The Law

”Failing Mall” Awarded Three Times Rent Value by Ron Davis A list of excuses for not paying rent hasn’t worked out all that well for a tenant of an Arkansas shopping center. The shopping center is The Pines, in Pine Bluff, and the tenant operated a business there named Cookies & Sweets. That tenancy began June 2009, but ended for all purposes several months later when the tenant stopped paying rent. When the shopping center’s owners no longer received that rent, they reacted as expected. They pointed out that the lease agreement with the tenant provided that failure to pay rent when due constituted “an event of default.” As such, they said, they were entitled to regain possession of the tenant’s premises—and much more. The lease also stated that if the tenant does not surrender the premises upon default, he must pay late fees of $100 for each day the rent remains unpaid. Upon default, the center’s owners quickly notified the tenant of the conditions of the lease. But even repeated efforts to spell out his obligations failed to persuade him to honor the lease terms. Eventually, the center’s owners notified the tenant by e-mail, U.S. mail, certified mail, and hand delivery to vacate the premises. At that point, the center’s owners reckoned that the tenant owned them $40,304. The tenant apparently ignored the notices he received. The center’s owners then sued him to regain the premises he leased and to force payment of the amount he allegedly owed them. At trial, the tenant argued that he had gained no sympathy when explaining his “position and stability.” He added that because of that, he was “incurring daily damages from loss of wages, pain and suffering.” He also said that he was concerned about the “failing mall” and because of that concern, he had withheld rent. Those arguments failed to sway an Arkansas circuit court, however. The judge ruled in favor of the center’s owners, explaining that the landlord and tenant had entered into a valid contract that the tenant had breached. The judge did, however, reduce the amount the tenant owed to past-due rent and rent due under the holdover period. The court also refused to award late fees because it found the amount to be “unconscionable and thus unenforceable.” But the court did enforce a state law that applies in such a case. That law provides that if the property recovered has been used for commercial purposes, a tenant must pay “liquidated damages at the rate of three times the rental value per month for the time that the property was unlawfully detained.” Therefore the court awarded the center’s owner $39,729, plus costs and attorney’s fees. That ruling was recently affirmed by the Court of Appeals of Arkansas. (Davis v. Pines Mall Partners, 20ll WL 6189485 [Ark.App.]) Decision: December 2011 Published: December 2011