The Law

Fire Spares A Store by Ron Davis Efforts of the owners of a Texas shopping center to placate a contentious tenant have not gone the way the owners had hoped. The shopping center is Parkdale Shopping Center in Corpus Christi. And the tenant is a subsidiary of Dollar General Corporation, which operates all the Dollar General stores in Texas. At Parkdale, problems between the center owners and the tenant date back to 2005, a couple of years after the owners purchased the property. That’s when they announced plans to reconstruct Parkdale to include a Wal-Mart store as anchor. Moreover, they asked the Dollar General tenant to move its store to “the other end of the center.” The Dollar General tenant responded to that request by stating that it was “not interested” in being part of a Wal-Mart-anchored center. The disagreement eventually resulted in an amendment to the Dollar General tenant’s lease. That amendment provided, among other things, that the center owners could terminate the tenant’s lease at any time but with sixty days’ notice and payment to the tenant of $350,000. A few months later, a fire occurred in a section of the shopping center, but at some distance from the Dollar General store, which did not suffer any fire damage. Nevertheless, the fire gave the center owners an incentive to terminate the tenant’s lease. And in doing so, the center owners invoked a lease provision that provided for early tenancy termination in the event of damage to the “demised premises.” The Dollar General tenant replied that its premises was not damaged by the fire, but added that it would allow termination of its lease if paid $350,000. The center owners rejected that offer and stated that the lease “was terminated by the circumstances.” The Dollar General tenant sued, claiming “breach of contract, constructive eviction, and breach of express warranty of quiet possession.” Following a six-day trial, a Texas jury awarded the tenant $350,000 in damages. In so deciding, the jury found that the center owners had breached its express warranty of quiet possession and that they constructively evicted the tenant. The judge hearing the trial also awarded the tenant $157,000 in attorney’s fees and denied Parkdale’s owners’ bid for a new trial. The center owners appealed, arguing that because they neither gave the tenant notice of lease termination nor paid the $350,000 early termination fee, “the original lease continued in effect and the early termination clause did not apply.” A Texas appellate court rejected that argument, stating, “Based on the evidence, a reasonable jury could have concluded that the casualty provision [of the lease] was not applicable because Parkdale did not establish that it was impossible to make the Dollar General store tenantable within 60 days following the fire. Thus, the jury could have reasonably determined that Parkdale breached the early-termination provision by failing to pay the $350,000 early termination fee.” (Parkdale Shopping Center v. Dolgencorp of Texas, 2013 WL 4331047 [Tex. App-Corpus Christi]) Decision: August 2013 Published: September 2013