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Doing the Double Dip a Donít
by Ron Davis

A building contractor has failed in his attempt to force a Missouri retail center owner to pay additional amounts for renovations to a tenant's space.

The retail center is Lucas Plaza in St. Louis, and its owner and the tenant had hired the contractor to renovate space there for the operation of a restaurant named Billboard Cafe. As compensation, the Lucas Plaza owner agreed in the tenant's lease to provide the tenant $75,000 of "tenant finish allowance" payments, of which $60,000 was payable directly to the contractor.

Just as the contractor completed the work, however, the tenant leased additional space at Lucas Plaza for another type of business. That lease provided for a $30,000 tenant finish allowance, again payable by the owner of Lucas Plaza to the contractor.

While the contractor was working on the two projects, he assumed, in lieu of additional compensation, the positions of vice president of the Billboard Cafe and as director of the other business of the tenant.

But before the contractor finished the second project, Billboard Cafe closed. Soon thereafter, the tenant's other business folded. The contractor then sued, seeking payment for his work for the tenant and Lucas Plaza.

A Missouri court ordered the tenant to pay $213,979 to the contractor for the two projects for which the tenant hired him. But the court refused to require the Lucas Plaza owner to pay any additional amount to the contractor. The contractor appealed, arguing the Lucas Plaza was "unjustly enriched" by his work and so should pay for that enrichment.

A Missouri appellate court, in upholding the decision favoring the Lucas Plaza owner, explained, "The executive positions [held by the contractor] support a finding he knew the terms of the Lucas Plaza tenant lease agreements, particularly of the 'tenant finish allowance' limitations found in the leases.... There is no evidence to support a finding that the contractor had any expectation of payment from Lucas Plaza beyond the tenant finish allowance before he did the work or during performance. Retention of the improvements to Lucas Plaza, under these circumstances, is neither unjust nor inequitable. (Kujawa v. Billboard Cafe at Lucas Plaza, 10 S.W.3d 584 [Mo.App. E.D. 2000])

Decision: February 2000

Published: April 2000



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