Case Notes

A commercial tenant has won a multi-million dollar judgment in a case pitting it against a landlord who, the court concluded, unreasonably refused to perform its obligations under the assignment provision of the parties' lease. Gamesa Energy USA v. Ten Penn Center, 2016 Phila. Ct. Com. Pl. LEXIS 270 (July 22, 2016).

Tenant Gamesa rented two floors of the Philadelphia office building known as Ten Penn Center. The lease, which was to expire on Sept. 1, 2018, provided that the lessor would give the tenant a large improvement allowance with which to build out the space to meet the tenant's needs. It also prohibited the tenant from subleasing to a third party absent the lessor's approval, but further provided that such “approval shall not be unreasonably withheld, conditioned or delayed.” The lease terms required the lessor to tell the tenant within 30 days of written request whether a proposed subtenant was approved or disapproved.
After the tenant had been in the space for several years, the lessor agreed to allow Gamesa to sublet part of the premises to third party Viridity Energy, Inc. Gamesa used part of its remaining improvements allowance to tailor the space for Viridity's use, leaving a further $391,000 of that fund to be used for its own unfinished office space.