The Law

Adjoining Adjacent by Ron Davis A tenant of an Indiana shopping center has blocked an unwanted potential neighbor from locating too close in proximity to the tenant’s leased premises. The shopping center is Hunter Station, located in the Louisville, KY, suburbs in Indiana. And the tenant operates a foot-care clinic there under a long-term lease. That lease strictly prohibits the center from leasing space “adjoining” the clinic to certain other businesses. The exclusion applies in particular to “any retail establishment or to a MD Podiatrist or to a business like a nail salon or a dog groomer.” Recently, a liquor store tenant of the shopping center experienced a fire within its premises. The center’s management responded by moving the liquor store to another location at the facility. But that space was adjacent to the foot-care clinic. The owner of the clinic sued, arguing that the liquor store’s presence eliminated use of a handicapped-accessible restroom. Moreover, added the clinic owner, the store was a nuisance to the tenant’s “quiet enjoyment of the leasehold” and limited the clinic’s “freedom” to operate at that location. The center’s management responded that the liquor store was not actually located in a space adjoining the foot-care clinic. Plus, the management added, there was no evidence that the liquor store created a nuisance and, finally, the foot-care clinic was not legally entitled to exclusive use the handicapped-accessible restroom. An Indiana court ruled in favor of the owner of the foot-care clinic on the question of whether the center’s management unlawfully leased the space adjoining the tenant’s location to another tenant. In so doing, the clinic owner was granted damages amounting to $10,256.22 plus costs and post-judgment interest. The center’s management appealed that verdict, raising the question of whether the judge had misconstrued the term “adjoining” as used in the lease. In so ruling, the judge had determined that the liquor store did in fact adjoin the foot-care clinic. The center’s management argued, however, that the decision to rent space to a liquor store in the closest rentable space did not pose a breach of lease. So the question to be resolved became whether the liquor store was adjacent to or adjoined the leased space of the foot-care clinic. The Court of Appeals of Indiana ruled in favor of the foot-care-clinic tenant, explaining, “[The center’s management] agreed not only to refrain from leasing adjoining space to retail businesses like the liquor store, [but as well as] to another podiatrist. That is, the lease provision at issue expressed the promise not to place next to the [foot-care-clinic] leasehold either a competitor or other businesses that would be incompatible with the environment of a professional podiatric practice.” (VPR Properties LLC v. Affiliated Foot Care Clinic, PC (2014 WL 222949 [Ind.App.]) Decision: January 2014 Published: February 2014