The Law

Construction on Well-Travelled Highway by Ron Davis Road construction near a Louisiana shopping center has cost the center’s owners a key tenant as well as the expenses involved in efforts to retain that tenant. The shopping center is located in the Baton Rouge area. And its owners were in the first stages of opening the new facility when a dispute with that tenant began. She had intended to operate a coffee shop at the shopping center, but problems began almost immediately after she signed her lease. First, she agreed to change the location of the coffee shop within the facility. Then she agreed to finish her leased space by painting, putting in flooring, and adding other desired fixtures. Once she opened for business, however, the nearby road construction greatly reduced the number of customers frequenting her coffee shop. Suffering from the loss of revenue, she told the center’s owners that she could no longer pay her rent. Concerned with her plight, the center’s owners offered her (and some other tenants) a reduction in rent. But in return for that offer, the center’s owners asked her to agree to a new five-year lease at the end of the abatement period. She verbally agreed to that offer, but never signed a written confirmation. When the road construction project finally ended, the tenant never regained the customers needed to operate profitably. Eventually, she moved from the premises. The space she had briefly occupied remained vacant after that for nearly four years. In response, the center’s owners sued her, seeking to recover rents, penalties, and attorney fees. She responded that the center’s owners were aware of the plans for the road construction at the time she signed her lease, but failed to disclose that fact to her. A Louisiana court awarded the center’s owners $4,500, representing rent owed for the three months she operated her business at the facility. But the center’s owners appealed that award, claiming that she owed rental payments and related fees for the nearly four-year period that the space she had leased remained vacant. Moreover, the center’s owners rejected her argument that she was no longer subject to a lease commitment. The lease she had signed, they said, states that it contains “the final and entire agreement between the parties, and neither they nor their agents shall be bound by any terms, conditions or representations not herein written.” A Louisiana appellate court rejected that argument, explaining, “It was established that an important cause, which had motivated the leasing of space for a coffee shop, was its location on a well-traveled highway…. With the closure of the roadway for some six months, traffic decreased significantly and the coffee shop was deprived of the accessibility and visibility it needed to attract customers…. We conclude that the curtailment of the traffic flow amounted to the elimination of a cause for agreement to contract and resulted in the dissolution of the lease contract.” (MIE Properties—LA, L.L.C. v. Huff 2012 WL 1203373 [La.App.1 Cir.]) Decision: May 2012 Published: May 2012