Store Can Close in Erie Case
by Ron Davis
A tenant with mounting financial losses from operating a store at an Erie, PA, shopping center can finally close the business for good.
Thatís despite the best efforts of the shopping centerís owners, however. They are the principals of Summit Towne Centre, Inc., which has leased space to the tenantóa shoe retailerófor the past several years. They have contended that the tenant agreed in the lease between the two parties to remain open for business during the entire lease term. They therefore have sued the tenant to try to enforce the lease restrictions.
The lease does in fact clearly state that the tenant must not abandon the premises or any part of the premises during the lease term. A breach of that agreement allows the shopping centerís owners to collect substantial monetary penaltiesónot including those the courts might impose for such a breach.
Nevertheless, the tenant reached a point where financial losses exceeded $100,000 annually, forcing the store to cease operations. The shopping centerís owners responded by suing the tenant, arguing that closure of the store could cause in a ďdomino effectĒ of other store closings at the facility. The result, they added, would mean irreparable damage to the centerís continuity. They therefore asked the courts to force the tenant to resume operations at the shopping centeróor face huge financial penalties exacted by the courts.
A Pennsylvania court noted, however, that the premises leased to the shoe store at the shopping center occupied less than 1 percent of the centerís total floor space. The court therefore ruled that the shopping centerís owners had failed to prove immediate and irreparable harm from the closing of the tenantís store. The shopping centerís owners appealed.
The Pennsylvania Supreme Court also ruled in favor of the tenant, explaining, ďThe record supports the conclusions that the shopping centerís harm was speculative in nature, that it had an adequate remedy through the collection of penalties, and that the tenant would have sustained more harm than the shopping centerís owners had the tenantís store reopened.Ē (Summit Towne Centre, Inc. v. Shoe Show of Rocky Mount, Inc., 828 A.2d 995)
Decision: August 2003
Published: November 2003