Downtown Barre Development v. GU Markets of Barre, LLC
189 Vt. 637
| Vt. | 2011Background
- Lease from 1973 between landlord and Grand Union Stores for a 26,000-sq-ft downtown Barre unit with 20-year term and five renewals totaling up to 50 years (through 2023).
- 2000 bankruptcy led to C & S Wholesalers, Inc. acquiring Grand Union assets and forming Grand Union Markets, LLC with separate SPVs for each property; tenant was created to operate the Barre store.
- 2000 assignment approved by bankruptcy court transferred the Grand Union lease to tenant; 2002 tenant assigned to Maxi Drug, Inc. but remained primarily liable.
- 2007 Rite Aid acquisition of Maxi Drug’s parent company did not relieve tenant of primary liability under the lease.
- 2009 landlord sought declaratory relief alleging (a) tenant’s control of outdoor lighting constituted a material breach justifying termination, and (b) tenant’s shell-corporation status was notice of reduced liability; trial court denied terminating rights; appellate court affirmed.
- Lease Paragraph 4 permits assignment or subletting, with landlord right to terminate only after (i) assignment occurs and (ii) tenant provides notice of reduced liability; Paragraph 55 deals with unpaid rent; rent payments have been current.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether notice of reduced liability is required for termination to occur | Downtown Barre argues tenant’s corporate structure and conduct show reduced liability and thus notice is satisfied | GU Markets contends no notice is provided by conduct; lease requires explicit notice of reduced liability | No; explicit notice is required; conduct/status do not satisfy notice under the lease |
| Whether tenant’s corporate status constitutes sufficient notice to terminate the lease | Landlord asserts shell-corporation status signals reduced liability | Tenant argues status alone does not trigger termination; no formal notice given | No; corporate structure alone does not meet the notice requirement in the lease |
Key Cases Cited
- Downtown Barre Dev. v. C & S Wholesale Grocers, Inc., 177 Vt. 70 (2004 VT 47) (notice/intent issues under prior decision cited by court)
- KPC Corp. v. Book Press, Inc., 161 Vt. 145 (1993) (when terms are plain, enforce according to language)
- Lamoille Grain Co. v. St. Johnsbury & Lamoille County R.R., 135 Vt. 5 (1976) (interpretation of contracts consistent with language)
- Field v. Costa, 184 Vt. 230 (2008 VT 75) (de novo review of judgment as a matter of law; standard applied)