Gill Case Decision

OVERTURNING AN EVICTION: COURT LEAVES TENANT IN PLACE AND LOWERS AMOUNT OWED. Even after a judgment of eviction, the court has wide discretion to change the judgment. This can occur when the defendant tenant files a petition for "relief from forfeiture." Although the court must find that the tenant will suffer "hardship" unless the judgment is overturned, the court can literally do anything it considers fair once the court decides to grant relief. A recent case illustrates the point dramatically. In Gill Petroleum, Inc. v. Hayer (3rd DCA [3/15/06]) the court not only allow the tenant to remain in occupancy, but also reduced the amount owed by the tenant to landlord from a rate based on fair rental value to the rate specified in the lease. The property consisted of a mini-market which also sold gasoline. The tenant had bought the business from a third party. The tenant received a long-term lease from the landlord With options the term could have lasted 30 years. The lease required the tenant to pay fees for the underground storage tanks. For some reason, the tenant refused to pay the fees. After the landlord paid the fees himself and served a three-day notice to pay rent or quit, the parties wound up in court in the landlord's eviction action. At trial the landlord testified that the fair rental value of the property was about $10,200 per month. But the lease called for rent at the rate of $6,200 per month (plus regular increases). The court initially granted judgment based upon the landlord's (selfish) opinion of value. When the tenant filed a petition for relief from forfeiture, the court granted it, allowing the tenant to remain in possession. The court also reduced damages to the amount of the rent stated in the lease. The landlord, having gone from the height of celebration to the pit of despair, appealed. The Court of Appeal denied his appeal. While reiterating the point about the broad discretion to do justice held by the trial court, the Court of Appeal rejected some plausible arguments advanced by the landlord. For example, on the question of hardship, the landlord pointed out that the tenant had recouped some of his investment in the business by earning profits. But the Court of Appeal countered that the tenant still had a large investment in his business; still owed a large amount of money on the loan used to purchase the business; and still operated a going concern whose value would be destroyed if its assets were sold piecemeal. What is striking about the opinion is the realization that the same reasoning might apply to a multitude of commercial enterprises. Commercial landlords have reason to worry if other courts take the same view of the tenant's hardship. The very fact that the landlord may have written a long-term lease at a rental rate that turns out to be far too low may later prevent the landlord from terminating that lease and regaining possession. Moral: In this state even commercial tenants may find a sympathetic ear in court. For questions or to give comments on this case or a related subject, please send email to jpwidman@comcast.net.