A nonresidential tenant entered into a lease agreement with the landlord for possession of space in a shopping complex. A landlord liability exemption provision in the lease agreement stated the landlord will not be liable for the tenant’s lost business incurred due to any renovations undertaken in the complex by the landlord. During the tenancy, the landlord began renovations, not exercising what the tenant deemed to be reasonable care, causing the tenant to lose business due to reduced customer visibility and construction activity at the tenant’s space. The tenant sought to recover lost business income caused by the renovation, claiming the landlord breached the lease since he did not exercise reasonable care in conducting the renovations. The landlord claimed the tenant was barred from any recovery under the liability exemption provision in the lease agreement. A California appeals court held the landlord was not responsible for the tenant’s lost income caused by the renovations since the lease agreement stated the landlord was not to be liable for lost business income due to renovations. [Frittelli v. 350 North Canon Drive (2011) 202 CA 4th 35]
Editor’s note – The tenant’s lease specified the sole recourse from damages was to file an insurance claim. The tenant claimed the landlord was still liable since the liability exemption provision was included inconspicuously, as it was found in the middle of the lease in normal-sized type. However, the court maintains the tenant had a reasonable opportunity to read the entire lease before signing. Although the tenant did not review the lease closely, all portions of the lease are enforceable, including the landlord’s exemption of liability for lost business on a renovation.
