THE LEASING HOTLINE

LEASES

Breach of a lease occurs upon failure to perform an absolute duty and the defense of anticipatory repudiation cannot be used.

The landlord sued the tenant alleging default under a commercial lease for failure to pay rent, utility expenses and the cost of renovations to the subject property that were the responsibility of the tenant under the parties' lease. The lease provided that if the tenant was in default of any term of the lease, the landlord could terminate the lease 14 days after written notice of termination to the tenant. After two separate written notices to the tenant advising the tenant of its defaults and including a written warning that the locks would be changed, the landlord proceeded with the termination of the lease ' 15 days after the first written notice to the tenant. The tenant alleged that the landlord had committed anticipatory repudiation of the lease by changing the locks on the premises. The trial court held that the tenant was indebted to the landlord for his failure to pay his debts under the terms of the lease. The appellate court affirmed, stating that the tenant was in breach of the lease by his failure to perform duties that had become absolute under the lease. The tenant's defense of anticipatory breach by the landlord failed because the tenant was already in default of his absolute duties under the lease at the time he claimed there was an anticipatory breach by the landlord.

Bystry v. Nemet, No. COA02-974, N.C. Ct.App., May 6, 2003.nse of anticipatory repudiation cannot be used.

OPTIONS

Despite the landlord's knowledge of the sublease, a tenant was not entitled to exercise an option to extend where he was in breach of the lease by subleasing without the landlord's consent.

The landlord and tenant entered into a three-year lease of medical office space in a medical building owned by the landlord. The lease contained an option to extend the lease as long as the tenant fulfilled all of his obligations under the lease and notified the landlord of an intention to extend at least 90 days prior to termination of the initial lease period. Under the lease, the tenant was prohibited from assigning or subleasing any portion of the leased space. Nevertheless, for two years of the initial three-year period of the lease, the tenant subleased a portion of the premises to a third-party pharmacist without the written consent of the landlord. The landlord, however, accepted rent from the subtenant without objection. Prior to the end of the initial lease period, the tenant attempted to exercise the option to extend the lease and the landlord requested additional rent with the commencement of the new leasing period. The tenant refused to pay the increased rent but continued to pay the original rent due under the initial three-year period. The landlord held the checks and sued to evict the tenant for nonpayment. The tenant was evicted and then sued the landlord for breach of contract and fraud, claiming he had validly exercised the option. The trial court awarded the tenant summary judgment and sent the issue of damages to a jury, which awarded the tenant more than $1 million in damages. The landlord appealed and, after analysis of certain procedural issues, the appellate court reversed the summary judgment and damages award. It held that the only issue before it was whether the tenant had the right to exercise the extension option. The court noted the tenant had never argued that the landlord had ratified the sublease by accepting rent with knowledge of the sublease and could not raise that issue on appeal. The appellate court held that the plain language of the lease provided that the option to extend was not enforceable by the tenant because the tenant was in breach of the lease by subleasing a portion of the premises to the pharmacist without the landlord's consent. The text of the written contract was unambiguous and the court was required to interpret the lease as it was written. It reversed the lower court's judgment and ordered that the tenant take nothing from the landlord.

Zurita v. Lombana, No. 01-01-01040-CV; Tex. Ct.App., May 8, 2003.

TORT LIABILITY

A landlord may be vicariously liable for injuries sustained by one of its tenants caused by an employee of the landlord even if the employee was not named in the lawsuit.

The tenant sued the landlord after a dog owned by the superintendent of the landlord's building bit the plaintiff. The tenant did not name the superintendent and his wife as defendants. The incident occurred when the tenant went to the superintendent's apartment, located in the same building as the tenant, to request a repair on a leak in her apartment. The tenants were informed that the procedure to notify the superintendent of any problem or to pay rent was to knock on the superintendent's door. When the door to the superintendent's apartment was opened, the dog ran out and bit the tenant on the leg. Pets were not allowed in the building and prior to the dog-biting incident, the landlord had requested that the superintendent remove the dog from the premises. When the superintendent asked that the dog be permitted to stay for protection, the landlord relented on the condition that the dog remain only in the apartment or in the yard on a leash. The tenant sued the landlord, complaining of negligence, strict liability, vicarious strict liability and negligent hiring and supervision of the superintendent-employee. The court below granted the defendant's motion for summary judgment, holding that under New Jersey law, the landlord had no knowledge of the dog's vicious propensity. The court below also ruled that the defendant could not be held vicariously liable because the superintendent and his wife were not named in the lawsuit. The tenant appealed and the appellate court reversed the summary judgment with regard to the tenant's common law theory of vicarious liability. Because the superintendent was an employee of the landlord and not merely a tenant of the building, it was irrelevant whether the superintendent was named in the suit or whether the landlord had knowledge of the dog's propensity to bite.

