The Law

Burned Out But Still Responsible by Ron Davis Sometimes a shopping center tenant can’t win for losing. Consider the example of one Louisiana tenant. He operated a Family Dollar Store in a New Orleans-area shopping center that was gutted by fire a couple of years ago. Although the terms of his lease freed him from further rental payments after the fire, he nevertheless received notice of an obligation to continue paying his share of the taxes and insurance on the shopping center property. In fact, his lease did not terminate because of the fire. Only the rent obligation ended. The tenant was apparently still responsible for paying the taxes and insurance. But the tenant argued otherwise. And he initially ignored the payment requests by the shopping center owner. Only when the tenant received a lease cancellation notice did he take any action. By then, however, the time allotted for remittance had ended, and the shopping center owner refused to accept the payment and sued to terminate the lease. The tenant had hoped to resume business after the rebuilding of the shopping center. He therefore contested the matter. In doing so, he claimed that because fire had destroyed his leased site, it was not an issue in the dispute. The dispute, he added, was simply over the payment for insurance and taxes. But a Louisiana court ruled in favor of the shopping center on grounds that the tenant had failed to comply with the terms of the lease. The tenant appealed. A Louisiana appellate court upheld the ruling in favor of the shopping center, explaining, “The tenant’s arguments are unsupported in law. The fortuitous event of the destruction of the leased premises does not eliminate the tenant’s right to possess the premises, and the record establishes that the tenant intended to continue possession of the premises. Therefore, possession was at issue in this proceeding…. The evidence presented supported the finding that the tenant defaulted in certain obligations under the lease.” (Sizeler Real Estate v. Family Dollar Stores, 814 So.2d 611 [La.App.4 Cir. 2002]) Decision: April 2002 Published: July 2002