Tenant Can't Use Lease Drafts to Dispute Owner's Termination

Facts: A drugstore tenant signed a lease with the owner of a property that was about to be developed into a shopping center. The tenant and owner agreed that unless the center had been built by a specified date, either party would have the right to terminate the lease—for any reason. Because the owner was unable to obtain approval for a traffic signal to be installed at the center, it stopped developing the property and terminated the lease prior to the specified date.

The tenant sued the owner, claiming that under the provisions in drafts of the lease that had been written before the tenant and owner signed the final version, the owner's failure to build the center altogether was not a valid reason for terminating the lease. The owner asked the court for a judgment in its favor without a trial.

The court ruled in the owner's favor, stating that drafts of the lease or any other communications between the tenant and the owner prior to signing the final version could not be used to dispute the termination. The tenant appealed.

Decision: The appeals court upheld the lower court's judgment in favor of the owner.

Reasoning: The appeals court stated that because the language in the final lease clearly gave both the owner and tenant the absolute right to terminate, the tenant could not use “extrinsic” evidence—that is, evidence other than the final lease provisions, such as drafts of the lease—to prove that the owner was not entitled to termination. Additionally, the owner's termination was valid because it had notified the tenant of its intent to terminate the lease before the date specified in the final version's mutual termination provision.

• Thrifty Payless, Inc. v. Mariners Mile Gateway, LLC, June 2010