Lease Bars Tenant's Fraud Claim

April 1, 2002

A tenant acknowledged in its lease that it had independently investigated the center's business operations and didn't rely on the owner's representations about those operations. The owner sued the tenant when it refused to pay its rent. The tenant responded by claiming that during lease negotiations, the owner had made fraudulent representations regarding the center's sales. The owner argued that the tenant's claim must be dismissed because of the tenant's acknowledgment in the lease.

A tenant acknowledged in its lease that it had independently investigated the center's business operations and didn't rely on the owner's representations about those operations. The owner sued the tenant when it refused to pay its rent. The tenant responded by claiming that during lease negotiations, the owner had made fraudulent representations regarding the center's sales. The owner argued that the tenant's claim must be dismissed because of the tenant's acknowledgment in the lease.

An Indiana appeals court dismissed the tenant's fraud claim. The court said that the tenant's acknowledgment in the lease barred its claim. The court admonished the tenant, saying the “[tenant] can't have it both ways.” That is, the tenant couldn't acknowledge in the lease that it had independently investigated the center's operations and wasn't relying on the owner's representations and then reject that acknowledgment, said the court [Circle Centre Development Co. v. Y/G Indiana, LP].

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