Monument Clause Rock Solid
by Ron Davis
Shrewd language skills have allowed a Nebraska shopping center owner to negate a noncompete clause in a tenant’s lease.
The shopping center, Monument Mall in Scottsbluff, had leased space to the tenant for the operation of a jewelry store there. And the noncompete clause in the lease not only gave the tenant the right to operate a jewelry store exclusively at the center, but also provided a remedy in case of a breach of that agreement.
That remedy stated that if the center’s owner should lease to another jewelry retailer, the tenant could ask for a 50-percent reduction in rent—or terminate his lease.
Nevertheless, when the shopping center owner later leased space for the operation of a second jewelry store, the tenant asked the courts to intervene. In response, the center’s owner pointed to the remedy contained in the lease.
A Nebraska court decided that the lease gave the tenant the exclusive right to operate a jewelry store at the shopping center. Moreover, the court rejected the lease remedy as “inadequate” to prevent enforcement of the noncompete clause.
The shopping center owner appealed that decision.
The Nebraska Supreme Court reversed the lower court and ruled that the two parties had indeed agreed to a remedy in case of a breach of the noncompete clause.
Explained the justices, “The remedy provision in the lease is not ambiguous and limits the tenant’s rights for this particular breach to decreased rents or termination of the lease agreements. Just as the shopping center owner is bound by the language of its covenant to forebear leasing space to a competing store, so the tenant must be held to the plain language of the exclusive remedy provision. No conflict exists between the two provisions and effect may be given to both.” (Reichert v. Rubloff Hammond, L.L.C., 645 N.W.2d 519 [Neb. 2002])
Decision: July 2002
Published: September 2002