Center Wins Damages for Future Rental Losses from Anchor that Went Dark

An anchor tenant's lease had a continuous operations clause. Despite that clause, the tenant went dark and failed to surrender the space to the center. The tenant then attempted to sublet the space but was unsuccessful. So the center sued the tenant for violating the continuous operations clause, and it asked the court for damages reflecting its future rental losses.

A California appeals court ruled that the tenant had violated its lease and ordered the tenant to pay the center $500,000 in damages for its future rental losses. The court rejected the tenant's argument that such losses were “speculative.” The court noted that since the tenant went dark, other tenants went of business, the center was forced to reduce the rent for many of the remaining tenants, and the center had to agree to lower rental rates for new tenants. So there was sufficient evidence of the center's “reduced… rental income stream,” said the court [Rexford Title, Inc. v. Nob Hill General Store, Inc.].