Transcript Landlord/Tenant Litigation Peter C. Sales Landlord/Tenant Lease Litigation • • • • • • • • • • • • • • • • Cost Time Process Tenant Right of Offset Self- Help/Right of Reentry Notice Provisions Cure Provisions Consent Provisions Holdover Surrender of Premises Attorney’s Fees Choice of.

Landlord/Tenant Litigation
Peter C. Sales
Landlord/Tenant Lease Litigation
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Cost
Time
Process
Tenant Right of Offset
Self- Help/Right of Reentry
Notice Provisions
Cure Provisions
Consent Provisions
Holdover
Surrender of Premises
Attorney’s Fees
Choice of Law
Choice of Venue
Jurisdiction
Mediation/Arbitration
Collectability of Judgment
Cost
• One thing that many non-litigation oriented
clients or transactional lawyers fail to understand
is the cost of litigation.
• Even a fairly simple case can cost tens of
thousands of dollars.
• Discovery, particularly, can be very expensive.
This is not limited to document intensive cases.
Reviewing and producing electronic discovery can
cost thousand and even hundreds of thousands
of dollars. Preparing and taking a single full day
deposition can cost in excess of $10,000.
Time
• One thing that clients and non-litigators do not
understand is how long litigation can last.
• In Tennessee, after relatively recent holdings,
motions to dismiss and motions for summary
judgment are very difficult to win.
• Current file to trial, if all goes well and there are
no delays, is running 16-20 months.
– In Davidson County, Local Rule 18.01 states
• All civil cases must be concluded or an order setting the case
for trial obtained within twelve (12) months from the date of
filing unless the court has directed a shorter or longer
period.
Process
• Many clients and non-litigators do not understand the
litigation process.
• It is not simply a matter of filing the complaint and getting a
judgment.
• Process
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File complaint.
Defendant has 30 days to answer the complaint.
Discovery usually takes 6 months to a year.
Trial is typically anywhere from 12 months to 24 months after
filing complaint.
– In Davidson County, Local Rule 18.01 states
• All civil cases must be concluded or an order setting the case for trial
obtained within twelve (12) months from the date of filing unless the
court has directed a shorter or longer period.
Tenant Right of Offset
• The law in Tennessee is that the Landlord’s
and the Tenant’s Obligations are independent
of each other.
• Therefore, if Landlord defaults, Tenant does
not have the right to unilaterally offset against
rent.
• Modern trend is that Landlord’s and Tenant’s
lease obligations are dependent obligations.
Self-Help Not Allowed in Some
States
• For examples in Tennessee – NO SELF-HELP
• T.C.A. § 29-18-102. Forcible entry and detainer; exceptions
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(a) A forcible entry and detainer is where a person, by force or with weapons, or by breaking
open the doors, windows, or other parts of the house, whether any person be in it or not, or
by any kind of violence whatsoever, enters upon land, tenement, or possession, in the
occupation of another, and detains and holds the same; or by threatening to kill, maim, or
beat the party in possession; or by such words, circumstances, or actions, as have a natural
tendency to excite fear or apprehension of danger; or by putting out of doors or carrying
away the goods of the party in possession; or by entering peaceably and then turning or
keeping the party out of possession by force or threat or other circumstances of terror.
(b) No action for forcible entry and detainer shall lie against any tenant who has paid all rent
due for current occupancy of the premises and who is not in violation of any law nor
otherwise in breach of the tenant's written lease, but this subsection shall not apply in any
manner to farm property, nor shall the provisions of this subsection be construed to alter or
amend any valid lease agreement in effect on May 31, 1979.
Notice Provisions
• Always, always, always follow the notice
provisions provided for in the contract.
• If it says written notice, that’s what it means.
• If it says hand delivery, that’s what it means.
• If it says certified sender receipt, that’s what it
means.
• There is nothing that can derail an otherwise
good lawsuit than a party’s failure to follow
notice provisions.
