Barry Hinesley signed a five-year commercial lease for a 1,200-square-foot store in the Oakshade Town Center shopping center in Davis, Calif. Slightly over a year later, Hinesley filed a lawsuit against the Oakshade owners for fraud in the inducement and for rescission of the lease.

Hinesley alleged Oakshade’s leasing representative told him Starbucks, Baskin-Robbins and Dos Coyotes (a regional restaurant chain) would be his store neighbors. But Starbucks and Baskin-Robbins never leased space in the shopping center.

Purchase Bob Bruss reports online.

Instead, Common Grounds (a coffee house) and Marble Slab Creamery (an ice cream store) became tenants. Major tenants in the shopping center are Safeway (40,000 square feet) and Rite Aid Drug Store (17,500 square feet). The Dos Coyotes Restaurant opened 18 months after Hinesley leased his space.

Oakshade denied Hinesley’s allegations and countersued for rent due under the lease and for attorney fees because Hinesley vacated his space in the shopping center.

At the trial, Oakshade’s attorney pointed to a paragraph in Hinesley’s lease, which said tenant Hinesley was not relying on the existence of other specific tenants in the shopping center.

If you were the judge would you award damages to the tenant or the landlord?

The judge ruled against the tenant and for the landlord.

The paragraph in Hinesley’s lease, which clearly said Oakshade made no representations about prospective neighboring tenants who might generate shopper foot traffic, was very clear, the judge explained. In addition, the evidence revealed Hinesley had his lawyer review the lease and did not object to its terms, he added.

The facts show Hinesley signed his five-year lease without any guarantee about whom his nearby retail neighbors might be, the judge emphasized.

Therefore, Oakshade has no liability to Hinesley for fraud in the inducement or any other basis, he ruled. However, Hinesley is liable to Oakshade for breach of the lease contract damages of $57,506.62 rent due, plus $90,876.80 attorney fees, the judge concluded.

Based on the 2006 California Court of Appeals decision in Hinesley v. Oakshade Town Center, 37 Cal.Rptr.3d 364.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

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