The Law

Common Area Unambiguous by Ron Davis Is a shopping center tenant obligated to pay his landlord for upkeep of portions of the center property that his customers rarely or never use? That was a question that begged for an answer in a dispute involving a Massachusetts shopping center tenant and his landlord. The shopping center is a property of Malway Realty Trust, and the dispute began when the tenant balked at paying the full amount the landlord demanded for common-area maintenance. The tenant argued that the amount should be based on customer usage of the property rather than a flat fee. Essentially, the tenant pointed out that its customers have access to and use only a limited portion of the shopping center’s common areas. For that reason, the tenant added, the common-area maintenance fee should be prorated. In other words, the tenant reasoned, that fee should be limited to the amount of access and use of common areas to which a tenant’s customers have access. In fact, the lease between the center’s owner and the tenant defines the common areas of the facility. And it generally describes the portion of the shopping center that the tenant and its customers may use. Also, as the tenant noted, because the lease does indeed limit the use of only certain portions of the center, the lease should be interpreted as requiring payment for only the pro-rated share of the common areas. If there is an ambiguity in that interpretation, the tenant argued, that ambiguity should be resolved in the tenant’s favor. A Massachusetts judge concluded that the landlord’s interpretation of the relevant and unambiguous lease provisions regarding the calculation of the tenant’s common-area expenses was correct. He explained, “This is a commercial lease and the parties to it were free to enter into any manner of agreement regarding the economics of their deal. There is nothing inherent in the parking limitation that suggests that the plain meaning of the words [in the lease] ought not to apply. The tenant appealed that conclusion. The Appeals Court of Massachusetts agreed with the lower court, explaining, “The lease is not ambiguous simply because the parties each have an interpretation that favors their own position…. As the [lower court judge] properly determined, there is nothing unconscionable about the manner in which the common area costs and expenses are apportioned to the tenant. This is a component of the rent that two sophisticated business entities negotiated and agreed to. It would not be appropriate for a court to engage in an ‘equitable construction’ of a commercial contract.” (Weiner v. SGI-Malden LLC, 2013 WL 1458629[Mass.App.Ct.]) Decision: April 2013 Published: April 2013