QUESTION 1H:
Spring 17: Although we covered a lot of the issues addressed in this Question, this is from the Fall 1998 exam and I was using a different book that included different cases and emphasis.
QUESTION 1H: COMMENTS: Exam Technique: I was looking for a to-do list or series of questions here. The best answers discussed in detail both legal and factual research they would do for each topic they discussed. Less strong answers were skimpy on either law or facts or both. A common problem was simply reciting legal tests in question form (e.g., "I would check to see if the eviction was substantial.") without any indication of what types of facts or questions would be relevant to determining whether the test was met.
A few of you ignored the form of Question I in whole or in part, and simply made legal arguments as though this was Question III or IV. I gave you a little credit for legal arguments that were on point and that recognized those places where you had insufficient information to resolve legal issues conclusively. I gave virtually no credit for arguments that assumed away the very uncertainties that you would have to research to advice your client intelligently.
Another common problem was a tendency to ask questions or make suggestions that were really aimed at giving L business advice. The problem suggests that he has come to you to get a sense of his legal rights and of the legal consequences of possible actions he might take. Nothing in the question (or the course) suggests that I was looking for you to do an elaborate business analysis, particularly of the potential profitability of the other space he is considering. On exams, focus on the topics which we covered in the course.
Substance: I was looking for discussion of four major sets of problems: The loss of heat/electricity; E's boxes in L's storage area; access to S's storage area; and L's ability to exit.
Heat/Electricity: Law: You need to determine if the jurisdiction has any kind of implied warranties or building codes that apply to commercial leases, whether they are waivable, how they are breached, what notice tenants have to give, and what remedies are available. Some of you suggested lawsuits against the builder for improper construction, but all the cases we read of that type involved suits by owners, not tenants. If you raised this issue, you should have at least suggested that you'd need to research whether tenants could bring such suits. Facts: You need to find out what provisions the lease makes for repairs, the cause and extent of the problems, what damage they caused, whether there's evidence of notice already given about the problems, whether L can (and can afford to) fix the problems himself. Some of you suggested researching the relative bargaining power of the parties. First, it's not clear what exactly you'd do to determine this. Second, it is highly unlikely that a court will void a commercial lease because of unequal bargaining power, and you really have no facts to suggest it would be an issue. Thus, it probably wasn't worth spending much time on.
E's Boxes: Interference with the tenant's possession by the landlord herself raises actual partial eviction (APE) issues. You'd have to check the relevant legal standards for APE, make sure the lease did not contain language that gave E the right to store the boxes, determine how big an interference was at issues, check what remedies were allowed, etc.
The boxes do not raise the issue of right to possession at the outset of the lease, which only arises if 3d parties are in possession without the landlord's permission. It also is not a "constructive" eviction both because it involves an actual trespass and because it doesn't effectively make it impossible for L to use the whole space.
S's Storage Area: Here, you'd first have to determine how precise the separate agreement between E and S was. The description of the agreement suggests a license as much as a lease (some storage space somewhere when it becomes available). Assuming it is sufficiently lease-like to be enforceable, you have to check the rules for who/how to evict holdover tenants. You probably also need to find out if L reaslly needs the space before S intends to vacate. No point in getting upset if in practice the space serves L's needs.
L's Exit: In order to advise L about exit, you'd need to determine how easy it would be for him to transfer the leasehold and whether E would have to mitigate damages. For both issues, you'd need to check the lease provisions as well as the particular legal rules employed in the jurisdiction for limiting transfer and for mitigation. You might want to know something about how suitable a tenant the law firm is and about how easy it is to fill the spaces in the mall in general. A couple of you cleverly suggested checking local law to see if discrimination against lawyers is permitted.
Other Issues: Many of you suggested checking if L's primary agreement is a lease or a license. You could do this, although it probably isn't worth spending a lot of time on. The question strongly suggests that L is assigned a specific space for a specific duration. It is very unlikely that one of a group of stores in a strrip mall will be operating by license; the mall owner needs security that individual stores will continue to operate.
Several of you proposed elaborately checking out the space to which L was considering moving. If your analysis seemed helpful to the question of whether L should leave his present lease, I gave you a little credit. However, you were not explicitly asked to check out the arrangements at the second location. The lack of information about it (compared to the current space) should have suggested that this was not a primary focus of the question.
QUESTION 1H: STUDENT ANSWER #1
(1) What are Lew's goals?
- How far does he want to go before cutting off E?
- When will he want to move?
This provides framework to effectuate decisions under client goals.
(2) Get the Agreement: Lease or License?: Getting the agreement would lead to allowing us to determine what he signed because they both have different ramifications, so categorize the agreement. Lease factors included?
- Language indicating parties intended Landlord Tenant Relationship or Informal Agreement signifying a license.
- Is there any assignment clause? (leases are assignable) or No Assignment (license)
- Is the space to be occupied specifically designated (lease) or not and subject to chance? (license)
- Does it appear easier or harder to set out of?
- Liquidated damages provision for breaching?
- Express term of agreement?
- Is it a right to possess exclusively or right to use to you personally?
Why? Determine if it is a license or lease allows a number of solutions to be spelled out right away. If the agreement is a license it will be generally easier to get out of while a lease is tougher; determining if it is one or the other also would impact how we negotiate w/ Edna or what optional incentives to act are most favorable. Along these lines we may want to research custom in strip mall agreements, in this strip mall, as well as prior relationships w/tenants and how Edna handled them.
(3) Implied Warranty of Habitability (IWH) and its extension to commercial facilities in jurisdiction?
