Neighbors' Resistance Doesn't Excuse Tenant from Lease

April 1, 2003

A tenant that provided alcohol and drug rehabilitation services signed a lease. But the city later denied the tenant's occupancy permit application, claiming that the tenant's services would be a “nuisance” under zoning regulations. The tenant appealed the city's decision. Despite resistance from neighborhood residents, the tenant ultimately got its permit. But the state government threatened to withhold its funding if the tenant moved into the building. When the tenant refused to move in, the owner sued it.

A tenant that provided alcohol and drug rehabilitation services signed a lease. But the city later denied the tenant's occupancy permit application, claiming that the tenant's services would be a “nuisance” under zoning regulations. The tenant appealed the city's decision. Despite resistance from neighborhood residents, the tenant ultimately got its permit. But the state government threatened to withhold its funding if the tenant moved into the building. When the tenant refused to move in, the owner sued it. The tenant argued that it was excused from meeting its lease obligations because of “commercial frustration—that is, an unforeseeable event that occurs, which destroys the purpose of the lease.

A Missouri appeals court ruled that the tenant wasn't excused from meeting its lease obligations. The court pointed out that the tenant didn't prove commercial frustration. The resistance from neighborhood residents that delayed the tenant's permit and the possibility that the state might withhold funding were foreseeable events, said the court. If the tenant had wanted to be excused from its lease obligations if those events occurred, it should have said so in the lease [Adbar, LC v. New Beginnings C-Star].

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