Is the Breach of the Commercial Lease Material?

Is the Breach of the Commercial Lease Material?

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A commercial lease is a contract. And, just like any contract, breach of a contract requires that there be a material breach of that contract.  The materiality of a breach is typically a question of fact but may be determined as a matter of law if the facts at-issue are undisputed between the commercial landlord and tenant. See Morton of Chicago/Miami, LLC v. 1200 Castle 100-A, Inc., 2014 WL 11944280 (S.D.Fla. 2014) (ruling in favor of tenant on motion for summary judgment that landlord materially breached contract where underlying facts not in dispute).

To constitute a material breach, a party’s non-performance of a contract must be such as to go to the essence of the contract.” See Morton of Chicago/Miami, LLC, supra, quoting Beefy Trail, Inc. v. Beefy King Int’l, Inc., 267 So.2d 853, 857 (Fla. 4th DCA 1972).

Not every landlord-tenant dispute or claimed breach will rise up to the level of materiality. But, some disputes certainly will. Just like any contractual dispute, whether a dispute is truly material will more than likely need to be played out as facts develop.  If a tenant stops paying rent it agreed to pay under the lease, certainly that would be material. However, there are other landlord tenant disputes relating to the terms and application of the lease besides the payment of rent.

For instance, in Morton of Chicago/Miami, LLC, the dispute involved free parking spaces. The original landlord and tenant entered into a lease that entitled the tenant to free parking in a parking garage that the landlord owned. Through ownership changes, a new landlord purchased the building and assumed the lease. The parking garage was conveyed to a different owner. This new parking garage owner started to charge the tenant for the use of the parking garage. The tenant then filed a breach of contract action against its new landlord claiming it was no longer getting free parking in the parking garage as required by the lease. The court agreed finding that the landlord materially breached the parking provisions contained in the lease, which entitled the tenant to damages (the costs it was incurring in having to pay for parking). The landlord tried to argue impossibility of performance since it did not own the parking garage. Besides the court acknowledging the difficulty of prevailing on this defense, it maintained that this was a foreseeable risk at the time the new landlord assumed the lease. In other words, the landlord knew it could not provide the parking spaces at the time it became the new landlord.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.