Monday, April 30, 2018

Automated External Defibrillators

Lupo Vine Street, LP owns a multi-unit commercial building. In 2011 Lupo entered into a five-year lease with Wild Card Boxing Club for two units, consisting of 5,000 square feet of space. Wild Card started business operations there as a Boxing Club / Athletic Club.

Lupo never had any ownership interest in Wild Card’s business.

On January 30, 2016, Omorishanla Olayinka was working out with a trainer at Wild Card when he suffered a fatal heart attack. Wild Card did not have an AED on the premises.

Olayinka’s surviving spouse Maryam Day and their daughter, Ayodele Omotolani Ifatosin Olayinka and Olayinka’s estate filed a lawsuit against Wild Card, its owner Freddie Roach, and Lupo. The petition alleged negligence based upon the failure to maintain an AED.

Lupo claimed it had no duty to furnish the premises with an AED or to ensure the gym owner did so. The trial court agreed, and entered judgment in favor of Lupo.

Plaintiffs appealed.

Olayinka’s family contend on appeal that Lupo was required to either provide an AED at the premises it leased to Wild Card, or to require that Wild Card obtain and maintain an AED as a condition to the lease. Plaintiffs believe that Lupo’s failure to do so meant that Lupo was negligent and should be responsible in damages to Plaintiffs.

The Appellate Court reviewed cases obligating commercial landlords to be sure that the premises are reasonably safe at the beginning of the tenancy. The analysis of when or if a duty arises has several elements: (1) foreseeability of harm; (2) degree of certainty that an injury was suffered; (3) closeness of the connection between the defendant’s conduct and injury suffered; (4) blame attached to the defendant’s conduct; (5) policy to prevent future harm; (6) extent of the burden to the defendant of imposing a duty to exercise care; (7) consequences to the community of imposing a duty to exercise care; and (8) availability, cost, and prevalence of insurance for the risk involved.

The Court also concluded that the chief element in determining whether defendant owes a duty is the foreseeability of the risk. And the second critical factor is the relative burden of imposing that duty. If the burden of providing a safety or security measure is onerous, a heightened or high degree of foreseeability of the danger is required.

Lupo reminded the Court that merely providing an AED does not end the duty, if indeed a duty exists. Rather, the AED must be constantly maintained, charged, recharged and tested, and personnel must be trained not only to properly utilize and service the AEDs, but also to administer CPR.

Further, as a landlord Lupo has relinquished possession of the premises to Wild Card. Requiring Lupo to constantly enter the premises to inquire if the AED had been used, charged, recharged, tested, and examine Wild Card’s AED and CPR training of its personnel far exceeds the typical obligations of a commercial landlord.

The Appellate Court concluded that a landlord cannot be held responsible for all damages inherent in a dangerous business. Lupo wins. See Maryam Day v. Lupo Vine Street, LP.; No B282996; California Court of Appeal; 2nd District; Division Four, April 11, 2018:,44.  

Lessons Learned / Questions Asked:

1.      Dust off your commercial lease boilerplate provisions. Hopefully your lease obligates tenants to fully conform with all private deed restrictions, zoning, municipal ordinances, county regulations, state statutes, and federal laws regarding all matters including health and safety.

2.      Does your lease form entitle the landlord and its agents to enter, to not only make repairs or show the premises to a lender, purchaser, or prospective tenant, but rather just to assure that tenant is discharging all of its obligations?

3.      Does your insurance cover this risk with affordable deductibles and loss retentions? Do your tenants share not only the premiums but also the deductibles if you are required to assert or defend a claim?

                                                                                    Stuart A. Lautin, Esq.*

* Board Certified, Commercial (1989) and Residential (1988) Real Estate Law,
Texas Board of Legal Specialization

Licensed in the States of Texas and New York

Monday, April 2, 2018

Lease Exclusive Provisions

Winn-Dixie owns and operates grocery stores across the county. Because of its size and positioning as an anchor tenant, WD is able to insist on using tenant-friendly leases that contain a provision allowing only WD to offer grocery products in its shopping centers.
The effect is to limit competitors to selling grocery items in 500 square feet or less of their retail space.

In 2011 WD filed lawsuits against Big Lots, Dollar General and Dollar Tree claiming they had violated WD’s exclusive rights in 97 stores in five States. The District Court denied WD’s claim in 43 stores, but allowed the litigation to proceed in the remaining 54 sites.

The Court reviewed the non-compete covenants and focused on the prohibition that precluded other stores from selling groceries. Lacking a definition of the term groceries in the leases, the District Court determined that groceries means “food items” and “beverages, including but not limited to bottled water, soda, and energy and coffee drinks, but excluding alcoholic beverages.”

Based on those definitions, the Court granted WD injunctive relief in 37 of the 54 stores. WD appealed.

The Circuit Court took a broader definition of the term groceries, and concluded that it includes not only food items but also “many household supplies” as well as fixtures and proportionate aisle space.

It took this federal court 35 pages to chastise the lower court and one lawyer – unnamed here – who represented Big Lots and Dollar General. Ultimately the Circuit Court determined that an expanded definition of groceries should apply. That definition would include “food (excluding prepared foods) and beverages (excluding alcoholic beverages) and many household supplies (as soap, matches, [and] paper napkins).”

And that “household supplies” means items “associated with the preparation and service of food, as well as the maintenance of a clean kitchen.”

The Judgment was remanded to the District Court with instructions to apply the broader definition. Winn-Dixie wins and will be allowed to exclusively sell groceries, using an expansive definition of that word.

See Winn-Dixie Stores, Inc. v. Dolgencorp, LLC, Big Lots Stores, Inc. and Dollar Tree Stores, Inc.; No 15-12990; United States Court of Appeals for the 11th Circuit, January 31, 2018:

Lessons Learned:

1.      I didn’t address this issue, but it’s relatively unusual that one tenant can lawfully sue another to enforce an exclusive restriction. Usually the offended tenant beats on the landlord, who then directs its ire towards the tenant attempting to compete.

2.      I have seen too many leases to count that contain imprecise language regarding an exclusive right. This case puts a spotlight on such provisions. If your lease doesn’t state with crystal-clear clarity the rights and duties of both parties, then keep drafting.

3.      In my experience, this is only one of the areas that typically lacks clarity. The others are ROFOs, ROFRs, knockout (early exit) clauses, percentage rental provisions, mid-term security deposit application language, tenant self-help remedies, Guaranty-limitation language, SNDAs, and Estoppel Certificate provisions.

                                                                                    Stuart A. Lautin, Esq.*

* Board Certified, Commercial (1989) and Residential (1988) Real Estate Law,
Texas Board of Legal Specialization

Licensed in the States of Texas and New York