Cure Provisions
• Issues
– What type of defaults are “cureable”
– How long to cure default
– Are different types of default treated differently
• Failure to pay rent vs. non-rent default
– What type of notice required to begin the cure
period running
– Is there a right to cure for multiple defaults
Cure Provision Examples
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The failure by Tenant to make any payments required to be made by Tenant
hereunder, where such failure shall continue for a period of ten (10) days after
written notice thereof from Landlord to Tenant; and (b) except as otherwise
provided in this Lease, the failure by Tenant to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed by
Tenant, other than described in subpart (a) above, where such failure shall
continue for a period of thirty (30) days after written notice thereof from Landlord
to Tenant; provided, however, that if the nature of Tenant’s non-compliance is such
that more than thirty (30) days are reasonably required for its cure, then Tenant
shall not be deemed to be in default if Tenant commenced such cure within said
thirty (30) day period and thereafter diligently prosecutes such cure to completion.
Tenant fails to observe, perform and keep each and every covenant, agreement,
provision, stipulation and condition contained in this Lease to be observed,
performed and kept by Tenant and, unless a shorter cure period is specified herein
(e.g., a failure by Tenant to pay the Rent as more particularly described above),
Tenant fails to cure such failure within twenty (20) days after receipt of notice by
Landlord requiring that Tenant correct such failure.
Consent Provisions
• Issues
– What type of actions must receive consent
• Assignment
• Tenant Repairs or Changes to Premises
– Is consent to be “freely given” not “unreasonably
withheld” or “in Landlord’s sole discretion.”
– What if consent is requested, but no response is
received?
Consent Provisions
• Example
– Consents: Wherever in the Lease provision is made for the consent, approval
or discretion of Landlord or Tenant, the same shall not be unreasonably
withheld, delayed or conditioned. In the event either party fails, in writing, to
approve or reject, in accordance with the terms hereof, any request for
consent or approval within fifteen (15) days after a second request, the same
shall be deemed approved. Wherever the Lease provides for one party to
incur costs on behalf of the other party, such costs shall be deemed limited to
reasonable costs.
– With regard to Assignment and Subletting
• Except as expressly permitted in Sections ___ and ___, Tenant shall not assign, transfer,
mortgage or otherwise encumber all or any part of Tenant’s interest or beneficial interest in
this Lease or in the Demised Premises, directly or indirectly, or by operation of law, or sublease
all or any part of the Demised Premises, without first obtaining the prior written consent of
Landlord in each and every instance, which consent may be granted or withheld by the
Landlord in its sole discretion, which shall not be unreasonably withheld. Receipt by Landlord
of amounts payable under this Lease from any party other than Tenant shall not be deemed to
operate as consent to an assignment or sublease.
Holdover Provisions
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HOLDING OVER. If Tenant remains in possession of the Premises after the expiration or
termination of the term hereof, without the execution of a new lease, Tenant shall be a
tenant at will, and Landlord shall have no obligation to notify Tenant of any termination of
Tenant’s possession. Commencing on the date following the date of such expiration or
termination, the Minimum Rent shall, for each month or fraction thereof that Tenant so
remains in possession, be one and one-half (150%) of the Minimum Rent in effect at the
expiration or termination of this Lease, subject to all the other terms and provisions of this
Lease. Tenant shall indemnify and hold Landlord harmless from all loss or liability, including
any claim made by any successor tenant founded upon Tenant’s failure to surrender the
Premises on a timely basis.
Any holding over after the expiration of the Term shall be construed to create a month-tomonth tenancy, terminable by either party upon thirty (30) days' notice, at the rent herein
specified (prorated on a monthly basis) and shall otherwise be on the terms and conditions
specified in this Lease as far as applicable, except that Minimum Base Rent shall be one
hundred, fifty percent (150%) of Minimum Base Rent for the immediately preceding Term.
