OK for Landlord to Lock Out Smoke Shop Tenant for Selling Prohibited Products

What Happened: A shopping center lease allowed the tenant to use the premises “solely for a tobacco, cigar, and vape store,” and “for no other purpose unless approved in writing by” the landlord. Section 3 of the lease also made sale or exhibition of “Prohibited Products,” including drug paraphernalia, supplies, and equipment grounds for immediate default entitling the landlord to “terminate the Lease, regain possession of the Premises, and immediately accelerate all rent due hereunder.” A few months after the tenant opened the shop, the landlord discovered that it was advertising cannabidiol (CBD) and kratom for sale. Stop immediately or face immediate eviction, the landlord warned. Later when the landlord found out the tenant was selling Prohibited Products, it changed the locks and placed a concrete barrier in the entryway. The case landed in court with both sides accusing the other of breach of lease.

Ruling: The Texas federal court awarded summary judgment to the landlord.

Reasoning: Under the clear terms of Section 3 of the lease, the tenant’s sale of Prohibited Products was an immediate default giving the landlord the right to repossess the premises. The court rejected the tenant’s claim that the lockout violated a state statute (Tex. Prop. Code Ann. §93.002(c)), banning landlords from resorting to self-help to keep a tenant from entering leased premises except for:

• Bona fide repairs, construction, or an emergency;
• Removing the contents of premises abandoned by a tenant; or
• Changing the door locks of a tenant who is delinquent in paying at least part of the rent.

While acknowledging that none of the stated exceptions applied, the court also noted that the Texas law allows for contracting out of the bar and establishing other lockout procedures by contract. Thus, to the extent that there was a conflict between Section 3 of the lease and Section 93.002(c) of the statute, the lease governed.

• SH Tobacco & Cigars, LLC v. Masters 96th LLC, 2024 U.S. Dist. LEXIS 69834