Plaza Dev. Co. v. W. Cooper Ents., L.L.C.
12 N.E.3d 506
Ohio Ct. App.2014Background
- Plaza (landlord) and DF&R entered a 1994 20-year ground lease for a restaurant property; the lease allowed landlord to reenter and relet upon tenant default and specified how reletting rents would be applied.
- Lease interest passed through several entities; Baja Sol held the tenant interest in 2009 and ceased operations but continued paying rent while seeking a replacement.
- On May 27, 2010 Baja Sol and El Triunfo executed a document titled “Sublease Agreement” (Plaza signed a consent); El Triunfo operated the restaurant and later fell behind on payments.
- Plaza commenced eviction proceedings in late 2010, then in January 2011 entered a five-year direct lease with El Triunfo effective Jan 1, 2011.
- Plaza sued Baja Sol/WCE for unpaid rent and other relief; trial court granted summary judgment to defendants finding the 2010 agreement was a sublease and that Plaza’s 2011 lease terminated defendants’ rent liability as a matter of law.
- The court of appeals affirmed that the 2010 agreement was a sublease but reversed the grant of summary judgment, holding Plaza’s reletting under the lease’s remedies clause did not extinguish defendants’ continuing liability and remanded for application of the lease’s damages formula.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the 2010 document an assignment or a sublease? | The document effectively transferred full lease rights to El Triunfo (assignment). | It was titled and structured as a sublease; Plaza consented but did not release tenant. | Sublease: agreement language, rent paid to sublessor, reservation of reversion/termination rights supported sublease. |
| Did Plaza's 2011 lease to El Triunfo terminate defendants' liability for future rent? | No — ground lease §25 permits reletting with receipts credited against tenant's continuing obligation; Plaza properly exercised that remedy. | Yes — reletting and executing a new lease terminated the old lease by operation of law, cutting off further liability. | Held for Plaza on this point: reletting pursuant to the lease's reserved power does not operate as surrender; defendants' liability was not terminated and trial court erred. |
| Should the contractual damages formula in the ground lease govern recovery? | Yes — Plaza should apply the lease's remedies and offset rents received from reletting against tenant liability. | Defendants argued reletting discharged obligations so the lease formula is inapplicable. | Remanded: court ordered to apply the lease's remedies provision (i.e., use the contractual formula and offsets) on remand. |
| Is Plaza entitled to attorneys' fees under the lease? | Yes — Plaza claimed it was the successful party and sought fees under §41(d). | Defendants opposed. | Moot on appeal: because case remanded to apply lease remedies, fee issue was left for trial court to decide in the first instance. |
Key Cases Cited
- Bonacorsi v. Wheeling & Lake Erie Ry. Co., 95 Ohio St.3d 314 (2002) (standard of de novo review for summary judgment).
- Frenchtown Square Partnership v. Lemstone, Inc., 99 Ohio St.3d 254 (2003) (landlord duty to mitigate damages in commercial leases; duty may be altered by contract).
- Dennis v. Morgan, 89 Ohio St.3d 417 (2000) (discussion of lessee liability for rents and effect of landlord’s actions absent specific lease provisions).
- F. Ent., Inc. v. Kentucky Fried Chicken Corp., 47 Ohio St.2d 154 (1976) (damage award should put injured party in position had contract not been breached at least cost to defaulting party).
- Yates v. Reid, 36 Cal.2d 383 (1950) (reletting pursuant to lease provision does not constitute surrender by operation of law).