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Case Notes
Failure to Read Lease is Not Fatal to Claim
The Court of Appeal of California, Sixth Appellate District, has upheld a jury verdict in favor of a tenant who was fraudulently induced to enter into a lease by the leasing agent's false assurances that the shopping center landlord did not have and did not anticipate having restaurant tenants that would compete with the tenant's restaurant. Orozco v. WPV San Jose, LLC, 2019 Cal. App. LEXIS 553 (7/17/2019).
Tenant Paul Orozco leased a restaurant space for his Pauly's Famous Franks N Fries in a shopping center in San Jose named The Plant. Before signing his 10-year lease, Orozco asked the leasing manager on several occasions whether restaurants with similar offerings were being considered as tenants in The Plant. The leasing manager said that no similar restaurants were being considered, even though she was at that time in negotiations with another restaurant, Al's Beef, which was a national franchise selling hot beef sandwiches, hot dogs and french fries. In fact, before Orozco signed his lease, a lease with the Al's Beef franchise had already been fully executed. The leasing manager said nothing about this development to Orozco, who signed the lease without fully reading it. Buried in the lease were multiple provisions stating that the landlord had made no promises to Orozco and his business, Solid Restaurant Ventures, as to products offered by current or future tenants of The Plant.
Pauly's Famous Franks N Fries opened to great fanfare and had lines out the door for six months, after which time Al's Beef opened for business just two doors down. Pauly's business swiftly went downhill and, less than six months after competitor Al's Beef opened, Pauly's restaurant in The Plant went out of business.
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