Damage Award Depends on Proof of Amount Lost

May 31, 2008

Facts: A Nevada tenant rented retail space from the owner. The tenant defaulted on the lease and never opened the store that it had planned to operate. The owner sued the tenant for the lease violation and asked that the trial court award it more than $2.4 million in damages. The trial court ruled for the tenant because the owner could not prove it suffered damages in that amount. The owner appealed.

Decision: The U.S. Court of Appeals for the Ninth Circuit upheld the trial court's decision.

Facts: A Nevada tenant rented retail space from the owner. The tenant defaulted on the lease and never opened the store that it had planned to operate. The owner sued the tenant for the lease violation and asked that the trial court award it more than $2.4 million in damages. The trial court ruled for the tenant because the owner could not prove it suffered damages in that amount. The owner appealed.

Decision: The U.S. Court of Appeals for the Ninth Circuit upheld the trial court's decision.

Reasoning: The owner used inflated calculations to support its damages claim, and the person who presented evidence about those damages did not know how the owner had determined the requested amount. Also, the owner was selling the building where the leased space was located, which precluded the claim for future rent.

Editor's Note: The favorable decision for the tenant did not reflect that it did not violate its lease; it merely reflected that the owner could not prove that that lease violation caused any compensable damage.

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