Hand Cut Steaks Acquisitions v. Lone Star Steakhouse
905 N.W.2d 644
Neb.2018Background
- Hand Cut Steaks Acquisitions, Inc. (HCS, Arkansas) owned a restaurant property in Omaha leased to Lone Star Steakhouse & Saloon of Nebraska, Inc. (Lone Star) under a 66‑month lease; LSF5 Cactus L.L.C. (Cactus) guarantied performance.
- Lone Star ceased operations, paid rent through Feb 2013, then stopped; HCS demanded surrender and Lone Star surrendered the premises in May 2013 with an acknowledgment of tender.
- After surrender, HCS received multiple leasing offers but declined some prospective tenants it deemed unsuitable; HCS negotiated with an ultimate buyer, executed a letter of intent (LOI) to sell on June 13, 2013, but did not close until April 2014.
- HCS sued Lone Star and Cactus for unpaid rent and related amounts; facts were tried by bench trial on stipulated facts.
- The district court found HCS did not accept surrender (treated its conduct as mitigation), awarded damages only through the LOI date (June 13, 2013), dismissed Cactus for lack of personal jurisdiction, and denied HCS’s request for contractual attorney fees.
Issues
| Issue | HCS (plaintiff) argument | Lone Star (defendant) argument | Held |
|---|---|---|---|
| Whether HCS accepted Lone Star’s surrender, terminating the lease | HCS: did not accept surrender; retook to mitigate and relet/sell on Lone Star’s account | Lone Star: HCS’s sale/retaking shows acceptance and termination | Court: HCS did not accept surrender; actions consistent with mitigation and HCS expressly reserved lease rights |
| Whether HCS reasonably mitigated damages and when damages stopped accruing | HCS: mitigation efforts were reasonable; damages run until sale closing | Lone Star: HCS unreasonably rejected bona fide tenants and unreasonably pursued a slow sale; damages should stop earlier | Court: initial mitigation reasonable through LOI (June 13, 2013); delay to closing was commercially unreasonable, so damages capped at LOI date |
| Personal jurisdiction over out‑of‑state guarantor Cactus | HCS: guaranty, choice‑of‑law (Nebraska), insurer status, and inducement to lease Nebraska property establish minimum contacts | Cactus: insufficient Nebraska contacts; dismissal appropriate | Court: reversed dismissal — Cactus purposefully availed itself with a guaranty tied to Nebraska real property and law; specific jurisdiction proper |
| Enforceability of contractual attorney‑fees provision | HCS: lease entitles prevailing party to attorney fees | Lone Star: American Rule bars contractual fee recovery absent statute | Court: affirmed denial — Nebraska refuses to enforce contractual attorney‑fee provisions absent statutory authorization |
Key Cases Cited
- Klein v. Oakland/Red Oak Holdings, 294 Neb. 535 (statement that stipulated‑fact bench trials are reviewed de novo)
- Quality Pork Internat. v. Rupari Food Servs., 267 Neb. 474 (analysis of contacts and contract‑based jurisdiction)
- McGee v. International Life Ins. Co., 355 U.S. 220 (contract with substantial connection to forum can support jurisdiction)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (purposeful availment and foreseeability in contract disputes)
- Properties Inv. Group v. JBA, Inc., 242 Neb. 439 (recognizing sale as a potential form of mitigation by landlord)