, is divided into eight parcels that are owned separately. The anchor-store parcel, however, has experienced a history of tenant occupancy problems. Those problems started with the original tenant, a supermarket. After operating successfully in the anchor space for a number of years, the supermarket eventually closed. Next, a telephone call center leased the space, only to vacate the premises in early 2011. Shortly after that, the Christian church group, known as “Bethel Church,” expressed an interest in the anchor-store space. In fact, those premises seemed ideal for the needs of the church group. Church leaders had in mind an internet department that would include 20 to 30 fulltime sales personnel. Plans also called for a “School of Ministry,” which would include a two-year curriculum enrolling as many as 1,000 students. Finally, the space would provide two church services on Sundays, each with perhaps as many as 600 attendees. After learning of the church group’s objectives, the owners of a separate parcel of the shopping center protested. They contended that a lease to the church group would violate the terms that the owners of the store space originally agreed to in the shopping center lease. Those terms stated that “the shopping center shall be used for commercial purposes only for…mercantile, business and professional establishments….” In response, the owners of the anchor-store space contended that such uses proposed by the church group, such as the internet department, are within the definition of “commercial,” as expressed in the lease. Not so, countered the opposition. And the dispute finally required the California courts to resolve the matter. At trial, a judge ruled that the restrictions that the anchor-store owners agreed to prevented them from leasing their parcel to a church-related group for the objectives that the group had planned for the disputed space. On appeal of that ruling, a California appellate court explained, “The owners of the space point to Bethel’s internet department, which engages in significant sales. However, this ancillary department does not transform what is, overall, an ecclesiastical use into a commercial use…. “Under the terms of the [agreement],” the court concluded, “the shopping center shall be used only for commercial purposes for mercantile, business, and professional establishments. The proposed uses primarily encompass church services and a school of ministry. These are not commercial purposes in the mercantile, business or professional context.” (Andreasen v. Garman, 2011 WL 3855460 [Cal.App. 3 Dist.]) Decision: September 2011 Published: September 2011