Zukowitz v. Halperin, A-2861-01T1, N.J. Super. Ct., May 5, 2003.

ZONING

No significant distinction was found between the zoning classifications of commercial and industrial property for the development of land for retail purposes.

The City Council of Menomonie purchased land without stating its intended purpose for the land and the property was zoned 'Restricted Industrial,' which permits retail uses. Thereafter, Hansman, a shareholder of Menomonie Chrysler, purchased six acres with the intent to construct an automobile dealership on it for retail purposes. Bob Willow, the owner of Menomonie Chrysler, commenced an action against Hansman to prohibit him from using the six acres for his automobile dealership and also against the city to prohibit any other retail purpose. Each party moved for summary judgment, and the court below granted summary judgment to Willow, holding that the zoning classification permits retail purposes on the land. The appellate court affirmed and considered that granting Hansman summary judgment would diminish the legislature's ability to have broad power concerning the sale of city or state-owned land. It also found unconvincing the distinction between industrial and commercial (retail) property. In addition, the appellate court considered that the city's sale of the land had a beneficial public purpose because it would generally enhance the 'economic climate' of the community.

Willow v. City of Menomonie and Menomonie Chrysler Center, Inc., Appeal No. 02-2959, Wis. Ct. App., May 6, 2003.

The landlord and tenant entered into a three-year lease of medical office space in a medical building owned by the landlord. The lease contained an option to extend the lease as long as the tenant fulfilled all of his obligations under the lease and notified the landlord of an intention to extend at least 90 days prior to termination of the initial lease period. Under the lease, the tenant was prohibited from assigning or subleasing any portion of the leased space. Nevertheless, for two years of the initial three-year period of the lease, the tenant subleased a portion of the premises to a third-party pharmacist without the written consent of the landlord. The landlord, however, accepted rent from the subtenant without objection. Prior to the end of the initial lease period, the tenant attempted to exercise the option to extend the lease and the landlord requested additional rent with the commencement of the new leasing period. The tenant refused to pay the increased rent but continued to pay the original rent due under the initial three-year period. The landlord held the checks and sued to evict the tenant for nonpayment. The tenant was evicted and then sued the landlord for breach of contract and fraud, claiming he had validly exercised the option. The trial court awarded the tenant summary judgment and sent the issue of damages to a jury, which awarded the tenant more than $1 million in damages. The landlord appealed and, after analysis of certain procedural issues, the appellate court reversed the summary judgment and damages award. It held that the only issue before it was whether the tenant had the right to exercise the extension option. The court noted the tenant had never argued that the landlord had ratified the sublease by accepting rent with knowledge of the sublease and could not raise that issue on appeal. The appellate court held that the plain language of the lease provided that the option to extend was not enforceable by the tenant because the tenant was in breach of the lease by subleasing a portion of the premises to the pharmacist without the landlord's consent. The text of the written contract was unambiguous and the court was required to interpret the lease as it was written. It reversed the lower court's judgment and ordered that the tenant take nothing from the landlord.

Zurita v. Lombana, No. 01-01-01040-CV; Tex. Ct.App., May 8, 2003.A landlord may be vicariously liable for injuries sustained by one of its tenants caused by an employee of the landlord even if the employee was not named in the lawsuit.

