Facts: A jewelry store tenant that leased space in a shopping center complained repeatedly about a sewage smell and mold problem in the store. It claimed that it was losing business. Its complaints were documented in multiple emails over the course of several months. For its part, the landlord had maintenance experts examine various areas of the store that could be causing the problem, such as clogged drains and leaks in the roof. While it paid to fix some of these issues, it also asserted that the tenant, under the lease, was required to maintain certain areas of its space—namely a shared wall between it and the tenant next door—that could be causing the problem. It said that the tenant should do so at its expense and on its own time.

The tenant disagreed with the landlord’s position. It argued, among other things, that the smells were caused by parts of the property the landlord was responsible for, but affected the whole space, and that the areas the tenant was responsible for were not the problem. The tenant cited the “quiet enjoyment” provision of its lease, claiming that it wasn’t able to use its space and therefore was being “constructively evicted.” It sent a rent payment with a letter stating that the payment would be its last and that it would move out of the space.

The landlord said that the tenant was in breach of its lease because it hadn’t been constructively evicted and hadn’t given proper notice that it wanted to terminate the lease. The landlord also argued that the tenant had continuously operated the business inside the premises, and, therefore, hadn’t been constructively evicted. It said that it had done its part to remedy the problem and the rest of the issues were the tenant’s responsibility.

The landlord sued the tenant for breach of the lease, asking for the rent that was owed. The tenant brought a countersuit. A district court ruled in favor of the landlord without a trial, and the tenant appealed.

Decision: A North Carolina appeals court reversed part of the decision and sent the case back to the lower court for a jury trial.  

Reasoning: The appeals court noted that, when a landlord breaches a duty under the lease that renders the premises untenable, such conduct constitutes constructive eviction. Here, the landlord had taken some measures to investigate the smells and mold. However, when those measures didn’t work, it shifted the responsibility to the tenant. The appeals court noted that the crux of the argument was whether a shared wall between the tenant’s space and the tenant next door that was causing some of the problem fell under the tenant’s or the landlord’s responsibility under the lease. But it said that “questions of material fact” were for a jury to determine, so the trial court’s decision to rule in favor of the landlord without a trial was incorrect. It sent the case back to the trial court for a determination.

• Brennan Station 1671, LP v. Borovsky, October 2018