Escape from Leavenworth
by Ron Davis
Did the owners of a Kansas shopping center try hard enough to find a replacement for a tenant who abruptly closed his business and moved out?
The Kansas courts have ruled that, no, the owners' efforts in that regard fell short and therefore have prevented them from collecting any future rents they could have received.
The shopping center, Leavenworth Plaza, in Leavenworth, had leased space to the tenant for the operation of a Pizza Hut restaurant. Two years prior to expiration of the lease, however, the tenant notified the center's owners that he was closing the restaurant and vacating his leased space.
The shopping center's owners responded by suing the tenant, demanding payment of rent for the months remaining until expiration of the lease. But a Kansas court refused to award any amounts beyond the date when the tenant stopped paying rent. The judge based his decision on a finding that the shopping center's owners failed to "mitigate" the damages caused by the tenant's departure from the premises.
Under previous Kansas rulings in similar cases, a landlord must make a reasonable attempt to replace a tenant who terminates his lease prematurely. And the judge in this case did not believe such an attempt was made. In fact, the evidence showed that the shopping center's owners actually rejected one offer of an existing tenant who wanted to lease the abandoned premises of the Pizza Hut restaurant. And to the claim that the center's leasing agent did in fact attempt to relet the Pizza Hut space, the agent was unable to give any names of prospects who inspected the property.
The shopping center's owners appealed the ruling of the judge.
But the Kansas Court of Appeals upheld the lower court ruling, explaining, "Where a tenant, under contract to pay rent on real property, abandons the property and notifies the landlord of that abandonment, it is the landlord's duty to make a reasonable effort to secure a new tenant and obtain rent before he can recover from the old tenant under the contract so as to lessen the injury.... The court in this case examined the totality of the circumstances and used reasonable and common sense to find that the shopping center's owners did not take proper efforts to mitigate its damages." (Leavenworth Plaza v. L.A.G. Enterprises, 16 P.3d 314 [Kan.App. 2000])
Decision: December 2000
Published: March 2001