Retailer sues landlord over falsely promised neighbors

Barry Hinesley signed a five-year commercial lease for a1,200-square-foot store in the Oakshade Town Center shopping center in Davis,Calif. Slightly over a year later, Hinesley filed a lawsuit against theOakshade owners for fraud in the inducement and for rescission of the lease.

Hinesley alleged Oakshade’s leasing representative toldhim Starbucks, Baskin-Robbins and Dos Coyotes (a regional restaurant chain)would be his store neighbors. But Starbucks and Baskin-Robbins never leasedspace in the shopping center.

Purchase Bob Bruss reports online.

Instead, Common Grounds (a coffee house) and Marble SlabCreamery (an ice cream store) became tenants. Major tenants in the shoppingcenter are Safeway (40,000 square feet) and Rite Aid Drug Store (17,500 squarefeet). The Dos Coyotes Restaurant opened 18 months after Hinesley leased hisspace.

Oakshade denied Hinesley’s allegations and countersued forrent due under the lease and for attorney fees because Hinesley vacated hisspace in the shopping center.

At the trial, Oakshade’s attorney pointed to a paragraph inHinesley’s lease, which said tenant Hinesley was not relying on the existenceof other specific tenants in the shopping center.

If you were the judge would you award damages to the tenantor the landlord?

The judge ruled against the tenant and for the landlord.

The paragraph in Hinesley’s lease, which clearly saidOakshade made no representations about prospective neighboring tenants whomight generate shopper foot traffic, was very clear, the judge explained. Inaddition, the evidence revealed Hinesley had his lawyer review the lease anddid not object to its terms, he added.

The facts show Hinesley signed his five-year lease withoutany guarantee about whom his nearby retail neighbors might be, the judgeemphasized.

Therefore, Oakshade has no liability to Hinesley for fraudin the inducement or any other basis, he ruled. However, Hinesley is liable toOakshade for breach of the lease contract damages of $57,506.62 rent due, plus$90,876.80 attorney fees, the judge concluded.

Based on the 2006 California Court of Appeals decision in Hinesleyv. Oakshade Town Center, 37 Cal.Rptr.3d 364.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2006 Inman News

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