What Happened: A fitness center with nearly four years left on its lease notified the landlord that it was abandoning the premises. You’d better start making mitigation efforts to relet the premises as soon as possible, the notice advised. But the landlord ignored the advice, relying on the lease clause giving it the right to accelerate the rent even if it didn’t make reasonable efforts to mitigate its damages. The court found the tenant and guarantor jointly and severally liable for $6.616 million in damages, including $4.603 million in accelerated rent through the end of the lease term.
Ruling: The Ohio court rejected the tenant’s appeal.
Reasoning: The tenant didn’t deny that it was in default of the lease. It just insisted that a landlord isn’t allowed to collect accelerated rent if it doesn’t mitigate damages. The problem with this argument is that while landlords in Ohio do have a duty to mitigate, they’re also allowed to contract out of that obligation. And the lease in this case clearly and unambiguously stated that the landlord would be entitled to an “accelerated amount of Base Rent and all additional rent to be paid” and that “Landlord shall not be obligated to relet the Leased Premises and may recover damages hereunder without such consideration” (emphasis added). Plain language in a lease waiving a landlord’s duty to mitigate is perfectly enforceable, “especially where, as here, the parties are sophisticated business entities,” the court reasoned.
