At Least Try to Mitigate Your Loses
by Ron Davis
Efforts of the owners of a Connecticut shopping center to force payment from a tenant for breach of lease haven’t near measured up to expectations.
The shopping center is The Plaza at Bun-Corners in Manchester. And the breach of lease occurred when the tenant stopped paying rent for space he occupied at the center to operate a restaurant.
After three months of contending with several flagrant lease violations, the center’s owners sued the tenant to regain the space he occupied and to recoup certain associated costs. The owners apparently believed that they should receive not only past-due rent, but also a number of related payments.
For example, the center’s owners wanted payment for the full term of the tenant’s lease. That would require the tenant to make rental payments for nearly four more years. By the owners’ calculation, the tenant would therefore owe $89,994.
Moreover, the owners asked the court to force the tenant to pay common-area maintenance for the term of the lease ($15,045) and real-estate taxes for the term of the lease ($10,178).
The owners also wanted the tenant to pay attorneys’ fees ($33,576) resulting from the lawsuit and other “future” charges that the tenant would owe had he continued to operate the restaurant at the shopping center.
In response to those claims, the tenant argued that the center’s owners failed to “mitigate” the problems caused by the breach of lease. Specifically, the tenant claimed, the owners did little to try to lease to another tenant.
And a Connecticut court seemed to agree with the tenant’s claim. Based on evidence presented at the trial, the judge noted that the only documentary evidence of efforts to secure a replacement tenant was “a one-page flyer containing a photograph showing a small image of the shopping center in the midst of other regional retail shopping centers and highways.”
The judge also noted that the center’s owners offered no evidence that after the breach of lease the restaurant premises were actually shown to any prospective tenant. Nor, added the judge, was there evidence of any bills or expenses for advertising the restaurant space in real-estate trade journals or newspapers.
The judge therefore ruled that based on evidence and the facts presented, “this court finds that the [tenant] has met the burden to prove that the [center’s owners] failed to make reasonable efforts to mitigate their damages….”
The judge concluded, “Judgment shall enter in favor of the [center’s owners] against the [tenant] in the sum of $74,098.40, plus taxable costs, upon submission of a proper bill of costs.”
(Gateway Lauren, Inc. v. Thibodeau, 2010 WL 3959197 [Conn.Super.])
Decision: October 2010
Published: November 2010