Owner Not Liable for Tenant’s Flood Damage

Facts: The shopping center where a general store-type tenant rented space was damaged when the area experienced flooding. The tenant sued the owner of the shopping center, among other parties including the adjacent tenant (a grocery store) and the Federal Emergency Management Agency (FEMA). The tenant claimed that the owner could have taken measures to make the premises water resistant, such as caulking the exterior of the building and constructing a membrane around it. The owner asked the court for a judgment in its favor without a trial.

Decision: A Mississippi district court ruled in the owner’s favor.

Reasoning: The tenant alleged that under the terms of the lease agreement the owner was obligated to maintain the tenant’s premises in a “safe, dry, and tenantable condition,” but breached these terms by failing to take flood-protection measures. The court determined that the owner’s conduct was consistent with the terms of the lease agreement. It stated that at the beginning of its lease, the tenant approved its own building design and specifications, and, if it wished to, could have included caulking and a waterproof membrane. The owner pointed out that it had taken over ownership of the center from a prior owner and that the tenant never gave it notice that the building needed any additional flood protection, like a waterproof membrane. The court noted that aside from lease obligations, under Mississippi law, a landlord must have had actual or constructive knowledge of a maintenance issue or defect, as well as a reasonable opportunity to make repairs, in order to be liable.

• Kmart Corp. v. Kroger Co., et al., January 2014