Commercial leases spell out the mutual duties and responsibilities of landlords and tenants. A common feature of most commercial leases is language that indemnifies each party from potential legal liability. Commercial leases must also define the exact areas under the respective control of tenants and landlords. A recent Florida appeals court decision helps explain how lease definitions regarding premises and indemnification clauses actually work in practice.
Hillstone Restaurant Group v. PF Chang’s Bistro, Inc.
This landlord-tenant dispute arose as the result of a personal injury lawsuit. In 2007, a woman tripped and fell over a curb in front of a P.F. Chang’s restaurant. She sued both P.F. Chang’s and its landlord, Hillstone Restaurant Group (also known as Houston’s) for negligence.
P.F. Chang’s and Houston’s counter-sued one another over who should be held responsible for any damages the plaintiff might recover. A trial court granted summary judgment to P.F. Chang’s, the tenant, holding the landlord was responsible for the curb area where the woman allegedly tripped. P.F. Chang’s appealed.
However, on August 13 of this year, the Florida Third District Court of Appeals reversed the trial court decision and entered summary judgment for the landlord, Houston’s. The appeals court said the trial judge read the parties’ lease incorrectly. The key word in the lease was “premises.” Under the lease, P.F. Chang’s, as the tenant, indemnified Houston’s from any damages arising from an accident on the leased premises. P.F. Chang’s—and the trial court—said “premises” did not extend to common areas of the larger commercial development. But Houston’s—and the appeals court—said the lease itself defined “premises” as certain specific parcels of land dedicated permanently to P.F. Chang’s use. One of these parcels included the curb. There could therefore be no dispute, the appeals court said, that the alleged injury occurred on P.F. Chang’s premises.
The indemnification language in the lease drew a clear distinction between the premises and other areas of the development. P.F. Chang’s, as the tenant, indemnified Houston’s for anything that happened on the premises. The landlord was responsible for anything taking place within the commercial development but outside of P.F. Chang’s premises.
Additionally, the appeals court noted the lease specified Houston’s leased the premises to P.F. Chang’s “as-is” and without any warranty. This meant P.F. Chang’s could not claim Houston’s lacked indemnification against injuries arising from faulty design or construction of the curb within the premises.
Never Negotiate a Lease Without Help
The Hillstone case highlights the importance of carefully negotiating a commercial lease. Even small businesses need qualified legal help before signing certain documents, the effects of which may mean the difference between indemnification and multi-million judgments. If you need assistance from a Florida real estate and small business attorney, contact John S. Sarrett today.