Arrowhead Ridge I, LLC v. Cold Stone Creamery, Inc.
2011 S.D. 38
S.D.2011Background
- Lease originated 2004 for Arrowhead-owned center; Cold Stone signed as tenant and guarantor, later admitted full liability for term; HuHot exclusivity provision limited tenant replacement options; trial court found Arrowhead failed to mitigate due to exclusivity; premises vacant nearly two years by trial; Arrowhead sought unpaid rent, late fees, and attorneys’ fees; court held mitigation and fee issues in dispute, reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Arrowhead have to mitigate damages due to exclusivity clause? | Arrowheadmitigated; exclusivity prevented replacement. | Mitigation required by lease; exclusivity violated duty. | Yes, but record shows mitigation satisfied despite exclusivity. |
| Can Arrowhead recover attorneys’ fees from Cold Stone’s default under the lease or SD law? | Lease authorizes fees; SDCL 21-16-11 permits fees in forcible entry. | Lease does not expressly or implicitly authorize fees; no statutory basis for collateral claims. | No recovery under lease or SD law; remanded to adjust judgment. |
| Was the lease between Arrowhead and Cold Stone valid and enforceable despite inconsistencies? | Written terms reflect mutual assent; parol evidence admissible to explain ambiguity. | Inconsistencies show lack of mutual assent on essential terms. | Court held no abuse of discretion; lease found valid and enforceable. |
| Did the trial court commit error by relying on ambiguity to bar parol evidence? | Ambiguity permitted parol evidence to explain instrument. | Extrinsic evidence improperly used to vary terms. | No clear error; standard affirmed in analysis. |
Key Cases Cited
- Ducheneaux v. Miller, 488 N.W.2d 902 (S.D. 1992) (duty to mitigate damages; reasonable diligence required)
- Jacobson v. Gulbransen, 623 N.W.2d 84 (S.D. 2001) (mutual assent depends on meeting of minds on essential terms)
- Read v. McKennan Hosp., 610 N.W.2d 782 (S.D. 2000) (mutual assent requires same understanding of terms)
- Frenchtown Square P’ship v. Lemstone, Inc., 791 N.E.2d 417 (Ohio 2003) (landlord not required to lease to any willing tenant; mitigation context)
- Austin Hill Country Realty, Inc. v. Palisades Plaza, Inc., 948 S.W.2d 293 (Tex. 1997) (landlord not obligated to sacrifice own rights; mitigation flexibility)