July 14, 2009
On May 21, 2009, the California Court of Appeals for the 4th District upheld a liquidated damages provision in a commercial lease. In El Centro Mall, LLC v. Payless ShoeSource, Inc, defendant Payless Shoe Source, Inc. ceased operations at a shopping center owned by plaintiff El Centro Mall, LLC. Pursuant to a provision in the applicable lease, El Centro Mall, LLC charged Payless ShoeSource, Inc. over $98,000 in liquidated damages for ceasing operations before the end of its lease term. Payless refused to pay and argued that the liquidated damages provision was an unenforceable penalty under Civil Code section 1671. The trial court determined that the liquidated damages provision was not an unlawful penalty and Payless appealed that decision.
The Court of Appeals held that substantial evidence supported the trial court’s judgment and overruled the demurrer. The court ruled that according to Civil Code section 1671(b) the liquidated damages clause was presumptively enforceable and Payless had the burden to demonstrate otherwise. Even though the Court determined that Payless’s evidence may have given rise to an inference that the liquidated damages provision was arbitrary, Payless did not meet their evidentiary burden.
It is clear from the Court of Appeals decision that this opinion was based on the very specific facts before the court. That being said, this is an important ruling because validates liquidated damages (a penalty provision) in the commercial leasing context.
Posted by Zachary D. Schorr, Schorr Law, APC, 310-954-1877, zschorr@schorr-law.com
April 2, 2009
I just got word today, that my seminar on how to prepare for commercial real estate leasing disputes is now available for purchase. Visit researchandmarkets.com for more information.
The seminar is available for viewing on your computer or ipod. We This is good timing as we are seeing a rise in commercial real estate disputes based on the current market. I expect this to remain a hotbed of activity while business continue to struggle.
For more information, please contact us at 310-954-1877 or info@schorr-law.com.
March 11, 2009
I discovered this morning that I was quoted on an affiliate website of the Philadephia Inquirer and the Philadelphia Daily News. The article, Having a Good Landlord Tenant Relationship, deals with issues facing both landlords and tenants.
In the article, I am quoted on several issues dealing with preserving and protecting both the landlord and tenant’s rights in leasing disputes. The goal is always to resovle the situation amicably. If the parties cannot reach an amicable resolution, then I try to give sound advice on preparing for litigation and trial.
Posted by Zachary D. Schorr, Schorr Law, APC, 323-658-8196, info@schorr-law.com.
February 25, 2009
The California Court of Appeals (3rd District) recently issued an opinion in Muzzi v. Bel Air Mart finding that Bel Air Mart, an anchor tenant on a commercial lease with Muzzi was not permitted to use common area parking spaces for food racks, pallets, an oil recycling bin and broken shopping carts despite provisions in their commercial lease allowing the use of common areas for the loading and unloading of merchandise. This opinion overruled the trial court’ s decision.
The Court of Appeals found that these items were left in the parking spaces far beyond any time associated with the actual loading and unloading of merchandise.
More specifically, the Court of Appeals found:
“”None of these uses involves the “loading and unloading of merchandise” as contemplated by the lease. These items were not placed in parking spaces a reasonable time before they were picked up; the parking spaces were permanently used for the storage of these items. By keeping items in these spaces, Bel Air appropriated these parking spaces to the exclusion of anyone else. The fact that few cars parked in this part of the shopping center is irrelevant (particularly given that Bel Air’s use of this area made this a less-than-desirable place to park). Under the lease, Bel Air had the right to nonexclusive use of these parking areas; it had no authority to commandeer these spaces for its own storage purposes.”
In other words, Bel Air’s exclusive and continuing use of these parking spaces violated its commercial lease.
February 24, 2009
As an active litigator in Los Angeles County, I would like to see the Los Angeles County Superior Court embrace online court filings. In my opinion, there are many benefits to online filing. Consider just a few:
1. Ease the burden on the court on scanning incoming documents. Currently the central district scans incoming documents and makes them available to the public online for a fee.
2. Allow parties to have instant access to filed documents.
3. Decrease court traffic. Currently attorneys rely on attorney services (messengers) to file and deliver documents. While these services are very helpful they tend to tie up the filing window and increase the number of visitors to the court house on any given day. While messenger services would still be needed, electronic filings would streamline the court filing process.
