Owner Did Not Unfairly Compete with Tenant

November 1, 2006

An owner notified its tenant that the tenant owed back rent and other expenses. The owner's notice also stated that the tenant's lease was expiring soon, but that the owner could not commit to signing a renewal agreement because of “a possible pending lease transaction” that could involve leasing the tenant's space to a third party when the current lease expired.

An owner notified its tenant that the tenant owed back rent and other expenses. The owner's notice also stated that the tenant's lease was expiring soon, but that the owner could not commit to signing a renewal agreement because of “a possible pending lease transaction” that could involve leasing the tenant's space to a third party when the current lease expired.

The owner sent two more demands for payment on the tenant's mounting rent debt, and warned that it would terminate the lease if the debt was not paid by a set date. In response, the tenant sued the owner for damages, claiming that the owner had practiced unfair methods of competition in violation of Hawaiian law, by concealing lease negotiations with a third party.

A Hawaii appeals court ruled that none of the owner's actions were unfair methods of competition, because: 1) The owner was not the tenant's competitor; 2) the owner was not required to negotiate a lease extension with the tenant; and 3) the lease clearly stated its expiration date.

  • Kim v. Pacific Guardian Center: No. 27430, 2006 Haw. App. LEXIS 538 (Haw. Intermediate Ct. App. 9/21/06).

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