Landlord Can’t Sue Wal-Mart for Backing Out of Lease Negotiations

What Happened: After years of fruitless negotiations, Wal-Mart decided to pull out of discussions for a long-term ground lease but didn’t notify the would-be landlord until months later. Having invested so much time and money in trying to secure the ground lease, the landlord went bankrupt. As a result, the property went on the market and Wal-Mart bought it. The landlord sued Wal-Mart for breach of good faith, breach of contract, and promissory estoppel. The federal court rejected all three claims.  

Decision: The U.S. Court of Appeals for the Third Circuit upheld the dismissals.

Reasoning: While expressing sympathy for the landlord’s “unfortunate situation,” the court couldn’t find any legal basis to rule against Wal-Mart:

• There was no good faith violation because there was no contract. Under Pennsylvania law, breach of the covenant of good faith claims can be brought only if there’s a contract between the parties.
• There was no breach of contract because Wal-Mart never signed a lease, and there was no evidence of any oral agreement between the sides.
• Promissory estoppel (a legal theory that enables a party that relies to its detriment on another party’s promise to sue the promisor even though there’s no contract between the parties) didn’t apply because there was no evidence that Wal-Mart ever promised the landlord that it would sign the lease.

• Landan v. Wal-Mart Real Estate Bus. Trust: 2019 U.S. App. LEXIS 15788, 2019 WL 2273316