Be reasonable when you lose a lease or it may cost you.  That’s the lesson of M&M Media and Ace Outdoor Advertising versus Regency Outdoor Advertising. Here’s a summary of the case.

• Regency Outdoor Advertising and M&M Media Group signed a lease for a billboard atop a building in Los Angeles.  The lease was for five years with an initial 5 year extension unless either party had provided written notice of termination 60 days prior to December 31, 2008.  The lease gave Regency the right to remove “items erected or made by Regency” at termination.
• On August 9, 2007 M&M sent Regency notice it was terminating the lease effective December 31, 2008.  On October 29, 2008 M&M sent another notice to Regency confirming its termination of the lease effective December 31, 2008.
• M&M entered into a new lease with Ace Outdoor Advertising.
• Regency challenged M&M’s notices of termination as inadequate because the notices were provided more than 60 days prior to the end of the lease term, rather than exactly 60 days prior to the end of the lease term.
• Regency subsequently asserted that it owned the horizontal beams embedded in the roof to which the billboard was attached and that it would not remove any of its property from the roof unless it was also allowed to remove the beams.
• Ace Outdoor’s general manager approached Regency asking if there was a sum which would resolve the dispute and Regency’s CEO replied “There is no amount of money and I’m going to make your life miserable.”  Regency’s CEO also refused an offer of two brand new beams rather than the old beams.
• A trial court and appeals court found that Regency did not own or have the right to remove the horizontal beams at the base of the billboard structure and that Regency and its counsel took “numerous untenable positions to delay Ace’s takeover of the rooftop as long as possible and to make it as difficult and expensive as possible for M&M and Ace.”
• M&M  Outdoor and Ace Outdoor were awarded $1.8 million consisting of compensatory damages to M&M of $676,000, compensatory damages to Ace Outdoor of $302,000 and punitive damages equal to the previous amounts to each company. The decision was upheld by the Second Appellate District of California.

Insider’s take:  It’s OK to insist that lease procedures be followed at termination but be careful about appearing vindictive or unreasonable or it will cost you.

[wpforms id=”9787″]

Paid Advertisement