Uptown Theatre Lease Dispute: Hansen Wins Reversal of 1.8 Million Dollar Judgment

A team of Burns & Hansen, P.A. attorneys, including Erik Hansen, Elizabeth Cadem, and Kirk Tisher, recently obtained reversal of a 1.8 million dollar judgment in a commercial lease dispute at the Minnesota Court of Appeals. The case involved the Uptown Theater, which closed in 2020 because of the COVID-19 pandemic and civil unrest in the uptown area. After the Uptown’s owner retook the property following an eviction action, it was converted into a performance venue. At the same time, the Uptown’s owner sued its former tenant for the majority of the remaining rent under the lease under a liquidated damages clause. The lower court granted a judgment for the majority of the rent due under the lease, despite the fact that the Uptown was being converted into a performance venue and the fact the lease term had yet to expire.

The Court of Appeals found that the liquidated damages provision in the Uptown’s lease was unenforceable, and reversed the lower court’s decision. Specifically, the Court of Appeals found that the lease provision acted as a penalty provision, that was unenforceable under Minnesota law. The case was sent back to the lower court for further proceedings.

This case has broad implications for commercial landlords in Minnesota. Landlords should not simply assume that they can obtain a judgment for all unpaid rents under the Lease after an eviction. The exact wording of the provisions in the lease matters, as well as how the landlord conducts itself after an eviction or voluntary surrender of the Property. Good legal counsel will take their clients through these various scenarios and help develop a comprehensive plan to resolve lease disputes.

Commercial leases can be complex, and simply using a form lease without reviewing it with an attorney can lead to undesirable outcomes. The attorneys of Burns & Hansen, P.A. are available to help commercial landlords and tenants with all of their legal needs. This includes drafting leases that protect a landlords’ interests, proving counsel on dealing with tenants, and litigating lease disputes.