The foregoing shall not prejudice any rights of Landlord in the event Tenant remains in
possession of the Demised Premises after the expiration of the Lease Term without
Landlord’s acquiescence, including, without limitation, the right to dispossess Tenant or to
seek any damages Landlord might have by virtue of Tenant’s holding over.
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Surrender of Premises
Surrender of Premises: Tenant may (if not in Default) immediately prior to the expiration or earlier
termination of this Lease or any extension thereof, remove all personal property, furnishings, trade
fixtures, merchandise and equipment which Tenant has placed in the Premises and all debris and rubbish,
provided Tenant simultaneously repairs all damage to the Premises caused by such removal. If Tenant is in
Default at the time of any termination of this Lease, Tenant shall not be entitled to remove any of such
personal property, trade fixtures, or equipment, and Landlord shall have all rights therein as are then
available to Landlord by law. Notwithstanding the foregoing, Tenant shall not be permitted to remove any
other alterations, additions or improvements to the Premises without Landlord’s consent, including but
not limited to wall coverings, floor coverings, fixtures (other than trade fixtures).
End of Term. Upon the expiration or other termination of the Term of this Lease, Tenant shall quit and
surrender to Landlord the Demised Premises together with all buildings and improvements thereon,
“broom-clean,” in good order and condition, ordinary wear and damage by the elements excepted. If the
last day of the Term of this Lease or any renewal thereof falls on a Sunday, this Lease shall expire on the
business day immediately following. Tenant shall remove its signs, unattached movable trade fixtures,
inventory and furniture upon the termination of this Lease. Landlord may require Tenant to remove any or
all leasehold improvements from the Demised Premises upon the termination of this Lease. Tenant shall
promptly repair any damage to the Demised Premises resulting from the installation or removal of any of
the foregoing items. Any personal property left in the Demised Premises by Tenant upon the termination
of this Lease shall be deemed abandoned and may be disposed of by Landlord at Tenant’s expense and
Tenant shall reimburse Landlord, on demand, for its costs of removal. Tenant’s obligations to observe or
perform this covenant shall survive the expiration or other termination of the terms of this Lease.
Quantum of Damages
• Leases
– Two Theories
• Conveyance Theory
– Landlord “conveyed” the property to the Tenant for a set period of
time and the Tenant was responsible for the payment for the
conveyance.
– The concept of monthly payments was a convenience for the tenant.
– Under the conveyance theory analysis – if the Tenant breached, the
Tenant was responsible for paying all of the rent.
• Contract Theory
– Under a Contract Theory, Upon a breach of the Lease by the Tenant,
the Landlord is entitled to damages to compensate it for what it
expected to receive.
– Expectancy Damages
Damages
• Tennessee has adopted the Contract Theory
– Kahn v. Penczner, 2008 WL 2894827 (Tenn. Ct. App. 2008)
• It is well settled that the measure and elements of damages upon the
breach of a lease is governed by the general principles that determine the
measure of damages on claims arising from breaches of other kinds of
contracts. The general rule of contracts, to the effect that the plaintiff may
recover damages only to the extent of its injury, applies to leases.
Damages for breach of a lease should, as a general rule, reflect a
compensation reasonably determined to place the injured party in the
same position as he or she would have been in had the breach not
occurred and the contract been fully performed, taking into account,
however, the duty to mitigate damages. In addition, damages resulting
from a breach of a lease must have been within a contemplation of the
parties; must have been proximately caused by the breach; and must be
ascertainable with reasonable certainty without resort to speculation or
conjecture. See 49 Am.Jur.2d Landlord & Tenant § 96 (2003).
Contract Theory for Damages
• Duty to Mitigate
– Unlike under the Conveyance Theory, under a Contract Theory the Landlord
has an obligation to mitigate its damages.
