Definition of ‘Adjoined’ Not Affected by Unusable Space

January 28, 2014

Facts: A foot care clinic rented office space and exam rooms in a strip mall. Its lease provided that the owner wouldn’t place a retail business in space “adjoining” the tenant. The owner subsequently leased space in the strip mall to a liquor store. The liquor store and tenant were separated by an unusable 500 square foot hallway. The tenant claimed that the liquor store adjoined its space, and, therefore, the owner had breached the lease. The owner said that because the two spaces were physically separated by the hallway, they weren’t adjoined.

Facts: A foot care clinic rented office space and exam rooms in a strip mall. Its lease provided that the owner wouldn’t place a retail business in space “adjoining” the tenant. The owner subsequently leased space in the strip mall to a liquor store. The liquor store and tenant were separated by an unusable 500 square foot hallway. The tenant claimed that the liquor store adjoined its space, and, therefore, the owner had breached the lease. The owner said that because the two spaces were physically separated by the hallway, they weren’t adjoined. Rather, they were “adjacent” to each other. A trial court ruled in the tenant’s favor. The owner appealed.

Decision: An Indiana court of appeals upheld the trial court’s ruling.

Reasoning: On appeal, the owner asserted that the presence of a hallway separating the tenant from the liquor store prevents the two spaces from adjoining. The appeals court noted that, generally, to adjoin something means “to join or attach physically” or to “be in contact with” another thing. So, the tenant and liquor store weren’t adjoined.

However, the appeals court said that the entire lease provision, not just the word “adjoined” should be taken into account. In the lease, the owner agreed not only to refrain from leasing adjoining space to retail businesses like the liquor store, but also to another podiatrist. This expressed the owner’s promise not to place next to the tenant either a competitor or other businesses that would be incompatible with the environment of a professional podiatric practice.

“In context, the use of adjoining here is clear: The tenant and owner entered into an agreement whereby the owner would not place certain businesses in the immediately closest neighboring usable spaces to the tenant’s premises,” said the appeals court. The hallway wasn’t usable space, so the most immediate neighboring business in useful space to the tenant was, therefore, the liquor store.

  • Vpr. Props. v. Affiliated Foot Care Clinic, January 2014

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