(a) Look at lease what does it obligate parties to do?
- Did Lew waive his IWH?
- Any express duty of LL to repair?
- Of Lew to repair?
- Is the lease one-sided or ambiguous?
- How far in Caselaw in Jurisdiction will court construe against LL or how much does jurisdiction want to have equal bargaining power as policy.
- Who wrote lease? Lew or Edna?
(b) Does the Jurisdiction extend the IWH to commercial?
(i) Caveat Emptor doctrine
(ii) Only residence
(iii) Limited commercial exceptions?
- For comic stories
- For strip malls
- Anything similar
(iv) Does jurisdiction have bright line commercial rules or evaluate parties on case by case basis.
(v) Any statutes? Housing codes?
- What do they say? May be we can get off on a technicality, a violation of code:
- Ask around; inspect the sites; list specific violations of codes, etc.
- May be we want out on point of law but can't so we need to find another way.
(c)Remedies: what does court allow?
(i) Constructive eviction? — Do we fit in, do these violations seem to constitute or run similar to caselaw?
(ii) Repair and deduct? — for commercial?
(iii) Rent abatement? For commercial
(4) Actual Partial Eviction/Storage in already demised back room
(a)Check out site:
- Are boxes substantially invading Lew's backroom
- Take measurements, pictures, collect witness testimony as to any change, addition of boxes to backroom. (Want to build a case for a substantial interference regardless of caselaw rule, just easier to show.)
(b) Since caselaw on APE often depends on the community (i.e. in Smith trivial invasion; APE because in city but in rural area not as big a deal lots of land). Check facts re custom/community
- What is business type and practice
- (i.e.) need lots of storage
- What do other malls in area allow
- What does Edna do for other clients in the area?
(b) Now check the caselaw to see how easy or how hard it will be to prove APE.
(i) Smith Rule — Trivial — APE (better for us; easier to prove.)
(ii) Dussin Rule — Substantial Required
(c) Along the Dussin lines we should check out evidence as to E's good faith in failing to remove her boxes as well as her agreements/history of agreements in area and how complicated. Dussin allowed the landlord to interfere as well because the lease agreements were complicated and also they stated that a good faith mistake was made. Since this a possible exception we should look into this.
1) Inquire to other tenants — Is she going same thing to them.
2) Any evidence of conversation
3) Any history of a bad relationship between Lew and Edna — May go to any bad faith motive of E.
- delinquent rent payments
- financial problems
- previous failures to repair, supply, remove previous tenants
(d) OK Now what can Lew get if he wins the APE suit.
1) Can he abate rent — Smith
2) Can he get just contract damages?
(5) As an aside: quickly consulting with a Landlord-Tenant lawyer for five minutes, on the phone may give the diligent attorney a grasp on any policies the state has. In a "close call" case, a court may rule on policy.
(a) Does state have pro-landlord policies
- protections for landlord
- less damages for tenant
- prevent assignability w/o consent
- rule for landlord often when bargaining power of parties questioned.
(b) Is the state pro-tenant?
- Flexible remedies like 1 year deduct
- Easier to prove fault of landlord in failing to furnish
- Remedies better for tenant rent abatement allowed not just contract damages.
After getting a feel for policy, this will allow you to prioritize your arguments and place those that will be most appealing to the court first, it will also dictate overall which remedies you seek to obtain; taking and trying to get the easier remedies first.
(6) Possible Potential Landlord breach: Failure to furnish possession of storage #2 at start
(a) Self Help
- Any way to avoid issue and either paying a moving co. or have Lew and his crew at the store help Stephanie move out more quickly.
(b) What is jurisdictions rule of LL required to do at start?
- Landlord or tenant duty to furnish
- If T, what will it cost Lew to boot out Stephanie?
- What are appropriate methods?
- Sheriff?
- Gangland raid — just kidding
- Cost of these vs. suit in court.
(c) Remedies — What can we get is it worth it?
(1) Fault of Landlord
- Does Edna have a duty and does she sit idly by
- Ask Edna to move out Stephanie
- Has she failed to remove in the past?
- (2) We can't recover if it is our duty.
(d) Does the jurisdiction follow the rule allowing the LL to have a reasonable time to remove the LL to have a reasonable time to remove the defaulting tenant?
- What constitutes a reasonable time in the caselaw?
- What constitutes a reasonable time under custom in the community?
- What and how dire is Lew's need for storage?
- Can he make it until Stephanie leaves or does he need now?
- What is value of site bargained for?
This issue may not be the best method to hang our hat on; the best we can do is get damages for substitute premises, and only if we follow a modern rule and can prove that the landlord is at fault and/or fails to correct the problem in a reasonable period of time, plus damages may not suffice if what Lew wants is storage. Since this is the case I might focus on self-help here.
(7) Assignability: Can Lew assign to the firm?
(a) Look at the lease
(i) Assignability Clause — Yes or no.
- "No transfers"
- "Transfers w/ LL consent"
(ii) No assignability clause?
(iii) Can Lew sublease?
(b) Caselaw — What rule does the court follow?
(i) Isbey — no implied reasonable consent, stick to language of contract
(ii) Hinky Dink — Implied that consent will be commercially reasonable given or not?
(iii) If no clause ,will our court read in a clause implying assignability?
- What will be terms of this implied clause?
- Strict landlord consent
- Landlord consent must be reasonable.
(c) Is there equal bargaining power between Lew & Edna (ie) evidence of?
(d) Are there a plethora of open places for the firm to rent from?