The tenant sued the landlord after a dog owned by the superintendent of the landlord's building bit the plaintiff. The tenant did not name the superintendent and his wife as defendants. The incident occurred when the tenant went to the superintendent's apartment, located in the same building as the tenant, to request a repair on a leak in her apartment. The tenants were informed that the procedure to notify the superintendent of any problem or to pay rent was to knock on the superintendent's door. When the door to the superintendent's apartment was opened, the dog ran out and bit the tenant on the leg. Pets were not allowed in the building and prior to the dog-biting incident, the landlord had requested that the superintendent remove the dog from the premises. When the superintendent asked that the dog be permitted to stay for protection, the landlord relented on the condition that the dog remain only in the apartment or in the yard on a leash. The tenant sued the landlord, complaining of negligence, strict liability, vicarious strict liability and negligent hiring and supervision of the superintendent-employee. The court below granted the defendant's motion for summary judgment, holding that under New Jersey law, the landlord had no knowledge of the dog's vicious propensity. The court below also ruled that the defendant could not be held vicariously liable because the superintendent and his wife were not named in the lawsuit. The tenant appealed and the appellate court reversed the summary judgment with regard to the tenant's common law theory of vicarious liability. Because the superintendent was an employee of the landlord and not merely a tenant of the building, it was irrelevant whether the superintendent was named in the suit or whether the landlord had knowledge of the dog's propensity to bite.

Zukowitz v. Halperin, A-2861-01T1, N.J. Super. Ct., May 5, 2003.No significant distinction was found between the zoning classifications of commercial and industrial property for the development of land for retail purposes.

The City Council of Menomonie purchased land without stating its intended purpose for the land and the property was zoned 'Restricted Industrial,' which permits retail uses. Thereafter, Hansman, a shareholder of Menomonie Chrysler, purchased six acres with the intent to construct an automobile dealership on it for retail purposes. Bob Willow, the owner of Menomonie Chrysler, commenced an action against Hans- man to prohibit him from using the six acres for his automobile dealership and also against the city to prohibit any other retail purpose. Each party moved for summary judgment, and the court below granted summary judgment to Willow, holding that the zoning classification permits retail purposes on the land. The appellate court affirmed and considered that granting Hansman summary judgment would diminish the legislature's ability to have broad power concerning the sale of city or state-owned land. It also found unconvincing the distinction between industrial and commercial (retail) property. In addition, the appellate court considered that the city's sale of the land had a beneficial public purpose because it would generally enhance the 'economic climate' of the community.

Willow v. City of Menomonie and Menomonie Chrysler Center, Inc., Appeal No. 02-2959, Wis. Ct. App., May 6, 2003.

LEASES

Breach of a lease occurs upon failure to perform an absolute duty and the defense of anticipatory repudiation cannot be used.

The landlord sued the tenant alleging default under a commercial lease for failure to pay rent, utility expenses and the cost of renovations to the subject property that were the responsibility of the tenant under the parties' lease. The lease provided that if the tenant was in default of any term of the lease, the landlord could terminate the lease 14 days after written notice of termination to the tenant. After two separate written notices to the tenant advising the tenant of its defaults and including a written warning that the locks would be changed, the landlord proceeded with the termination of the lease ' 15 days after the first written notice to the tenant. The tenant alleged that the landlord had committed anticipatory repudiation of the lease by changing the locks on the premises. The trial court held that the tenant was indebted to the landlord for his failure to pay his debts under the terms of the lease. The appellate court affirmed, stating that the tenant was in breach of the lease by his failure to perform duties that had become absolute under the lease. The tenant's defense of anticipatory breach by the landlord failed because the tenant was already in default of his absolute duties under the lease at the time he claimed there was an anticipatory breach by the landlord.

Bystry v. Nemet, No. COA02-974, N.C. Ct.App., May 6, 2003.nse of anticipatory repudiation cannot be used.

OPTIONS

Despite the landlord's knowledge of the sublease, a tenant was not entitled to exercise an option to extend where he was in breach of the lease by subleasing without the landlord's consent.

