Amendment—Not Lease—Governed Percentage Rent Calculation

A lease required the tenant to pay minimum and percentage rent, and allowed for a reduction in its percentage rent payments if certain conditions were met. The tenant and the owner then amended the lease to reflect agreed-upon reductions in the tenant's minimum rent payments. The tenant later sued the owner, arguing that it had overpaid its percentage rent because the conditions for a reduction of percentage rent payments spelled out in the lease had been met.

A federal court in Ohio ruled that the amendment—not the lease—governed the calculation of the tenant's percentage rent payments. The court noted that the amendment specifically said that the tenant's percentage rent payments would be calculated according to the formula in the amendment, not the formula in the lease. Also, the tenant was a sophisticated party that had negotiated for reduced minimum rent in the amendment, said the court. If the tenant had wanted the lease language relating to reduced percentage rent to still apply, it should have negotiated for its inclusion in the amendment, the court reasoned [Regal Cinemas, Inc. v. First Interstate Willoughby, Ltd.].