The Law

Lose – Lose by Ron Davis A major tenant as well as the owners of a Florida shopping center must simply continue to suffer the financial hardship of lengthy renovations to the facility. The shopping center, located in the Vero Beach area, had leased a building in the center’s plaza area to the tenant for the operation of a restaurant. At the time of the leasing, the renovations were under way. But the lease contained no provisions estimating the completion of that undertaking. Nevertheless, the tenant agreed to accept the premises “in their current condition.” A year later, the tenant stopped making rental payments to the center’s owners, charging that they “fraudulently induced the execution of the lease agreement.” Specifically, the tenant claimed that the center’s owners “breached the lease by failing to have the sewage hooked up as required” by the agreed due date. Such failure, the tenant explained, resulted in a delayed opening of the restaurant. Moreover, the tenant added, the center’s owners refused to repair the roof, the parking facilities, the air-conditioning system, and the landscaping. Lastly, the tenant added, the owners did not provide adequate parking spaces for the businesses in the plaza area and intentionally removed and destroyed the return-air unit of the restaurant. To force payment of the rent, the shopping center’s owners sued the tenant. A Florida court determined that the shopping center’s owners had breached the lease by not completing the necessary renovations by the promised date “and because of failure to maintain the roof of the building, the exterior of the plaza, [as well as keep] all parking areas in decent repair.” The judge therefore surmised that the tenant had suffered $102,395.15 in damages (including lost profits) because of “failure to complete work on the plaza by the due date and [had] incurred $32,840.62 in damages as a result of failure to maintain the premises.” The judge also rejected the center owners’ claim that the tenant had breached the lease by failing to make timely payments of several months’ rent. The center owners appealed those findings. And a Florida appellate court pointed out that there was no obligation under the lease to complete the work on the plaza by a definite date. Therefore, the judges explained, the lease contained no such covenant. “To the contrary,” they decided, “the lease provided that the tenant was accepting the premises, including the building and the plaza, in their current condition at the beginning of the rental period…. [The owners] cannot reasonably be charged with any damages that [the tenant] incurred as a result of the delayed opening” of the restaurant. The appellate court therefore disallowed the penalty of $102,395.15 that the lower court judge had imposed. “The appropriate amount of the judgment in favor of the tenant should be $32,840.62,” the judges ruled. (AGBL Enterprises, LLC v. Girlcook, Inc., 2012 WL 3822760 [Fla.App. 4 Dist.]) Decision: September 2012 Published: September 2012