by Ron Davis
A lack of customer parking space at a California shopping center has developed into a legal clash between the center’s owner and a tenant.
The shopping center, located in Ventura County, is Seabridge Shopping Center, and the legal battle began after the tenant had leased space at the center to operate a restaurant.
Before negotiating the lease, however, the prospective tenant wanted a guarantee that parking for restaurant customers would be adequate. In response, the center’s management company assured the prospective tenant that customer parking would be no problem and that the “anchor” tenant would likely be a marine-hardware company. With that assurance, the restaurant operator opted to lease space at Seabridge.
But negotiation between the prospective anchor tenant and the shopping center ended without a lease. Instead, the center’s management company leased that space to a company called 24 Hour Fitness, while likely knowing that 24 Hour Fitness customers could cause major parking congestion problems at the shopping center.
The restaurant owner was obviously dismayed when learning that the anchor tenant would be a fitness center. He later was said to remark that he would not have entered into a lease and instead “would have been out of there like a jack rabbit.”
The restaurant owner’s worst fears soon became reality. Almost from the beginning of the fitness center’s operations, the lot at the shopping center’s parking area was “virtually full” because of fitness center customers. And the problem worsened with time. Apparently, many of the restaurant’s potential customers gave up trying to find a parking space and dined elsewhere. Neither on-site valet parking nor requiring restaurant employees to park off-site was successful. Customer turnout at the restaurant continued to dwindle.
The principals of the restaurant eventually filed a complaint alleging “breach of contract, breach of the covenant of good faith and fair dealing, fraud in the inducement, negligent misrepresentation, and negligent and unfair competition.”
The trial court found that the shopping center owner had a duty to disclose that 24 Hour Fitness would be a tenant and that the shopping center’s owner intentionally concealed that fact. The court also awarded damages in the amount of $1,892,835.
The court explained, “Where a single tenant takes up the vast majority of the parking spaces (a survey showed 95 percent), it is reasonable to conclude other tenants have been denied use of the common area. In addition, where the landlord at the time of leasing is well aware of the tenant’s propensity to deny use to other tenants, it is reasonable to conclude the landlord authorized the denial of use.”
On appeal, the shopping center principals argued that prior experience (of its authority) offered them assurance that they could proceed with the lease to 24 Hour Fitness. But the court differed with that argument. Explained the judge, “Experience as property manager at one shopping center is not a basis for concluding that gym customers would be making parking difficult for other customers.”
(Gietzen v. Goveia, California Rules of Court, 2015,WL 8025421)
Decision November 2015
Published: November 2015