Tenant Not Intended Beneficiary of Another Tenant's Claus

Tenant A's lease said that the tenant would use its space as a “Gift Shop … and for no other purpose.” Tenant B leased space as a take-out deli. After Tenant B moved into its space, Tenant A started selling certain beverages and food items that directly competed with Tenant B's business. Tenant B knew about Tenant A's use clause.

Tenant B sued the owner for violating its lease by not enforcing Tenant A's use clause. Tenant B argued that it had relied on Tenant A's use clause when deciding whether to sign its lease, so it was an intended beneficiary of that clause.

A New York court dismissed Tenant B's lawsuit against the owner. The lease negated Tenant B's claim that it had relied on Tenant A's use clause when signing its own lease. That is, Tenant B's lease contained a “No Representations By Owner” clause that stated that the owner had not made any representations or promises regarding Tenant B's space, except as expressly stated in the lease.

Tenant B's lease didn't make any reference to Tenant A's lease—nor did the lease mention that the owner had any other tenants. The court said it could not rewrite the lease to include a contrary clause urged by Tenant B.

• Hamawi Deli, Inc. v. Psaras: No. 9251/06, 2006 N.Y. Misc. LEXIS 3795 (N.Y. Sup. Ct. 12/15/06).