– Obligation to try to find a replacement tenant
– What effort is satisfactory depends on the circumstances
– Kahn v. Penczner, 2008 WL 2894827, *5 (Tenn. Ct. App. 2008)
• Under the doctrine of mitigation of damages, an injured party has a duty to exercise reasonable
care and due diligence to avoid loss or minimize damages after suffering injury. See Cook &
Nichols, Inc. v. Peat, Marwick, Mitchell & Co., 480 S.W.2d 542, 545 (Tenn. Ct. App. 1971); Gilson
v. Gillia, 321 S.W.2d 855, 865 (Tenn. Ct. App. 1958)). Generally, one who is injured by the
wrongful or negligent act of another, whether by tort or breach of contract, is bound to
exercise reasonable care and diligence to avoid loss or to minimize or lessen the resulting
damage, and to the extent that his damages are the result of his active and unreasonable
enhancement thereof, or due to his failure to exercise such care and diligence, he cannot
recover. Cook & Nichols, Inc., 480 S.W.2d at 545. In determining whether an injured party has
fulfilled its duty to mitigate, a court must examine “whether the method which he employed to
avoid consequential injury was reasonable under the circumstances existing at the time.”
Action Ads, Inc. v. William B. Tanner Co., Inc., 592 S.W.2d 572, 575 (Tenn. Ct. App. 1979).
Despite this duty, an injured party is not required to mitigate damages where such a duty
would constitute an undue burden. Cummins v. Brodie, 667 S.W.2d 759, 766 (Tenn. Ct. App.
1983).
Calculation of Damages under
Contract Theory
• Damages must be ascertainable and not
speculative
• Fair Market Value Offset
• Present Value
Consequential and/or Incidental Damages
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Broker’s Fees associated with reletting
New Tenant Improvements
Attorney’s fees
Clean-up fees for premises
Etc.
Default Provision Example #1
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Tenant’s Default:
(a)
The occurrence of any one or more of the following events shall constitute a material
default of this Lease by Tenant:
(i)
The failure by Tenant to make any payments required to be made by Tenant
hereunder, where such failure shall continue for a period of ten (10) days after written notice
thereof from Landlord to Tenant; and (b) except as otherwise provided in this Lease, the
failure by Tenant to observe or perform any of the covenants, conditions or provisions of this
Lease to be observed or performed by Tenant, other than described in subpart (a) above,
where such failure shall continue for a period of thirty (30) days after written notice thereof
from Landlord to Tenant; provided, however, that if the nature of Tenant’s non-compliance is
such that more than thirty (30) days are reasonably required for its cure, then Tenant shall
not be deemed to be in default if Tenant commenced such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.
(ii)
Tenant, Guarantor or any other party liable for the obligations of Tenant under this
Lease shall file or have filed against it any proceedings under any present or future state or
federal insolvency or bankruptcy laws or other laws of similar purpose.
Default Provision Example #1 Cont.
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(b)
In the event of any such material default by Tenant, Landlord may at any time thereafter, without further demand
or notice at once, or any time thereafter during continuance of such default, do one or more of the following:
(i)
Landlord may terminate this Lease by written notice to Tenant in which event Tenant shall immediately surrender
possession of the Premises to Landlord. If the Lease is so terminated, Tenant shall be obligated to and shall pay Landlord all
Rent that would have been payable by Tenant from the date of termination to the date when this Lease would have expired
if it had not so terminated, less the fair rental value of the Premises for the same period, both discounted to present value at
the discount rate of the Federal Reserve Bank of Atlanta, Georgia, in effect at the time of termination, plus all costs and
expenses incurred by Landlord by reason of such default, including reasonable attorney’s fees. No termination of this Lease
prior to the scheduled expiration thereof shall affect Landlord’s right to collect Rent or Landlord’s costs and expenses
incurred by reason of such default, including reasonable attorney’s fees, for the period prior to the termination thereof.
