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Burden of Proof
by Ron Davis

Lack of proof that a Kansas shopping center owner committed financial improprieties has prevented a return to one of the centerís tenants of certain paid expenses.

The shopping center is Town Center Plaza, located in suburban Kansas City, and the tenant, Barnes & Noble Booksellers, Inc., contends that the centerís owner overcharged for shared common-area upkeep. Barnes & Noble also believes that it paid marketing fees that it did not owe.

Under the terms of the lease, executed in 1994 between the two parties, the centerís owner annually estimates the forthcoming yearís expenses to operate the facility. Barnes & Noble then pays its portion of the estimates on a monthly basis. At yearís end, the centerís owner conducts a year-end reconciliation. If the yearís estimates are too low, Barnes & Noble gets the difference. If the yearís estimates are too high, Barnes & Noble gets a credit.

Marketing fees, however, are billed separately. But Barnes & Noble is obligated to pay the marketing fee only if all other tenants are required to similarly contribute to the marketing fund.

In 2004, Barnes & Noble sued the centerís owner for failure to accurately calculate the expenses paid since 1997. The centerís owner replied that it would issue credits for fees Barnes & Noble paid for trash removal and water and sewer expenses for 1997 and 1998. But in that reply, the centerís owner stated, ďPlease be advised that the issuance of this credit is not, and should not be construed to be, an admission to or agreement with the position [of Barnes & Noble] or an admission of any liability [by the centerís owner] whatsoever on this issue.Ē

Also without admitting guilt, the centerís owner issued to Barnes & Noble a credit for marketing contributions that the tenant paid for 1999 through 2005. In response, Barnes & Noble presented evidence that one other tenant, who leased space at the center in 2004, was never required to contribute to the marketing fund. Therefore, Barnes & Noble added, it should receive a credit for marketing fees dating from the signing of the lease in 1994.

In Kansas, however, unless fraud is involved, a statute of limitations sets a five-year restriction on claims for a breach of contract.

While finding that the centerís owner breached the lease, a U.S. District Court pointed out that there is no evidence of fraud or that any tenants other than the one that leased space in 2004 were excused from participating in the marketing fund. Therefore the court ruled that while Barnes & Noble is due payment for marketing contributions after 2004 (plus legal costs), the Kansas statute of limitations protects the centerís owners from claims earlier than 1999. (Barnes & Noble v. Town Center Plaza, 2006 WL 1410048 [D.Kan.])

Decision: May 2006
Published: June 2006



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