Daily Development for Tuesday, June 8, 1999
By: Patrick A.
Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu
Another from Senn, Lewis
EMINENT DOMAIN; LEASES; ALLOCATION OF AWARD: Even though a lease between parties contained a termination clause stating that the lease would terminate as of the date of total condemnation, lessees' right to a portion of the condemnation proceeds was not automatically extinguished since the lease contained an additional provision addressing the allocation of the condemnation award between the parties.
Musser v. Bank of America, 964 P.2d 51 (Nev. 1998).
In 1996 McCarran International Airport condemned two parcels of land in order to construct two airport runways. Both of the condemned parcels were leased for the operation of mobile home parks for a period of 49 years. The owners of the land and the lessees were in dispute as to the apportionment of the condemnation proceeds. The owners alleged that the leases provided that they were entitled to the entire condemnation proceeds, while the lessees alleged that they were entitled to a portion of the proceeds. The lease contained a provision for automatic termination upon total condemnation but also contained a provision addressing allocation between the parties to the lease in the event of total condemnation.
The Supreme Court of Nevada stated that when there is a termination clause in a lease without accompanying language addressing the allocation of a compensation award then the termination clause is sufficient to bar a lessee's claim to a portion of such award. However in this case, the lease contained additional language setting forth the allocation of any condemnation award. Therefore, the court felt that to allow the automatic termination clause to bar lessee's claim to a portion of the condemnation award would be in effect dismissing a part of the contract by not giving the allocation provision of the lease any effect. The court concluded that the lessees were entitled to a portion of the condemnation proceeds to be distributed pursuant to the allocation provision of the lease.
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