Jury Must Decide Tenant's Motive for Terminating Lease

A tenant's lease had a non-compete clause that barred the owner from knowingly renting to a tenant “whose primary business is the same” as the tenant's. During negotiations with a prospective tenant, the owner asked the prospect if it was in competition with the tenant, and the prospect said no. In fact, both the tenant and the prospect had previously been in offices in a nearby complex at the same time, and the tenant had never complained about competition. When the owner and the prospect signed a lease, the tenant sued to terminate its lease, claiming that this new lease violated its non-compete clause. The owner argued that the new lease didn't violate the non-compete clause, and that the real reason the tenant wanted to terminate its lease was that it wanted better terms and was angry that the new tenant had gotten “prime center space.”

A Michigan appeals court ruled that a jury must decide the tenant's motive for terminating the lease. In making that determination, the court said that a jury could consider the following: The tenant only wanted its lease terminated—even though its lease permitted it to have the new tenant barred from offering competing services; the owner's claim that the tenant wanted better lease terms and was angry that the new tenant had gotten “prime center space”; and the tenant's claim that it had moved to this center and requested the non-compete clause to escape from competition with the prospect [MM Complete Accounting, Inc. v. Park Place Shopping Center, Inc.].