Property II, Pages 432–435

DVM Co. v. Bricker

Supreme Court of Arizona, 1983

Facts:

Plaintiff leased space in a mall to defendants. This lease required a minimum rental and a percentage of the net sales. It also said that only certain items could be sold without plaintiff's written consent. It said that if defendants defaulted or breached performance for more than a reasonable time, plaintiff could take possession back.

Defendants began selling t-shirts with pop culture graphics. Plaintiff said that this violated the lease, but defendants said that it fell under "Arizona Souvenirs," which was allowed. Plaintiff sued to terminate the lease for the breach.

Procedural History:

Trial court held that there was a breach, but that it was not "sufficiently material" to require a forfeiture of the lease. They therefore awarded attorney's fees but did not terminate the lease. Court of Appeals affirmed.

Issue:

Did the breach of the lease allow repossession?

Plaintiff's Argument:

Defendant's selling t-shirts could have affected other merchants, thereby becoming material and information about the sales should have been admitted.

Defendant's Arguments:

  • Plaintiff accepting payments during the cases pendency waives its rights to claim forfeiture.

  • The sale of t-shirts did not effect a material breach of the lease.

Rule:

Arizona law allows a landlord to repossess from commercial lessees for any breach, material or not.

Reasoning:

While trivial breaches can be ignored, DVM had a statutory right to terminate the lease. DVM even notified defendants of the breach, and he did not cease selling the T-shirts.

Holding:

Yes, the breach of the lease allowed plaintiff to repossess the property. Reversed.


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