The landlord and tenant entered into a three-year lease of medical office space in a medical building owned by the landlord. The lease contained an option to extend the lease as long as the tenant fulfilled all of his obligations under the lease and notified the landlord of an intention to extend at least 90 days prior to termination of the initial lease period. Under the lease, the tenant was prohibited from assigning or subleasing any portion of the leased space. Nevertheless, for two years of the initial three-year period of the lease, the tenant subleased a portion of the premises to a third-party pharmacist without the written consent of the landlord. The landlord, however, accepted rent from the subtenant without objection. Prior to the end of the initial lease period, the tenant attempted to exercise the option to extend the lease and the landlord requested additional rent with the commencement of the new leasing period. The tenant refused to pay the increased rent but continued to pay the original rent due under the initial three-year period. The landlord held the checks and sued to evict the tenant for nonpayment. The tenant was evicted and then sued the landlord for breach of contract and fraud, claiming he had validly exercised the option. The trial court awarded the tenant summary judgment and sent the issue of damages to a jury, which awarded the tenant more than $1 million in damages. The landlord appealed and, after analysis of certain procedural issues, the appellate court reversed the summary judgment and damages award. It held that the only issue before it was whether the tenant had the right to exercise the extension option. The court noted the tenant had never argued that the landlord had ratified the sublease by accepting rent with knowledge of the sublease and could not raise that issue on appeal. The appellate court held that the plain language of the lease provided that the option to extend was not enforceable by the tenant because the tenant was in breach of the lease by subleasing a portion of the premises to the pharmacist without the landlord's consent. The text of the written contract was unambiguous and the court was required to interpret the lease as it was written. It reversed the lower court's judgment and ordered that the tenant take nothing from the landlord.

Zurita v. Lombana, No. 01-01-01040-CV; Tex. Ct.App., May 8, 2003.

TORT LIABILITY

A landlord may be vicariously liable for injuries sustained by one of its tenants caused by an employee of the landlord even if the employee was not named in the lawsuit.

The tenant sued the landlord after a dog owned by the superintendent of the landlord's building bit the plaintiff. The tenant did not name the superintendent and his wife as defendants. The incident occurred when the tenant went to the superintendent's apartment, located in the same building as the tenant, to request a repair on a leak in her apartment. The tenants were informed that the procedure to notify the superintendent of any problem or to pay rent was to knock on the superintendent's door. When the door to the superintendent's apartment was opened, the dog ran out and bit the tenant on the leg. Pets were not allowed in the building and prior to the dog-biting incident, the landlord had requested that the superintendent remove the dog from the premises. When the superintendent asked that the dog be permitted to stay for protection, the landlord relented on the condition that the dog remain only in the apartment or in the yard on a leash. The tenant sued the landlord, complaining of negligence, strict liability, vicarious strict liability and negligent hiring and supervision of the superintendent-employee. The court below granted the defendant's motion for summary judgment, holding that under New Jersey law, the landlord had no knowledge of the dog's vicious propensity. The court below also ruled that the defendant could not be held vicariously liable because the superintendent and his wife were not named in the lawsuit. The tenant appealed and the appellate court reversed the summary judgment with regard to the tenant's common law theory of vicarious liability. Because the superintendent was an employee of the landlord and not merely a tenant of the building, it was irrelevant whether the superintendent was named in the suit or whether the landlord had knowledge of the dog's propensity to bite.

Zukowitz v. Halperin, A-2861-01T1, N.J. Super. Ct., May 5, 2003.

ZONING

No significant distinction was found between the zoning classifications of commercial and industrial property for the development of land for retail purposes.

The City Council of Menomonie purchased land without stating its intended purpose for the land and the property was zoned 'Restricted Industrial,' which permits retail uses. Thereafter, Hansman, a shareholder of Menomonie Chrysler, purchased six acres with the intent to construct an automobile dealership on it for retail purposes. Bob Willow, the owner of Menomonie Chrysler, commenced an action against Hansman to prohibit him from using the six acres for his automobile dealership and also against the city to prohibit any other retail purpose. Each party moved for summary judgment, and the court below granted summary judgment to Willow, holding that the zoning classification permits retail purposes on the land. The appellate court affirmed and considered that granting Hansman summary judgment would diminish the legislature's ability to have broad power concerning the sale of city or state-owned land. It also found unconvincing the distinction between industrial and commercial (retail) property. In addition, the appellate court considered that the city's sale of the land had a beneficial public purpose because it would generally enhance the 'economic climate' of the community.

Willow v. City of Menomonie and Menomonie Chrysler Center, Inc., Appeal No. 02-2959, Wis. Ct. App., May 6, 2003.

