The Law

Being Squeaky Wheel Won’t Fix Leaky Roof by Ron Davis Good intentions apparently won’t save the owners of a Tennessee shopping center from having to pay a tenant $168,000 for damage sustained from a collapsed roof. The tenant had leased space at the Memphis shopping center—Southgate Mall—to operate a medical clinic. But soon thereafter he began experiencing water leakage from the roof. The tenant had paid nearly $57,000 to improve the leased space, and he had bought more than $135,000 worth of equipment and supplies for use in the clinic. As leaks became a more frequent problem, however, he intensified his complaints to the shopping center owners. They were obviously sympathetic to the tenant’s plight and made several attempts to repair the roof. But none of those attempts was successful. Nevertheless, the tenant renewed his lease after the first term expired, though with the following provision: “Lessor [shopping center owners] will be responsible for any damages caused by roof leaks which recur more than four days after Lessor has been given written notice of problem(s).” On the other hand, the lease also required the tenant to carry liability insurance on his premises and to coinsure the shopping center owners. Moreover, the lease required the tenant to “hold harmless” the shopping center owners from damage to the tenant’s premises. The leaks from the roof soon became much worse, and the tenant again complained numerous times to the shopping center owners. The tenant actually had to place garbage cans beneath the leaks to collect water, causing considerable interruption of business, inconvenience—and embarrassment. Finally, the shopping center owners notified the tenant that they would construct a completely new roof for the premises. Two weeks later, however, the roof completely collapsed, flooding the premises with rainwater. The clinic and equipment were ruined, and the tenant had to cease operations. Because patient records were destroyed, the tenant was unable to salvage his practice. He eventually relocated in another state. In the resulting lawsuit, the shopping center owners alleged that the tenant had breached the lease by failing to list them as an additional insured in an insurance policy. A Tennessee jury nevertheless returned a verdict for the tenant, awarding him $168,000 in damages. The shopping center owners appealed. A Tennessee appellate court upheld the jury verdict and denied a new trial to the shopping center owners. (Childress v. Union Realty Co., Ltd., 97 S.W.3d 573 [Tenn. Ct. App. 2002]) December 2002 Published: April 2003