There are obviously many other benefits to such a system. I am sure the LA Superior Court will eventually permit such filings, my question is how long will it be?
February 19, 2009
I am happy to announce that we are in production with ReedLogic (http://www.reedlogic.com/) for a legal seminar on Preparing for Commercial Real Estate Leasing Disputes. We recorded the audio presentation earlier this week and are getting ready to publish the accompanying material. I expect to announce that the seminar will be available for purchase in the next month or so. I will post a link when the seminar is available for purchase.
Some of the topics covered include:
- Roles and Motivations of the Parties in Commercial Real Estate Leasing Disputes
- Financial Considerations in Commercial Real Estate Leasing Disputes
- Attorney Checklist for dealing with Commercial Real Estate Leasing Disputes
- Client Checklist for Commercial Real Estate Leasing Disputes
- Areas of Research and Due Diligence for Commercial Real Estate Disputes
Check back for more details. www.schorr-law.com.
January 14, 2009
A recent California Court of Appeals decision (Birke v. Oakwood Worldwide – filed January 12, 2009, Second District, Div. Seven) found that a tenant can sue its landlord for a nuisance based on second hand smoke stemming from the common areas of the property.
This opinion is interesting in that it found that the landlord has an indisputable duty to take reasonable steps to maintain its premises in a reasonably safe condition, its failure to impose any type of limitation on smoking in common areas, including swimming pools and the children’s playground that the plaintiff minor child has a right to use and enjoy, breached that duty.
It will be interesting to see what effect this opinion has on landlords in California. Will they ban smoking in common areas of their properties? Will they designate smoking areas?
December 11, 2008
In a recent California Court of Appeals, Third Appellate District Opinion the Court issued an alternative writ on the novel issue of the application of the California lis pendens statutes to out-of-state litigation. The court held that California’s our lis pendens statutes do not apply to a notice of litigation in the courts of another state. A copy of the opinion can be found at http://www.metnews.com/sos.cgi?1208%2FC058894.
As background, a lis pendens is a written notice that a lawsuit has been filed which concerns the title to real property or some interest in that real property. The lis pendens or notice of pendency of action is recorded with the county recorder’s office and puts potential buyers on notice of the litigation concerning title to that property.
This recent ruling is important because it means that if title to California real property is being litigated in another state, the plaintiff no longer will have the option to record a lis pendens in California. This will force litigants to chose California when filing their lawsuits in order to preserve this important pre-judgment tool.
The power to record a lis pendens is a very powerful tool for a plaintiff in a real property dispute concerning title – one that should be not dismissed lightly.
December 4, 2008
The issue of whether a commercial lease subleasee can sue the landlord under the terms of the master lease has arisen in recent litigation and is becoming increasingly important. In California, there is legal authority that suggests a subtenant can sue the landlord under the terms of the master lease, even though there is no privy of contract, provided the subtenant assumed the obligations of the master lease. This is an area of the law that is continuing to develop.
A real world example of why this issue is important follows.
A landlord and a tenant enter into a master lease where the landlord agrees that the tenant shall have the exclusive right to sell coffee for the entire commercial shopping center. The tenant then sublets its leased premises to a subtenant. The subtenant continues to sell coffee pursuant to the terms of the master lease and assumes all of the obligations of the lease. The landlord later allows another tenant at the same commercial shopping center to sell coffee in the shopping center in violation of the exclusive use provision in the master lease. The subtenant can then sue the landlord for breach of the lease.
December 4, 2008
Schorr Law, completed a trial in October in Santa Monica, which resulting in a $1.5 million jury verdict for its client. The verdict came at the end of an approximately three week jury trial. The jury also made a finding that punitive damages would be applicable and the punitive damages phase of the trial was set to begin on December 1, 2008. Before that time, the parties settled for $2.5 million.
This is the second big jury trial win for Schorr Law, and, in particular, Zachary D. Schorr. Both matters were real estate litigation.
The issues involved in this trial included land use issue and permitting for development. For my information, contact me at zschorr@schorr-law.com.
