by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
LANDLORD/TENANT; USE; IMPLIED DUTIES OF LANDLORD: Absent an express lease obligation imposing special duties, a landlord who leases premises in a retail shopping center does not bind itself to operate the land as a "retail shopping center". Michigan Sporting Goods Distribs. v. Lipton Kenrick Assocs., L.P., 927 S.W.2d 570 (Mo. App. 1996).
Tenant took an assignment of a fifteen year lease of a sporting goods store. Five years after original lease execution, the shopping center was more than 60% vacant and only two other tenants operated retail stores. The tenant vacated the premises, and sought a judicial determination that the landlord was in breach and that the lease was terminated because the property was no longer being operated as a "retail shopping center".
The lease was replete with references to the shopping center of which the tenant's premises was a part. But despite the fact that the parties clearly contemplated that the premises would be part of a shopping center, they never put anything in the lease that required the landlord to take active steps to operate the property as a shopping center. The court found that, while the lease referred to the existence of a shopping center, it did not unambiguously require the landlord to ensure the existence of such a shopping center, nor did it require a certain level of tenancy or number of stores.
Note: As a separate count, tenant alleged that, prior to the lease, the original tenant was assured that the center would be a "retail hub" and that specifically named retailers would operate there. The court assumes that this allegation was true, and that the landlord did say these things to the tenant, but the lease contained an integration clause, and the court absolutely slams the door on any claims based upon prior oral representations not included in the lease.
Comment 1: You'll rarely find such a clear and complete application of an integration clause. The case is worth including in your precedents file for that aspect alone. But when courts decide that they will address pre-contract representations, they may just fail to mention in their opinions that an integration clause is precedent.
Comment 2: On the principle issue of implied duty, the case is interesting because it is the mirror image of the more typical argument - that a tenant implicitly agrees to operate a store in its leased premises when it leases property that clearly has a synergistic relationship with other properties in a shopping center. There is a relatively strong vein of cases, albeit a clear minority, that will find implied duties of continuous operation in anchor tenants based upon the economic interdependence of the various tenants and the landlord. An good example is Ingannamorte v. Kings Super Markets, Inc. 260 A.2d 841 (N.J. 1970), which has been widely cited but most often distinguished. Note also that this situation is distinct from the situation in which the landlord argues that the court should imply a duty of continuous operation because of the percentage rent provisions of the lease. Ingannamorte was a fixed rent lease.
Missouri has never had strong state court case imposing an implied duty on a tenant, so it perhaps it is not surprising that it won't flip the duty onto the landlord either. But see the really bad Eighth Circuit decsion in Emro Marketing Company v. Plemmons, 855 F.2d 528 (8th Cir. 1988), where the court concludes that a use clause that permits use "as a Nickerson Farms store. . . or for any other lawful purpose" imposes a continuous operation duty.
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