MEDIATORS:
DO NOT READ THE SIMULATION PARTS OF THE LANDLORD AND TENANT.
Negotiation & ADR
Prof. John Barkai
Red Devil Dog Restaurant Lease
Please find two people to be the disputants in this case. You have the role of the mediator. Use caucuses in this mediation.
MEDIATOR
LENGTH OF MEDIATION:
AGREEMENT, if any: - the terms of agreement should be put on the back of this page and the parties should sign the page indicating their consent with the terms.
OBSERVATIONS:
PLEASE TURN IN THIS PAGE TO PROFESSOR BARKAI'S MAILBOX BY
THURSDAY at Noon
LANDLORD
Red Devil Dog Restaurant Lease
Thank you for your willingness to help our class in this mediation training. Please play your role realistically. If necessary, you can make up additional facts that someone in your position would know as long as these facts are consistent with the facts that you have been given here. You are the owner of some commercial property. You are having a problem with a tenant. Assume that you have tried, but failed to negotiate a successful resolution to your problem with your tenant. Now you are willing to try mediation. Please don't make this too hard or too easy for the student playing the role of the mediator. Make them work at it, but allow them to help you settle this problem. Don't be too talkative. Make them ask questions. Don't pour out all your information at once. Reveal things slowly over the course of the mediation. This mediation should take no more than one hour. Thanks again.
FACTS:
After searching for a year, you finally found a tenant for a commercial space near the university. The tenant planned to open a Red Devil Dog restaurant, a national chain, on your property. The prospective tenant works in the health-care field, but has won awards for Cajun cooking and has some experience in the restaurant business.
Shortly after signing a lease with the tenant for the Red Devil Dog restaurant, you received an offer, which is still open, from another national restaurant chain. This second offer is for a lease at $600 per month plus 1 1/2 percent of gross sales.
However, you are more pleased with the better Red Devil Dog deal under its five-year lease ($1,000 per month plus 3 percent of gross sales) and have looked forward to working with the tenant, who had even advanced a $2,000 payment as a sign of good faith.
Unfortunately, recent news is that the Red Devil Dog chain is in bankruptcy. You were hopeful that the tenant could still open a restaurant under another name, but the tenant seemed anxious to wiggle out of the lease. To make matters worse, you had spent $2,500 to modify the building for the tenant, particularly fixing the windows to look like a Red Devil Dog restaurant. Under the circumstances, your lawyer is not optimistic about a substantial recovery from this tenant.
You have decided to act tough in the beginning with this tenant. Despite your lawyer's warning that certain action might subject you to liability for withholding the tenant's property, you changed the locks so that the tenant could not remove the boxes of restaurant equipment that had been placed inside your building. You also sent a demand letter asking the tenant to either perform the lease (rent the building) or to pay $80,000 in damages. If the tenant will not rent the building, you want as much money as possible. NOTE: You may elaborate on these facts as you play the role of the landlord.
Red Devil Dog Restaurant LeaseTENANT
Thank you for your willingness to help our class in this mediation training. Please play your role realistically. If necessary, you can make up additional facts that someone in your position would know as long as these facts are consistent with the facts that you have been given here. In this case you are a tenant who was going to rent some commercial property. You are having a problem now. Assume that you have tried, but failed to negotiate a successful resolution to your problem with your landlord. Now you are willing to try mediation. Make them work at it, but allow them to help you settle this problem. Make them work at it, but give them a chance to succeed. Don't be too talkative. Make them ask questions. Don't pour out all your information at once. Reveal things slowly over the course of the mediation. This mediation should take no more than one hour. Thanks again.
FACTS:
You have always dreamed of running your own Cajun restaurant. You have won awards for Cajun cooking. To get experience, you have taken part-time jobs assisting in the management of friends restaurants. Recently, you decided to take the plunge and open a restaurant of your own. You decided to try a franchise with a name that would draw customers.
You purchased a Red Devil Dog restaurant franchise, borrowing half of the $40,000 franchise purchase price and using your savings for the rest. You signed a five-year lease with a landlord. You gave a $2,000 deposit and had $9,000 worth of new equipment delivered to the building.
The rent is high, $1,000 per month plus 3 percent of gross, but the location is near a university and students have flocked to Red Devil Dogs elsewhere. The landlord was very cooperative and made some modifications including changing the windows to fit the franchise specifications. You planned to quit your job in the health-care field next month and begin a new career.
Then the news of the Red Devil Dog bankruptcy broke! You don't know when, if ever, you'll see the $40,000. Your dreams are dashed. When the landlord heard of the bankruptcy, the landlord responded by changing the locks so that you could not remove the boxes of equipment and sending a letter demanding you either perform the lease (rent the building) or pay $80,000 in damages. Talk about being cold - at the very least the mediation will permit you to tell that jerk what you think of such a response.
The whole thing is a nightmare. If you don't get the equipment out within two weeks, you will not be able to get a refund; in fact, you'll have to sell it as used equipment for half price. Your savings are now down to only a few thousand dollars. You would still like to start a restaurant, but if you try to start a Cajun restaurant without a national franchise, it will take some time to establish a clientele and you won't have the benefit of the franchiser's assistance. Paying $1,000 a month in rent is out of the question. NOTE: You may elaborate on these facts as you play the role of the tenant.
MEDIATOR
Red Devil Dog Restaurant Lease
You have agreed to mediate a dispute between a commercial landlord and a prospective tenant. You have been told that the prospective tenant had agreed to rent the landlord's premises to operate a local franchise of the well-known Red Devil Dog Restaurant chain.
The lease provides for a payment of $1,000 per month plus 3 percent of gross sales for a five-year period. After the landlord made $2,500 in modifications and the tenant moved in boxes of equipment, the news broke that the Red devil Dog chain had filed for bankruptcy.
The prospective tenant called the landlord to cancel the lease. The landlord responded with a letter demanding that the tenant either perform the lease (rent the building) or pay $80,000 in damages.
A mediation has been scheduled and you are going to be the mediator (and may mediate this case with a co-mediator).
Created by Len Riskin; modified by John Barkai