Guarantor on the Hook for Landlord's Consequential Damages

What Happened: A landlord sued Saks, Inc., for failure to honor a corporate guaranty of its subsidiary’s obligation to pay rent under its shopping center lease. Saks owes us attorneys’ fees and consequential damages covering the loss in the property’s value we suffered due to its breach, the landlord argued. Saks denied liability for consequential damages since such losses were unforeseeable at the time the lease was signed.

Ruling: The Northern District of Illinois federal court sided with the landlord.

Reasoning: The guaranty made the guarantor responsible to “pay to Landlord all damages and all costs and expenses that may arise in consequence of any default by guarantor hereunder (including, without limitation, all reasonable attorneys’ fees incurred by Landlord or caused by any such default and/or by the enforcement of this Guaranty),” the court explained. And the lease specifically required the tenant to pay “All costs and expenses incurred by or on behalf of Landlord, including, without limitation, reasonable attorneys' fees and expenses, occasioned by any default by Tenant under this Lease which shall constitute additional rent hereunder.” Damages were foreseeable, the court concluded, noting the liquidated damages clause of the lease establishing a specific formula for calculating the landlord’s losses in the event the tenant didn’t pay rent.

• WEC 98C-4 LLC v. Saks Inc., 2022 U.S. Dist. LEXIS 140948, 2022 WL 3212369