The Law

Shopping Center Wins $249.32 by Ron Davis An “escape clause” has allowed a tenant of an Alabama shopping center to avoid the constraints of his lease. The shopping center, located in Montgomery, is owned by Chantilly Properties I, LLC, and the tenant had leased space there for the operation of a Mattress Fair store. But a couple of years after beginning operations, the tenant’s business began floundering. Soon, the store’s sales dropped to such a level that the tenant was unable to operate at a profit. The reason for the decline in business was a sharp reduction in the overall patronage of the shopping center. The tenant blamed the problem on the closing of a Bruno’s supermarket that operated at the facility. Fortunately for the tenant, a provision of his lease anticipated such an incident. That provision stated, in part, that in the event Bruno’s ceases to operate in the shopping center for more than 180 consecutive days “and tenant’s sales decrease more than 30 percent for the 180 days after the closing,” the tenant can terminate the lease with a 60-day notice. The only exception to that stipulation: the assignment of a replacement of Bruno’s with a comparable major tenant. The tenant was able to show that his sales declined more than 30 percent after the Bruno’s closing. And, he added, that decline apparently occurred within the required time period. Moreover, no tenant replaced the Bruno’s supermarket as a major attraction for potential customers of the shopping center. So he paid $10,000 to the center’s owner to cover the 60-day notice requirement and moved from the property. The shopping center owner reacted by suing the tenant for breach of lease and claiming that he actually owed $17,259.97, plus attorney’s fees and expenses. Eventually the claim against the tenant was $50,029.43. An Alabama judge ruled in favor of the center’s owner, but nevertheless agreed that the tenant had fulfilled his obligation to the center’s owners with the payment of $10,000. The center’s owner appealed that ruling. An Alabama Court of Civil Appeals affirmed the lower court’s determination that the tenant properly invoked the escape clause. But the court added, “We reverse the damages award, and we remand the cause for that court to correctly determine…the appropriate amount of damages to award the landlord with respect to the two-month period after the tenant’s triggering of the escape clause and to enter a judgment in conformance with that determination.” In so ruling, the tenant was obligated to pay an additional $249.32 ($124.66 x 2). That amount would ensure that the tenant would actually pay the center’s owner the required monthly rent of $5,124.66 for two months. (Chantilly Properties I, LLC v. Justice, 2013 WL 1490610 [Ala.Civ.App.]) Decision: April 2013 Published: April 2013