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If Not Fully Satisfied…You’re Out of Luck
by Ron Davis
The wording of a tenant settlement agreement has proved costly for the owners of a Missouri shopping center.
The shopping center is Mid Rivers Mall located in the St. Louis area, and the settlement agreement resulted from an attempt to satisfy a rental debt owed to the shopping center’s owners.
The debt was incurred by a couple who leased space at Mid Rivers Mall under the corporate name MacImp, Inc., and they owed the money because they had guaranteed the payment "of all sums due under the lease, up to $45,000." So that when MacImp ran into financial difficulties and defaulted on its rent, the owners of Mid Rivers Mall sued the couple for payment.
The couple eventually paid an amount ($8,480.50) that both parties agreed to in a "Memorandum of Settlement and Dismissal." The wording of that agreement stated, in part, "Guarantors...have made payment..., the receipt of which hereby acknowledges...full satisfaction of the Guarantee...."
Several months later, however, the owners of Mid Rivers Mall again sued the couple for approximately $4,500 in rental delinquencies that accrued after the settlement. In response, the couple contended that the courts should dismiss that lawsuit on grounds that the settlement of the prior lawsuit extinguished their obligation.
Mid Rivers Mall’s owners argued, however, that the settlement satisfied only the obligation to pay rent due at that time, but did not satisfy rent owed after that.
A Missouri appellate court dismissed the lawsuit, explaining, "There is only one reasonable interpretation of the Memorandum language at issue in this case. The phrase ‘in full satisfaction of the Guarantee’ cannot reasonably be interpreted to mean ‘in partial satisfaction of the Guarantee.’ The Memorandum, therefore, completely discharged the tenant couple’s obligations under the Guarantee." (Mid Rivers Mall, L.L.C. v. McManmon, 37 S.W.3d 253 [Mo.App.E.D. 2001])
Decision: April 2001
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