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Day Late and a Dollar Short
by Ron Davis
A questionable ruling by an Alabama judge has aided the owner of an Anniston shopping center in fending off a lawsuit of one of his tenants.
The shopping center was the target of the lawsuit after the tenant claimed that the owner had violated a noncompete provision of his lease. The tenant also maintained that because of that violation, he suffered from a decline in the number of customers using his service and eventually had to cease operations.
Details of the case show that the tenant operated an auto-repair business at the shopping center. He had purchased that business, known as AnniTune, from its founder, who had previously leased space at the center for many years. Included in that agreement was the noncompete provision. It prohibited the shopping center owner from leasing to "any person engaging in the business of domestic and foreign automobile oil changes and lubrication, tune-ups and diagnosis, carburetion and fuel-injection repairs and computerized engine control repairs." In assuming the lease, the tenant assumed the noncompete agreement as well.
Just over a year after the tenant began operations, however, the shopping center owner leased space to a business called "Tommy Griffith Auto Repair." And that tenant generally offered the same services as did the AnniTune tenant. Nevertheless, the AnniTune tenant subsequently renewed his lease with the shopping center.
But shortly after doing so, he filed for bankruptcy, then eventually sued the shopping center owner, alleging breach of the lease agreement.
The shopping center owner responded by asking the courts to resolve the matter through arbitration. Such a solution was dictated by the terms of the lease between the two parties when any controversy arose over the lease provisions. A local judge then ordered the arbitration to commence within 30 days. And, the judge added, failure to comply with that 30-day time limit by one party would result in a ruling in favor of the other party. Eight days prior to expiration of the 30-day time limit, the tenant asked the court to extend the deadline for initiating arbitration. The tenant explained that the delay was necessary because he was involved with another lawsuit "with identical issues that are the basis on this arbitration."
The court rejected that explanation, however, and dismissed the case. The tenant appealed.
The Alabama Supreme Court, in a split decision, upheld the lower-court judge's authority to dismiss the case for failure to initiate arbitration. Explained the majority-opinion justices, "AnniTune simply did not initiate arbitration despite the clear language in the court order indicating that the case would be dismissed if arbitration proceedings were not begun within 30 days." (Mangiafico v. Street (767 So.2d 1103 [Ala. 2000])
Decision: August 2000
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