Problems with the changeover back to me have prevented this from getting posted. I'm trying one more time, but the ultimate result may be that there will be multiple postings. I apologize if this happens. Ed.

Daily Development for Monday, March 22, 2004
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin Kansas City, Missouri

LANDLORD/TENANT; COMMERCIAL; CONTINUOUS OPERATION; IMPLIED DUTY: Use clause in lease that states that parties “shall use premises solely for the . . . business of a grocery” does not impose a continuous operation obligation.

Daniel G. Kamin Kilgore Enterprises v. Brookshire Grocery Company, 81 Fed. Appx. L827, 200d U.S. App. LEXIS 24299 (5TH Cir. 12/03/03)

The court began by saying “this is not - the parties agree - an implied agreement case.” As indicated, the key language stated that the tenant would use the premises exclusively for grocery purposes:
“The Leased Premises are leased to Tenant and Tenant shall use and occupy the same during the term hereof solely for the purpose of conduction [sic] this business of a grocery, produce and meat marketing establishment and other goods, wares and merchandise usually handled by supermarket [sic], with related items as are carried by supermarket operations generally during the term of the lease.”

Landlord argued that this language, interpreted in connection with other provisions in the lease, “and the circumstances surrounding the lease’s execution” imposed a continuous operation obligation. The trial court, in fact, agreed. The trial court emphasized the percentage rent clause and the fact that the sublet clause required the tenant to operat at least 75% of the premises if it sublet.

The 5th Circuit Court of Appeals, however, reversed. Looking at Texas authority, it pointed to other cases involving percentage leases in which no continuous operation duty was found.

The landlord attempted to distinguish Texas authority because this case, unlike the precedent, involved a use clause that stated the Tenant “shall” use and occupy the property . . . rather than just making a general statement about the planned use. In fact, another Texas case did use the mandatory language, and found no implied covenant. From that the court concluded it would be improper to read mandatory language on use alone to embody an express operating covenant.

The court further noted that this lease included a substantial minimum rent in addition to the percentage rent terms.

Comment 1: The landlord made other grammatical distinctions that failed to impress the appeals court and failed so utterly to impress the editor that he won’t list them.

Comment 2: Although the case purports to address only the question of whether the express use clause imposes an operating duty, clearly the landlord was trying to “bootstrap” an implication of an operating duty from the percentage rent features into what otherwise would be simply a restriction on use. This has worked occasionally in other jurisdictions, but about two thirds of the voluminous authority on this point come out for the tenant. The primary exception is those cases in which the lease provides only for percentage rent - such as in the old gallonage rent provisions for gas stations. The editor’s work in Friedman on Leases collects all the recent cases in Section 6.906 of the Supplement.

Comment 3: Two years ago, the editor wrote a little piece on this issue, “Going Dark Aggressively,” collecting a group of cases in which, in his opinion, and implied duty is more likely to be found, the Probate and Property Magazine. A version is on the DIRT Website:

More recently, Probate and Property published the editor’s views on the “flip side” of the issue - whether a landlord might have implied operating duties to keep a retail center operating for the benefit of a retail tenant. That article is called: “Does a Shopping Center Landlord Have an Implied Operating Duty?” The editor has included a section on this theme in his new version of Friedman on Leases which should be out in a month or so.

Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. The same is true of all commentary provided by contributors to the DIRT list. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.

Parties posting messages to DIRT are posting to a source that is readily accessible by members of the general public, and should take that fact into account in evaluating confidentiality issues.


DIRT is an internet discussion group for serious real estate professionals. Message volume varies, but commonly runs 5 15 messages per work day.

Daily Developments are posted every work day. To subscribe, send the message

subscribe Dirt [your name]


To cancel your subscription, send the message signoff DIRT to the address:

for information on other commands, send the message Help to the listserv address.

DIRT has an alternate, more extensive coverage that includes not only commercial and general real estate matters but also focuses specifically upon residential real estate matters. Because real estate brokers generally find this service more valuable, it is named “BrokerDIRT.” But residential specialist attorneys, title insurers, lenders and others interested in the residential market will want to subscribe to this alternative list. If you subscribe to BrokerDIRT, it is not necessary also to subscribe to DIRT, as BrokerDIRT carries all DIRT traffic in addition to the residential discussions.

To subscribe to BrokerDIRT, send the message

subscribe BrokerDIRT [your name]


To cancel your subscription to BrokerDIRT, send the message signoff BrokerDIRT to the address:

DIRT is a service of the American Bar Association Section on Real Property, Probate & Trust Law and the University of Missouri, Kansas City, School of Law. Daily Developments are copyrighted by Patrick A. Randolph, Jr., Professor of Law, UMKC School of Law, but Professor Randolph grants permission for copying or distribution of Daily Developments for educational purposes, including professional continuing education, provided that no charge is imposed for such distribution and that appropriate credit is given to Professor Randolph, DIRT, and its sponsors.

DIRT has a WebPage at:


To be removed from this mailing list, send an email message to with the text SIGNOFF BROKERDIRT.

Please email if you run into any problems.
See <> for more information.