Narrow Lease Clause Applying Broadly To “Any Party” Encompassed Fee Exposure With Respect To Actions Between Joint Tenants.
Sometimes small words make a difference in the interpretation of the scope of an attorney’s fees provision. In this instance, the words “any party” opened the door to fee exposure in a controversy between joint tenants with respect to a fire causing damages to the leased premises and damaging both of the tenants’ businesses operated from jointly leased premises.
Shehadeh v. Altoh, Case No. C082993 (3d Dist. July 27, 2018) (unpublished) involved joint tenant lease with a broadly-worded fees clause which said “[i]f any Party or Broker brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party . . . in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys’ fees.” (This is the fees clause in the AIR Commercial Real Estate Association Standard Industrial/Commercial Single-Tenant Lease at the time, which was in 2008.) Of importance, two tenants—plaintiff and defendant in the litigation to follow—signed as tenants in a lease with a landlord, eventually dividing the space so that plaintiff operated an auto sales business on one part of the property while defendant operated an auto repair business on another part. A fire occurred, disrupting the sales business and destroying the repair business. Plaintiff joint tenant (sale business owner) sued defendant joint tenant (repair business owner) for negligence and premises liability, claiming the fire originated from the auto repair business. The trial court, after a bench trial, agreed and awarded plaintiff damages in the amount of $210,750. Prevailing plaintiff filed a motion for attorney’s fees based on the lease provision, requesting $253,780 in fees. The trial court awarded plaintiff $237,080 in fees, prompting an appeal by defendant claiming that the fees provision does not apply to disputes between joint tenants.
The Third District affirmed the fee award. A big reason for the affirmance was the “any Party” language in the lease provision among joint tenants, especially given that the lease specifically delineated that a “Party” meant an individual Party in definitional language and given that the authority/multiple parties/execution provision supported a singular party as being a “Party” within the meaning of the lease. Joint tenants were obviously jointly and severally liable to the landlord, such that there were contribution rights for damages and joint tenants have duties amongst themselves under the lease, so the dispute was encompassed (not to mention the broad tort language in the fees clause). Although there was a separate sublease between the joint tenants with a narrower fees clause, nothing in the sublease indicated it displaced the lease joint tenancy provisions.