Lease agreements for commercial properties generally have clear terms regarding what would cause a default and/or termination of the lease, and Washington statutes have provided bases regarding when a tenant can withhold rent. However, Washington courts have ruled that a tenant can terminate a lease and be released from the tenant’s obligation to pay for rent if the landlord interferes with the tenant’s use or enjoyment of the property. This is referred to as constructive eviction. “Construction” is a legal term denoting that the court is creating something. In this context, the court is creating a basis for the tenant to terminate the lease that is not expressly stated within the terms of the lease or in Washington’s statutes. A landlord’s failure to follow a term of the lease or the applicable Washington statutes can be a basis for a court to determine that a tenant has been constructively evicted. A landlord’s interference with a tenant’s business also implicates another legal doctrine, tortious interference of business expectancy.
Constructive Eviction Law and Examples
For commercial leases, Washington courts have concluded that constructive eviction occurs when the landlord seriously interferes with the tenant’s conduct of business on the premises. The interference must be a result of the landlord’s wrongful action. It is important to note that if the tenant consents to the landlord’s act, then courts have found that the landlord’s action is not wrongful and cannot constitute constructive eviction. Another important requirement is that the tenant vacate the leased premises within a reasonable time. Courts have found that a reasonable time can extend many months if there are negotiations over a defective condition of the premises , but, ultimately, what is reasonable depends on the circumstances.
There are a number of cases in which courts have found constructive eviction: the premises were unsanitary and unsafe ; the landlord repeatedly insulted a tenant in front of customers ; leasing to other tenants in violation of the plaintiff tenant’s exclusive clause ; changing a store entrance in violation of a covenant ; and allowing water puddles in an auto sales lot.
Tortious Interference of Business Expectancy
As stated above, a landlord’s interference with a tenant’s business on the premises can also be a basis for the tenant to bring a claim for tortious interference of a business expectancy. This is a claim under which a party can recover losses related to the party’s business as a result of another party’s wrongful acts. To prevail on this claim, a plaintiff must show: (1) the existence of a valid business expectancy; (2) that the defendant had knowledge of that expectancy; (3) an intentional interference inducing or causing termination of the expectancy; (4) that the defendant interfered for an improper purpose or used improper means; and (5) resultant damage.
To establish a valid business expectancy, courts require something less than an enforceable contract. Instead, a valid business expectancy includes any prospective contractual or business relationship that would be of pecuniary value. Courts allow tortious interference claims “where a defendant’s acts to destroy a plaintiff’s opportunity to obtain prospective customers.” Washington courts require a plaintiff to show only that the plaintiff’s future business opportunities are a reasonable expectation and not merely wishful thinking.
The second element of a tortious interference claim requires the defendant to have known of the plaintiff’s business expectancy. This element requires only that the defendant knew of facts giving rise to the presence of the business expectancy. The facts need merely show that the defendant had “awareness of ‘some kind of business arrangement.’”
For intentional interference, courts have found a party intentionally interferes with a business expectancy if that party “desires to bring it about or if he knows that the interference is certain or substantially certain to occur as a result of his action.”
Tortious interference through improper means “arises from … the defendant’s … use of wrongful means that in fact cause injury to plaintiff’s contractual or business relationships.” To show improper means, the plaintiff must demonstrate that the defendant had a duty not to interfere. To establish such a duty, the plaintiff may point to a statute, regulation, recognized common law, or established standard of trade or profession.
Regarding resulting damages, a party must prove a claim of damages with reasonable certainty. Thus, the party must produce evidence sufficient to support the party’s claim. “Evidence of damage is sufficient if it affords a reasonable basis for estimating loss and does not subject the trier of fact to mere speculation or conjecture.”
If all of the preceding requirements are met, then a plaintiff will have a valid claim for tortious interference of a business expectancy. In the context of a commercial lease dispute, the commercial lease agreement itself is evidence that the landlord has had knowledge of some kind of business arrangement. Therefore, that requirement is unlikely to be disputed.
Relating this doctrine of tortious interference of a business expectancy to being constructively evicted, if a tenant can establish that the tenant was constructively evicted by a landlord’s serious interference with the tenant’s conduct of business on the premises, then the commercial tenant will also likely be able to establish the other requirements of tortious interference of business expectancy. The only evidence required will be quantifying the resulting damages.
As shown above, these doctrines of constructive eviction and tortious interference of a business expectancy are interrelated in the situation where a commercial landlord or a commercial tenant are forced to breach the strict terms of a commercial lease, and if a tenant intends to bring a claim for one, then the tenant should also consider bringing a claim for both.
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