Owner Not Required to Pay for Accessibility Expenses

Facts: Less than one year after entering into a five-year lease, a tenant vacated its space, declaring that the owner had materially breached the lease by allegedly refusing to make accessibility improvements under the Americans with Disabilities Act (ADA) that the tenant insisted were required for it to obtain a use and occupancy permit for the space.

After the tenant moved out, the owner sued it, claiming that it had breached the lease by refusing to pay rent: (1) without justification; (2) based upon an unreasonable ultimatum; (3) before the owner could submit code-compliant architectural plans to the proper governmental authority; and (4) before the authority could make a determination regarding the necessity of making ADA accessibility improvements.

The tenant sued the owner, asserting claims for breach of the lease, fraudulent misrepresentation, and violation of the Tennessee Consumer Protection Act.

Following a four-day trial, the trial court found that the tenant had breached the lease; it awarded damages of over $90,000 and attorney’s fees to the owner. The trial court dismissed the tenant’s claims. The tenant appealed.

Decision: A Tennessee appeals court upheld the trial court’s decision.

Reasoning: The appeals court noted that each of the tenant’s defenses and claims related to the alleged breach of the lease were based on allegations that the property didn’t comply with code requirements—but no governmental entity had found any violation of an applicable law or code requirement. Because of this, the owner had no duty under the lease to contribute to the accessibility expenses that the tenant insisted were required. Dismissal of the tenant’s claim under state consumer protection laws was proper because the owner hadn’t wrongfully represented the status of the property before the lease was signed.

• Hunt v. Veropele Nashville I, LLC, August 2015