Tenant Gave Up Right to Claim Exclusive Violation

An electronics store tenant's lease barred the shopping center owner from leasing to any other tenant “whose primary use involves the sale of electronic equipment and components.” The owner rented space to a tenant that sold cellular phones and wireless service. More than four years later, the electronics store tenant told the owner that it was entitled to pay only percentage rent because the cellular phone tenant's presence in the center violated its exclusive. The owner sued the electronics store tenant, asking the court to declare that it had given up its right to challenge the cellular phone tenant's presence in the center.

A federal appeals court in Georgia ruled that the electronics store tenant had given up its right to claim that the cellular phone tenant's presence violated its exclusive. The court agreed that the cellular phone tenant's presence did violate the electronics store's exclusive. But the electronics store tenant knew about the cellular phone tenant for more than four years, yet never challenged its presence. So, the owner was entitled to rely on that silence as an indication that the electronics store tenant didn't believe that the cellular phone company's presence violated its exclusive, the court reasoned [Cascade Crossings II, LLC v. RadioShack Corp.].