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Not a Good Sign
by Ron Davis

A controversial sign that a Texas shopping center tenant wants erected on the premises violates the terms of the tenant’s lease with the center, a Texas court has ruled.

The shopping center is the Houston Galleria in Houston, and the tenant, operating a business named BioSilk Spa, obviously believes the center’s owners do not have a right to prevent erection of the sign. So the tenant charged them with fraud, fraudulent inducement, and negligent misrepresentation when they disallowed the sign.

That sign includes, in addition to the trade name of the business (“BioSilk Spa”), a tag line that reads “Chi Color Salon.” But the terms of the tenant’s lease limits signage to BioSilk’s trade name. Moreover, the lease contains a statement that any changes or additions to the agreement between tenant and landlord must be in writing and that BioSilk “would not rely on any representations, oral or otherwise, not contained in the lease.”

Finally, the center’s owners pointed out that they had twice rejected the tenant’s proposed sign when the tenant submitted it for approval.

In response, the tenant did not dispute that “BioSilk Spa” is the trade name of the business and the phrase “Chi Color Salon” is a tag line. The tenant added, however, that the terms of the lease apply only to “pre-lease” conditions, not to any conditions that could arise after the lease went into effect.

A Texas court rejected the tenant’s arguments in its ruling in favor of the shopping center’s owners. The tenant appealed.

A Texas appellate court, in upholding the lower court decision, explained, “The tenant’s lease unambiguously disclaimed reliance on any representations, oral or otherwise, not contained in the lease. And by requiring that all changes or amendments be in writing and signed by both parties, the lease provided additional notice to BioSilk not to rely on oral representations.

“Finally,” the judges added, “the center’s owners communicated to BioSilk in writing and in no uncertain terms that they would not approve a sign containing the tag line ‘Chi Color Salon.’ We find that the lease and written correspondence between the two parties contained ample language precluding a reasonable business person from relying exclusively on any alleged oral representations that contradicted the terms of the lease and the written communications between the parties.” (BioSilk Spa v. HG ShoppingCenters, Tex.App.--Houston [14 Dist.], 2008)

Decision: May 2008
Published: June 2008



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