The landlord and tenant entered into a three-year lease of medical office space in a medical building owned by the landlord. The lease contained an option to extend the lease as long as the tenant fulfilled all of his obligations under the lease and notified the landlord of an intention to extend at least 90 days prior to termination of the initial lease period. Under the lease, the tenant was prohibited from assigning or subleasing any portion of the leased space. Nevertheless, for two years of the initial three-year period of the lease, the tenant subleased a portion of the premises to a third-party pharmacist without the written consent of the landlord. The landlord, however, accepted rent from the subtenant without objection. Prior to the end of the initial lease period, the tenant attempted to exercise the option to extend the lease and the landlord requested additional rent with the commencement of the new leasing period. The tenant refused to pay the increased rent but continued to pay the original rent due under the initial three-year period. The landlord held the checks and sued to evict the tenant for nonpayment. The tenant was evicted and then sued the landlord for breach of contract and fraud, claiming he had validly exercised the option. The trial court awarded the tenant summary judgment and sent the issue of damages to a jury, which awarded the tenant more than $1 million in damages. The landlord appealed and, after analysis of certain procedural issues, the appellate court reversed the summary judgment and damages award. It held that the only issue before it was whether the tenant had the right to exercise the extension option. The court noted the tenant had never argued that the landlord had ratified the sublease by accepting rent with knowledge of the sublease and could not raise that issue on appeal. The appellate court held that the plain language of the lease provided that the option to extend was not enforceable by the tenant because the tenant was in breach of the lease by subleasing a portion of the premises to the pharmacist without the landlord's consent. The text of the written contract was unambiguous and the court was required to interpret the lease as it was written. It reversed the lower court's judgment and ordered that the tenant take nothing from the landlord.

Zurita v. Lombana, No. 01-01-01040-CV; Tex. Ct.App., May 8, 2003.A landlord may be vicariously liable for injuries sustained by one of its tenants caused by an employee of the landlord even if the employee was not named in the lawsuit.

The tenant sued the landlord after a dog owned by the superintendent of the landlord's building bit the plaintiff. The tenant did not name the superintendent and his wife as defendants. The incident occurred when the tenant went to the superintendent's apartment, located in the same building as the tenant, to request a repair on a leak in her apartment. The tenants were informed that the procedure to notify the superintendent of any problem or to pay rent was to knock on the superintendent's door. When the door to the superintendent's apartment was opened, the dog ran out and bit the tenant on the leg. Pets were not allowed in the building and prior to the dog-biting incident, the landlord had requested that the superintendent remove the dog from the premises. When the superintendent asked that the dog be permitted to stay for protection, the landlord relented on the condition that the dog remain only in the apartment or in the yard on a leash. The tenant sued the landlord, complaining of negligence, strict liability, vicarious strict liability and negligent hiring and supervision of the superintendent-employee. The court below granted the defendant's motion for summary judgment, holding that under New Jersey law, the landlord had no knowledge of the dog's vicious propensity. The court below also ruled that the defendant could not be held vicariously liable because the superintendent and his wife were not named in the lawsuit. The tenant appealed and the appellate court reversed the summary judgment with regard to the tenant's common law theory of vicarious liability. Because the superintendent was an employee of the landlord and not merely a tenant of the building, it was irrelevant whether the superintendent was named in the suit or whether the landlord had knowledge of the dog's propensity to bite.

Zukowitz v. Halperin, A-2861-01T1, N.J. Super. Ct., May 5, 2003.No significant distinction was found between the zoning classifications of commercial and industrial property for the development of land for retail purposes.

The City Council of Menomonie purchased land without stating its intended purpose for the land and the property was zoned 'Restricted Industrial,' which permits retail uses. Thereafter, Hansman, a shareholder of Menomonie Chrysler, purchased six acres with the intent to construct an automobile dealership on it for retail purposes. Bob Willow, the owner of Menomonie Chrysler, commenced an action against Hans- man to prohibit him from using the six acres for his automobile dealership and also against the city to prohibit any other retail purpose. Each party moved for summary judgment, and the court below granted summary judgment to Willow, holding that the zoning classification permits retail purposes on the land. The appellate court affirmed and considered that granting Hansman summary judgment would diminish the legislature's ability to have broad power concerning the sale of city or state-owned land. It also found unconvincing the distinction between industrial and commercial (retail) property. In addition, the appellate court considered that the city's sale of the land had a beneficial public purpose because it would generally enhance the 'economic climate' of the community.

Willow v. City of Menomonie and Menomonie Chrysler Center, Inc., Appeal No. 02-2959, Wis. Ct. App., May 6, 2003.