Commercial Landlord Secures $6.2M Judgment After Federal Litigation and Appeal

As a commercial landlord, you have certain risks you face whenever a tenant’s lease comes to an end. One of these is that the tenant will not have maintained the property in accordance with the terms of the lease agreement. When that happens, you may need to litigate to recover damages for the harm you suffered. Whether your relationship with your tenant is a successful one or not, it pays to have experienced Georgia landlord-tenant counsel on your side to protect your interests.

One example of a relationship that did not end well was a pharmacy benefits management company’s lease of a “Class A-plus” space from a commercial landlord. The lease placed the obligation for many maintenance-related issues on the tenant. The two sides’ first dispute regarded the roof of the property. The landlord demanded installation of a two-ply roof, but the tenant instead sought to install a one-ply roof. A Florida court concluded that the landlord was entitled to reimbursement for the costs of the roof upgrade.

After the lease term expired, the landlord filed a second lawsuit, this one in federal court. The crux of the landlord’s federal case was that the tenant had returned the property in inferior condition. The landlord’s lawsuit listed 26 deficiencies, including problems with both the property and the equipment within it. The landlord argued that this was a breach of the lease agreement, which contained a paragraph that required the tenant to “at all times, at Tenant’s sole cost and expense, put, keep and maintain the Leased Premises (including, without limitation, the parking areas, roof, footings, foundations, interior and exterior walls and structural components of the Leased Premises) and the Equipment in a first class condition and order of repair.”

The case was tried before a judge, and the landlord was successful, obtaining a judgment and a damages award in excess of $6.2 million. The tenant appealed, but the judgment and damages stood. While the leased property (and the lower court trial) was located in Tampa, Florida, the appellate decision issued by the 11th Circuit Court of Appeals affects landlords and tenants in Georgia, Florida, and Alabama.

The tenant attempted to assert two different types of challenges. In one argument, the tenant attacked the judgment because the judge allowed the introduction of expert testimony. In some types of contract dispute cases, the law requires that the court decide the issue based upon the content of the agreement document alone, with all other “extrinsic” (or outside) evidence excluded.

In this case, though, the judge was allowed to rely upon experts to explain some of the non-specific terms in the agreement. This included the language that obligated the tenant to keep “the premises and equipment remain in ‘first class condition,’ excepting ‘ordinary wear and tear,’ and to replace ‘worn out or unusable’ equipment.”

The tenant also tried to escape the judgment by arguing that the landlord had illegally “split” its case. In some situations, the law may require an injured party to bring all of its claims in one action. In this circumstance, the landlord sued (successfully) the tenant on two separate occasions. That was not impermissible, though, since the two cases involved separate facts. One involved the attempted installation of a substandard roof. The other involved the deficient state of “asphalt paving and sidewalks, landscaping and irrigation, and security systems,” among other things. Since the facts underlying each of the two cases were different, the landlord had not improperly split its case, and the ruling of the lower court (along with the award of damages) stood.

If you find yourself in a dispute with your commercial tenant, you need counsel who is experienced and knowledgeable in commercial litigation. The diligent Atlanta landlord-tenant attorneys at Poole Huffman, LLC have been working for many years to help their landlord clients defend their rights. Contact our attorneys online or by calling 404-373-4008 to schedule your confidential consultation.

More blog posts:

Property Investors Beware: “self-Help” Evictions Are Never an Option, Atlanta Business Litigation Attorneys Blog, April 18, 2015

Worried about Collecting on a Judgment against your Tenant? Don’t Stress, Distress!, Atlanta Business Litigation Attorneys Blog, June 5, 2013