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A Sign of Trouble
by Ron Davis
The outright purchase of an Arizona shopping center parcel has not favored the buyer in a conflict over control of a display sign located on the property.
The shopping center is Woodland Plaza in Glendale, and the sign is a monument type that lists the center’s tenants. Because the other Woodland Plaza parcels—a total of four—are operated by a different owner, a dispute soon arose over use of the sign.
That dispute came to a head when the owner of the single parcel demanded use of the sign. Discussions between the two owners followed, but without resolution. The single-parcel owner then sued, alleging breach of contract, breach of good faith and fair dealing, and unjust enrichment.
Among other claims, the owner of the single parcel argued that he has sole authority and control over the sign and that the owner of the other parcels has been interfering with that autonomy.
In response, the owner of the other parcels contended that his opponent is not the successor to the previous owner’s rights regarding the sign. He added that the sign provisions in the agreement with the previous owner of the property applied only to him, the previous owner, and not the new owner.
Moreover, the owner of the other parcels maintained, restrictions in the original agreement with the previous owner confer only an approval right, not an exclusive right, to control of the sign.
An Arizona court sided with the owner of the single parcel, granting him authority and control over the sign and ordered the owner of the other parcels to refrain from interfering with that authority.
On appeal, however, an Arizona appellate court overruled the lower court, explaining, “We do not agree with [the owner of the single parcel] that the right to approve the location and content of the sign gives him sole authority and control over the sign. Rather, the [owner of the single parcel] is given no more than an approval or veto right that can block the other party’s intentions as to the location and content of the sign. The approval right does not, however, equal the exclusive right to control the sign…. Thus, neither party may act unilaterally; both parties must agree as to the location and content of the sign.”
The appellate court noted, however, that the inability of the owner of the single parcel to control the content of the sign “has created significant difficulty in marketing and leasing” his property. But the court added, “Such injury, if any, is a loss of rent and profit. Monetary damages can be awarded after trial and do not constitute irreparable harm.” (Akahi Orchid, LLC v. Danel Properties, LLC, 2009 WL 223285 [Ariz.App.Div. 1])
Decision: February 2009
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