No Lawsuit Until Landlord Gets Chance to Stop One Tenant from Violating Another’s Exclusive

 What Happened: A Colorado shopping center leased 7,000 square feet of space to a tenant “for the purposes of operating indoor golf simulators, to include the sale of golf-related apparel, a ‘fast casual’ restaurant, and a bar.” News of the new occupant didn’t sit well with the current tenant holding the exclusive right to operate “a sports-themed restaurant/bar larger than 5,000 square feet” in the center. The landlord understood the sports bar tenant’s concern but asked for some time to deal with the golf store before going to court. But the sports bar was having none of it and filed a lawsuit.

Ruling: The federal district court ruled that the case wasn’t “ripe” and dismissed it “without prejudice” (that is, without impairing the tenant’s right to file it again when and if the case did become ripe).

Reasoning: The key to the ruling were two crucial lease provisions:

• The “Rogue Tenant” clause in the sports bar’s lease giving the landlord up to one year to cure breaches to its “exclusive use” rights caused by another tenant’s non-conforming use; and
• The provision in the golf store tenant’s lease expressly banning it from operating “a sports-themed restaurant/bar larger than 5,000 square feet.”

The landlord was still in the process of following the procedures set out in the “Rogue Tenant” clause to keep the golf store from violating the sports bar’s exclusive. And because that process hadn’t yet run its course, the case wasn’t “ripe” for court review.

• Ft. Collins 8, L.L.C. v. Walton Foothills Holdings VI, L.L.C.: 2019 U.S. Dist. LEXIS 94235, 2019 WL 2372688