(ii)
Landlord, as Tenant’s agent, without terminating this Lease, may enter upon, retake and relet the Premises at the
best price obtainable by reasonable effort, without advertisement and by private negotiations, for any term Landlord deems
appropriate, and Tenant shall be liable immediately to Landlord for all costs Landlord incurs in reletting the Premises,
including without limitation, reasonable attorneys fees, brokers’ commissions, expenses of remodeling the Premises and like
costs and Tenant’s right to possession of the Premises shall immediately be terminated. In addition, Landlord shall have the
right to have a receiver appointed to collect Rent and conduct Tenant’s business. Tenant shall be liable to Landlord for the
deficiency, if any, between all Rent due hereunder and the rent received by Landlord as a result of such reletting or
receivership (after first deducting from the rents received from such reletting or receivership the costs incurred by Landlord
in connection with such entry, retaking, reletting or receivership). Tenant shall have no right to any rent received by
Landlord from any such reletting in excess of the Rent due hereunder. No act by Landlord with respect to the Premises shall
terminate this Lease, including but not limited to acceptance of the keys, institution of an action for detainer or other
dispossessory proceedings; it being understood that this Lease may only be terminated by express written notice from
Landlord to Tenant, and any reletting of the Premises shall be presumed to be for and on behalf of Tenant, and not Landlord,
unless Landlord expressly provides otherwise in writing to Tenant.
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Default Provision Example #1 Cont.
(iii)
In addition to all other remedies available to Landlord under this Lease, Landlord may, at Landlord’s
option, but is not obligated to, upon default, pay any sum of money on behalf of Tenant that Tenant has failed to
pay in accordance with the terms hereof, or perform on behalf of Tenant any covenant or obligation of Tenant that
Tenant has failed duly to keep, observe and perform, and all sums so paid by Landlord and all costs incurred by
Landlord in connection with such performance shall be additional rent and shall be repaid by Tenant to Landlord
upon demand, together with interest thereon at the rate set forth in Section 30.3 below.
(iv)
Tenant hereby expressly waives any and all rights of redemption granted by or under any present or
future laws in the event of Tenant being evicted or dispossessed for any cause, or in the event of Landlord
obtaining possession of the Premises by reason of the violation by Tenant of any of the terms, covenants or
obligations of this Lease, or otherwise.
(v)
The rights given to Landlord in this Section are cumulative and shall be in addition and supplemental to all
other rights or remedies that Landlord may have under this Lease, under laws then in force or in equity.
(c)
In the event of any default by Tenant, Landlord shall use reasonable efforts to mitigate its damages.
Notwithstanding anything contained in this Section 22.1, (i) Tenant shall not be liable to Landlord for any sum of
accelerated Rent equivalent to more than one (1) year at a time (it being understood that if Landlord pursues the
remedy set forth in Section 22.1 (b)(i), Landlord may obtain a judgment for the full amount due thereunder, but if
the same exceeds one year of the Rent that would otherwise be payable in the last year of the then current Term
of this Lease (the “One Year Payment Limit”), such judgment shall earn interest at the Interest Rate and shall be
payable in annual installments equal to the One Year Payment Limit until the judgment and all interest thereon
has been paid in full; provided however, that the Premises shall not have been relet during such time or the
damages otherwise mitigated, in either event, the same shall reduce the amount due Landlord); (ii) neither Tenant
nor Landlord shall be liable to the other for punitive, special or consequential damages; and (iii) Tenant may be
entitled to attorneys’ fees pursuant to Section 23.1 hereof.
Default Provision Example #2
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Default. (a) The occurrence of any of the following shall constitute an event of default hereunder by
Tenant:
(i)
The Rent payable under this Lease (including Minimum Base Rent and Additional Rent) or any
other sum of money due hereunder is not paid when due, and such failure to pay continues for more than
five (5) days;
(ii)
Tenant fails to open to the public and operate in accordance with Section 1.17 of this Lease, or
Tenant sublets the Demised Premises or assigns this Lease except as herein provided;
(iii)
Tenant shall make an assignment for the benefit of creditors, or file a voluntary petition in
bankruptcy, or be adjudicated a bankrupt by any court and such adjudication shall not be vacated within
thirty (30) days, or Tenant takes the benefit of any insolvency act, or Tenant be dissolved voluntarily or
involuntarily or have a receiver of Tenant’s property appointed in any proceedings other than bankruptcy
proceedings, and such appointment shall not be vacated within thirty (30) days after it has been made; or
(iv)
Tenant fails to observe, perform and keep each and every covenant, agreement, provision,
stipulation and condition contained in this Lease to be observed, performed and kept by Tenant and,
unless a shorter cure period is specified herein (e.g., a failure by Tenant to pay the Rent as more
particularly described above), Tenant fails to cure such failure within twenty (20) days after receipt of
notice by Landlord requiring that Tenant correct such failure.
