Lease Clause Doesn't Eliminate Landlord’s Duty to Mitigate Damages

What Happened: A restaurant subtenant admitted to defaulting on its obligation to pay rent and vacating the premises. But it objected to the $689,554.94 that the trial court awarded because the landlord didn’t mitigate its damages by seeking to relet the space to another tenant. We have no duty to mitigate, the landlord countered, citing the following lease provision:

If Landlord elects to reenter the Premises. . . and takes possession of the Premises, Landlord may, but except to the extent required by applicable law or court order, shall not be obligated to, relet the Premises for a term, rate and upon such other provisions as Landlord deems appropriate (emphasis added).

Ruling: The Ohio appeals court reversed the lower court’s ruling on the duty to mitigate issue.

Reasoning: The key language in the clause purporting to relieve the landlord of its duty to relet the premises is the italicized phrase making an exception to the extent reletting is “required by applicable law.” The court then cited Ohio case law rulings specifying that a landlord does, in fact, have a “duty to mitigate damages caused by a lessee’s breach of a commercial lease if the lessee abandons the leasehold” and that its “efforts to mitigate must be reasonable.” The landlord’s contention that the clause eliminated its duty to mitigate was of no avail because of the “except to the extent required by law” qualifying language. As a result, a trial would be necessary to determine whether the landlord met its duty to use reasonable efforts to mitigate damages. And because the landlord didn’t advertise or even hang a “for rent” sign to relet the premises, it will very likely have to settle at a reduced damages award rather than risk a trial.

• Apple Ohio, LLC v. Rose Italian Kitchen Solon, LLC, 2023-Ohio-2880, 2023 Ohio App. LEXIS 2844, 2023 WL 5287238