Facts

The lawsuit for breach of a written lease arose when defendant Ross Dress For Less Inc. took possession of leased premises in the Porterville Marketplace shopping center after required commencement date co-tenant Mervyn's closed its store. Ross maintained possession for 13 months, but refused to pay to the landlord, plaintiff/cross-defendant Grand Prospect Partners LP, any amounts due under the lease based on its claim that the co-tenancy provisions in the lease excused payment because Mervyn's was not open on the commencement date.

The court and the jury found the co-tenancy provision permitting Ross to occupy the premises for 13 months and pay no rent because Mervyn's was not open on the commencement date constituted an unenforceable penalty and was unconscionable and, therefore, Ross breached the lease by refusing to pay rent and terminating the lease.

The only remaining issue was a determination of the damages sustained by Grand Prospect, which was submitted to the jury.

PLAINTIFF'S CONTENTIONS:
Grand Prospect contended that the co-tenancy provisions of the lease were procedurally unconscionable because the terms in the adhesion contract were offered on a "take it or leave it" basis by Ross; and that Ross shifted the risk of loss onto plaintiff by the use of one-sided provisions.

Grand Prospect claimed that the co-tenancy provisions constituted an unenforceable penalty that operated as forfeiture by causing actual damages to plaintiff that was not reasonably related to losses anticipated at the time the lease was executed and delivered.

Grand Prospect also claimed that Ross admitted in discovery that it did not anticipate it would suffer any loss if Mervyn's was not open on the commencement date.

DEFENDANT'S CONTENTIONS:
Ross contended that the requirement that Mervyn's be open on the commencement date of the lease was a condition preceded to the payment of rent; and plaintiff's failure to satisfy the condition relieved Ross of its obligation to pay rent and gave Ross the right to terminate the lease.

Ross also contended that the co-tenancy provisions were not procedurally unconscionable because plaintiff's general partner was a sophisticated, experienced shopping center developer who had signed many commercial leases containing co-tenancy provisions and therefore was not surprised by the provisions; the provisions were not substantially unconscionable because they were not one-sided; and that Ross executives believed the absence of required co-tenant Mervyn's would reduce foot traffic and therefore adversely affect sales.

Result

The court awarded $829,930 in attorney fees and $86,346 in costs for a total judgment of $4,701,991. The jury rendered special verdicts in favor of Grand Prospect in the amount of $3,785,715 against Ross. The court awarded Grand Prospect its costs of suit based on the court's finding that Grand Prospect was the prevailing party in the action.

Other Information

Ross' Motion for New Trial was denied on April 3, 2013. Ross filed a Notice of Appeal on May 3, 2013. FILING DATE: April 22, 2010.

Deliberation

three hours

Poll

11-1

Length

12 days