Upon the happening of any one or more of the defaults or events specified above, Landlord shall have the
option to do and perform any one or more of the following, in addition to, and not in limitation of, any
other right or remedy available to Landlord at law or in equity or elsewhere under this Lease:
Default Provision Example #2 Cont.
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(b)
By written notice to Tenant, Landlord may terminate this Lease and Tenant’s right to possession, in which event this Lease
shall terminate, and Tenant shall immediately surrender possession of the Demised Premises to Landlord. No act by Landlord other
than giving written notice to Tenant of Landlord’s election to terminate Tenant’s right to possession shall terminate this Lease. Acts of
maintenance, efforts to relet the Demised Premises, or the appointment of a receiver on Landlord’s initiative to protect Landlord’s
interest under this Lease shall not constitute a termination of Tenant’s right to possession. Termination shall terminate Tenant’s right
to possession of the Demised Premises and shall terminate this Lease but shall not relieve Tenant of any obligation under this Lease
which has accrued prior to the date of such termination. Upon such termination, Landlord shall have the right to re-enter the Demised
Premises in compliance with applicable laws, and recover from Tenant:
(i)
the worth at the time of the award of the unpaid Minimum Base Rent and Additional Rent which had been earned at the time
of termination of the Lease;
(ii)
the worth at the time of the award of the amount by which the unpaid Minimum Base Rent and Additional Rent would have
been earned after termination of this Lease until the time of the award exceeds the amount of such rental loss that could have
reasonably been avoided;
(iii)
if Landlord has terminated this Lease as a result of an uncured monetary default by Tenant, the worth at the time of the
award of the amount by which the unpaid Minimum Base Rent and Additional Rent for the balance of the then-current Term after the
time of award exceeds the amount of such rental loss that could have reasonably been avoided; and
(iv)
any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform
its obligations under this Lease or which in the ordinary course of things would be likely to result from Tenant’s default, including, but
not limited to, the cost of recovering possession of the Demised Premises, commissions and other expenses of reletting including
necessary repair, demolition, and renovation of the Demised Premises to the condition existing immediately prior to Tenant’s
occupancy, and reasonable attorneys’ fees, and real estate commissions paid or payable (but expressly excluding any of the foregoing
amounts which are paid or otherwise reimbursed to Landlord by a third party).
The “worth at the time of the award” as used in (i) and (ii) of this Section 14.2(a) is to be computed by allowing interest on unpaid
amounts at the lesser of the published "prime rate" as published in The Wall Street Journal plus four percent (4%) per annum, or the
maximum rate permitted under applicable law (the "Default Rate"). The “worth at the time of the award”, as used in (iii) of this
Section 14.2(a), is to be computed by discounting such amount at the published prime rate of the Federal Reserve Bank located in the
jurisdiction in which the Shopping Center is located plus two percent (2%) per annum.
Default Provision Example #2 Cont.
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(c)
Landlord may maintain Tenant’s right to possession, in which case this Lease shall continue in effect
whether or not Tenant shall have abandoned the Demised Premises. In such event, Landlord shall be entitled to
enforce all of Landlord’s rights and remedies under this Lease including the right to recover the Minimum Base
Rent and Additional Rent as it becomes due hereunder.
