Trial Needed to Determine if Tenant's CAM Costs Include Exterior Square Footage

Aug. 14, 2006—A lease required a tenant to pay a share of CAM costs based on an amount equal to 50 cents “per square foot of the Premises.” For six years, the owner billed the tenant its CAM costs by calculating 50 cents per square foot only on the store's interior (72,000 square feet). Later, the owner realized that it hadn't included the store's exterior (130,000 square feet) in its CAM cost calculation. So it sent the tenant a revised bill to recoup the deficiency. The tenant refused to pay the revised bill, arguing that the lease required it to pay its share of CAM costs based on the store's interior square footage—not on the combined interior and exterior square footage. The owner sued the tenant for refusing to pay the revised bill.

The court ruled that the lease was ambiguous about the basis for the tenant's share of CAM costs, so it ordered a trial to determine what the lease was intended to mean. The CAM cost clause in itself didn't let the owner include the store's exterior square footage in the CAM cost calculation. But interpreting the lease as a whole could lead to a different conclusion. For example, the court noted that the lease defined “Premises” as including the store's interior and exterior square footage. Both the owner's and the tenant's interpretations of the CAM cost clause were reasonable and in direct conflict with each other—making the lease ambiguous, said the court.

• Muscatine Mall Assocs., LLC v. Menard, Inc.: No. 06 C 2422, 2006 U.S. Dist. LEXIS 57056 (U.S. Dist. Ct. N.D. Ill. 8/14/06).