The Law

Abort Closing Sale Ads by Ron Davis Efforts to abort a tenant’s advertising of a store-closing sale at a Washington shopping center have finally paid off for the center’s owner. The shopping center is Bellevue Square Mall, located in the Seattle area. And the tenant, a clothing retailer, had advertised the store-closing sale without gaining approval from the center’s owner. Such approval seemed mandatory. Terms of the tenant’s lease, for example, strictly prohibited the tenant from conducting a “distress sale.” Violation of that lease provision prompted the center’s owner to resort to legal action. Evidence presented at the subsequent trial showed that the tenant displayed a sign that read, “Everything Must Go 30% to 50% Off.” Another sign read “Inventory Blowout Sale.” The tenant also aired radio commercials advertising a “store-closing sale.” A news release mailed to customers similarly described a sale and explained the tenant’s plans to move to two new locations. Protests by the center’s owner had resulted in the tenant’s removal of a reference to “store closing.” But the tenant continued using the other signs and radio commercials. A Washington court subsequently put a stop to all such advertising. A discussion between landlord and tenant followed, but ended without an agreement that suited both parties. A Washington court eventually granted the tenant the right to continue advertising that stated, “Storewide Sale” and “Entire Stock 30% to 50% Off.” But the judge added, “Allowing a tenant to violate the lease and conduct a store-closing sale will result in actual and substantial injury” to the center’s owner. The tenant answered that the actions of the center’s owner constituted “a breach of the landlord’s duty to give [the tenant] an opportunity to cure any alleged breaches [of the lease] before declaring…a default [of the lease].” The tenant also claimed that the center’s owner had committed fraud and conspiracy. Finally, the tenant argued that the center’s owner was unable to show any suffering of “irreparable harm” from the tenant’s advertising efforts. In response to that appeal, the court dismissed the tenant’s claims and awarded the center’s owner $126,757 in legal fees and costs resulting from the lawsuit. The tenant wasn’t through, however, and requested reconsideration of the court’s verdict. But a Washington appellate court also rejected the tenant’s position, explaining “In sum, [the lease] prohibited [the tenant’s] sale and authorized the center’s owner to immediately seek legal relief. The [lower court] properly granted judgment to the center’s owner and denied [the tenant’s] request for reconsideration.” (Bellevue Square Managers, Inc. v. Barcelino Continental Corp., 2010 WL 3672249 [Wash.App.Div.1]) Decision: September 2010 Published: October 2010