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Waiving Rights Goodbye
by Ron Davis

Can an oral agreement negate the written provisions of a shopping center lease? That question begs for an answer to settle a dispute between a Florida shopping center owner and a tenant.

The shopping center, located in the Fort Lauderdale area, is Trail Plaza, and the tenant leased space there to operate a restaurant. Terms of that lease required the tenant to carry the shopping center owner as an additional insured party on the tenantís fire-insurance policy.

The tenant complied with that requirement, thereby offering the centerís owner protection against a fire loss. And when the tenant later renewed the lease, the protection for the centerís owner apparently continued. Or did it?

The question of protection of the centerís owner arose when, just after the lease renewal, a fire destroyed the tenantís restaurant. The insurer later paid the tenant $494,000, but the centerís owner received nothing.

The centerís owner then sued the tenant for breach of the agreement that would extend fire-insurance coverage to the landlord. The tenant replied that prior to signing the lease renewal, he had received assurance from the centerís property manager that adding the centerís owner to the policy was unnecessary at that time. Therefore, the tenant said, he did not include the name of the centerís owner as a potential beneficiary.

In response to the lawsuit, the tenant sued the centerís owner for failure to rebuild the restaurant after its destruction in the fire.

In arguing his position, the tenant admitted that he failed to add the landlordís name to the fire-insurance policy. But he added that contract terms may be waived by the party named to receive the benefits. And in this case, the tenant noted, the oral statement of the property manager served as that waiver.

A Florida court ruled in favor of the shopping center owner, explaining that the tenant breached the lease and so must comply with terms that require the tenant to legally protect the owner in case of fire.

The tenant appealed that ruling.

A Florida appellate court reversed the lower court and ordered a reexamination of the legal aspects of the case. Explained the judge, ďGenuine issues of material fact [exist] as to whether the landlord waived his right, under the terms of the lease, to be named as an additional insured on the tenantís fire-insurance policy, and whether the lease provision barring oral modifications precluded such a waiver, [and so] preclude judgment in favor of the landlord.Ē (Husky Rose, Inc. v. Allstate Insurance Company, 2009 WL 3189181 [Fla.App. 4 Dist.])

Decision: October 2009
Published: December 2009



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