If following an uncured Tenant default, Landlord re-enters, or takes possession pursuant to legal proceedings or
otherwise, Landlord may either terminate this Lease or, from time to time, without terminating this Lease, make
such alterations and repairs as necessary in order to relet the Demised Premises, and relet the Demised Premises
or any part thereof for such term or terms and for such rent and upon such other terms and conditions as
Landlord may deem advisable in its sole discretion (provided that in no event shall Tenant’s liability under this
Lease be increased as a result thereof). Upon each such reletting, all rentals and other sums received by Landlord
from such reletting shall be applied, first, to the payment of any indebtedness other than rent due hereunder
from Tenant to Landlord; second, to the payment of any actual reasonable costs and expenses of such reletting,
including reasonable brokerage fees and attorneys’ fees and the costs of any alterations and repairs; third, to the
payment of rent and other charges due and unpaid hereunder; and the residue, if any, shall be held by Landlord
and applied in payment of future rent as the same may become due and payable hereunder. If such rentals and
other sums received from such reletting during any month are less than the amount payable to Landlord by
Tenant hereunder for the subject month, Tenant shall pay such deficiency to Landlord within thirty (30) days after
Tenant’s receipt of Landlord’s written request and reasonably detailed invoice therefor. If such rentals and other
sums received from such reletting are more than the amount payable to Landlord by Tenant hereunder for a
particular month, Tenant shall have no right to such excess but shall receive a credit therefor against rent next
falling due hereunder. Such deficiency shall be calculated and paid monthly (as applicable). Notwithstanding any
such reletting without termination, Landlord may at any time elect to terminate this Lease for such previous event
of default.
The rights and remedies of Landlord set forth herein shall be in addition to any other right and remedy now or
hereafter provided by law or in equity, and all such rights and remedies shall be cumulative.
(d) Tenant hereby expressly agrees to reimburse Landlord for any reasonable attorneys’ fees and any and all costs
and expenses incurred by Landlord in enforcing or defending Landlord’s rights and remedies under this Lease.
Attorney’s Fees
• Absent a statutory or contractual right, you are not
entitled to attorney’s fees.
• When entering a contract, always consider whether
you want an attorney’s fees provision.
• If you include a fees provision, make sure it specifically
states “attorney’s fees.” Absent language specifically
stating attorney’s fees, court is unlikely to award fees.
• If you include a fees provision in your contract, think
about whether it is a one way (e.g., only Landlord) fees
provision, whether it is a prevailing party provision, or
limited to specific types of actions.
Choice of Law
• Depending on possible potential issues, you should
consider what state law you want to apply.
• The parties can agree to the application of a specific
state regardless of where the contract was entered or
performed.
• A good example of this is different states have different
statutes of limitations. For example, Tennessee has a
six year statute of limitations on contract claims
(whether the contract is oral or written), and Indiana
has 10 year statute of limitations on written contracts
and a 6 year statute of limitations on an oral contract.
Choice of Venue
• Where do you want to litigate?
• Parties can contractually agree where
litigation will occur in the event of a dispute
relating to a contract.
• Absent agreement, a party may end up
litigating a case in a foreign jurisdiction.
Jurisdiction
• Parties can agree to state court or Federal
court.
– Note parties cannot agree to Federal jurisdiction if
the Federal courts would otherwise not have
jurisdiction.
Mediation/Arbitration
• A contract can require mediation and/or arbitration prior to or
instead of litigation.
• There are any number of variations that can come into play.
• One thing to note, particularly for leases, is that while mediation
and arbitration are generally quicker and cheaper than litigation not
always.
• For example, if a lease contains a mediation or arbitration provision,
you may as landlord be taking yourself out of the detainer statute.
This would slow down an otherwise quick process.
• The mediation/arbitration provision can limit its scope to exclude
certain disputes, including an eviction.
• The mediation/arbitration provision can limit the scope of
discovery. For example, it can provide that there will be no
depositions.
• Mediation
Collectability of Judgment
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Are you going to be able to collect
Is other Party “judgment proof”
Assets of other Party
Resources to evaluate collectability