Who owns a billboard that’s blocked by trees and sits vacant for 15 years? The billboard company, as long is the lease hasn’t been terminated. That’s the lesson of OUTFRONT v Lemaster. Here are the facts.
Between 1969 and 1973, a predecessor of OUTFRONT Media entered into billboard leases with Blanche Powell in Kentucky.
The leases provided that
- The billboard company or landowner could terminate the lease prior to renewal.
- The billboard company could terminate the lease on 15 days written notice if the billboards were “entirely or partially obscured or destroyed” or if it was “prevented by government authority from constructing or maintaining such signs.”
- The billboard company could abate rent if temporary conditions existed obscuring the sign or preventing it from maintaining the sign.
- Any materials and displays on the property were the property of the billboard company and “shall not be considered abandoned at any time and shall not become the property of Lessor except by express conveyance in writing.”
In February 2001 OUTFRONT’s predecessor sent a letter to Blanche Powell noting that the billboards were blocked by trees and abating rent. Kentucky’s laws at that time prohibited cutting vegetation on state right of ways to make billboards visible.
From 2001 to 2015 OUTFRONT continued to abate rent and considered removing the billboards. The leases were not terminated.
In 2015 Blanche Powell died and the property passed to her children Randall and Brenda Powell. Terri Lemaster and Performance Media approached the Powells to discuss removing the billboards in exchange for credits which would allow Performance to erect a digital billboard.
The Kentucky Transportation Cabinent approved a request by Lemaster to remove the billboards and issued Lemaster four credits.
When OUTFRONT learned of the billboard’s removal it sued Lemaster, Performance Media and the Kentucky Transportation Cabinent claiming conversion of property and tortious interference with OUTFRONT leases. Lemaster and Performance Media argued that OUTFRONT had abandoned the billboards by abating rent and failing to maintain the billboards or act in a commercially reasonable manner.
A District Court ruled in favor of OUTFRONT and in 2021 the US Court of Appeals Sixth Circuit affirmed the decision. The Courts found.
- That the leases provided broad authorization of abatement and that OUTFRONT followed the protocol laid out in the lease and abated rent during the time that the billboards were obstructed.
- That OUTFRONT did not voluntarily abandon the billboards. “Lemasters contention that OUTFRONT abandoned the billboards by failing to sell advertising on any of the five billboards since 2002 and failing to maintain the billboards ignores the fact that these consequences were the result of Kentucky regulations, not OUTFRONT’s voluntary conduct.”
- That the Powells or OUTFRONT could have terminated the leases but chose not to: “if the Powells believed that abatement was improper because the obstruction was a permanent condition, they could have terminated the lease prior to the next renewal date.”
- That that leases made clear that the billboards were OUTFRONT’s property and could not be conveyed except in writing.
Billboard Insider’s take: This case illustrates the importance of having clear instructions on rent abatement and lease termination; the importance of a clause confirming that the billboard structure is yours; and the importance of verifying that a seller has title to what they are selling. If a landowner tells you that they own structures on their property you should ask for written evidence. It also doesn’t hurt to do a title search for recorded leases and to look up permit records.
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