Our office recently represented a client whose fast-food franchise business was sued by its landlord for eviction and other damages. The landlord’s complaint alleged that our client’s walk-in cooler was leaking, which caused mold, water intrusion and pooling in an adjacent unit. The landlord had ordered our client to fix the leak and pay for remediation; however, our client’s position was that the leak was not coming from the cooler and instead was due to water intrusion from the roof. Due to the issue of the actual cause of the damage to the unit and our client’s steadfast position that its equipment was not the causative factor, the landlord alleged that our client breached its lease. In so doing, the landlord rejected our client’s position that the roof was leaking which subsequently led our client to hire experts to review the roof and determine what was causing the leak.
Aside from the water damage issue, the landlord had been collecting funds in addition to the common area maintenance (known as “CAM”), which our client determined to be excessive and fraudulent. We immediately sought discovery of how the landlord arrived at the amounts collected and copies of our client’s ledger as well as the other ledgers for each individual tenant.
In addition to our client’s business being named in the suit, a major concern for our client was a personal guarantee which had been executed for the rent which, if our client defaulted, could have left our client personally responsible for up to 5 years of lease payments, plus legal fees, costs, and penalties. Further, the main franchisor could have sought penalties from our client for closing the business without permission and allowing the location to sit empty. Our client’s goal was simple, yet challenging:
- To terminate the lease, minimizing any personal liability for rent, damages and penalties as possible; and,
- To negotiate with the franchisor to close its business and obtain a mutual waiver and release.
Our firm was successful in achieving both goals aggressively, implementing creative litigation strategies. Ultimately, the landlord accepted two final months of rent payments in return for a release both of our client from the personal guarantee and of his business from any additional obligations under the lease terms. The franchisor accepted our clients offer to leave the property in good condition, allowing our client to not be held personally liable for damage to the property or any additional rent.