What if Large Shopping Center Tenant goes DARK?

Where a lease clause provides that tenant may terminate its lease if an identified co-anchor fail or cease to lease and pay rent for its store in the Shopping Center... the tenant has the right to terminate where the co-anchor assigns its lease, even where the co-anchor's lease had no operating covenant.
from DIRT
"The tenant's lease specifically identified that there was a co-anchor lease and that the continued leasing and payment of rent for [co-anchor's] store is part of the consideration to induce [Tenant] to lease and pay rent for its store. According to the parties who negotiated this lease, the purpose of the clause was to give assurance to Tenant that the co-anchor would continue to bear its share of the Center's costs during the period of Tenant's lease. At the time it entered into this lease, Tenant was fully aware that the co-anchor's lease was freely assignable and contained no operating covenant.
Jenkins v. Eckerd Corp., 913 So. 2d 43 (Fla. App. 2005)
On the other hand, the Tenant's lease negotiator testified that in clauses of this sort that he had negotiated, usually the parties stipulate if they intend the reference to the cotenant in question to include the cotenant's successor and assigns. Obviously the clause in question did not include that language.
Of course, what happened was that the co-anchor assigned its lease to another grocery store operator, which in fact continued to operate a grocery store and to pay rent. The assignor/co-anchor remained liable for such rent. The Tenant's lease had also passed through several hands, and the present assignee, Eckerd, concluded that it was not desirable to continue to operate at this location and therefore, one year after the co-anchor assigned, Eckerd invoked the termination right described above.
Landlord argued that the co-anchor, as assignor, remained fully liable on the lease, and that, consequently, the only conceivable purpose of the clause - to insure that the operating costs be covered - was satisfied. Landlord argued that, although the language of the termination right appeared to be ambiguous, in context it was in fact ambiguous because it did not identify what happened when the co-anchor assigned.
In the alternative, the Landlord argued that the failure of the co-anchor to continue
to be the one actually paying the rent was an immaterial breach. The Landlord noted
that the Restatement of Contracts referred to immaterial conditions also as excused if the invocation of the breach:
(a) Will involve extreme forfeiture or penalty, and,
(b) Its existence or occurrence forms no essential part of the exchange for the promisor's performance..
The appeals court panel ruled, 2-1, in favor of Tenant, with a strong and detailed dissenting opinion.
In the view of the majority, the language of the clause was unambiguous, and therefore so was the condition that Tenant was entitled to expect - the continued leasing and payment of rent by the co-anchor.
Consequently, the failure of the co-anchor to continue in the premises was material, as it was the performance for which the Tenant bargained.
A very strong dissent argued point by point against this position.
Comment: In the editor's view (J. Patrick Randolph, Professor of Law,
UMKC School of Law), this is a very close call, especially on the first argument - that, in context the language of the lease was inherently ambiguous when it failed to address what would happen if the co-anchor assigned. The majority placed the responsibility for addressing the issue directly on the landlord, who knew that assignment was a distinct possibility. As Landlord failed to do anything to protect itself against this eventuality, Landlord should suffer the consequences.
Central to the editor's conclusion on this point would be more and clearer evidence of trade practice with respect to this issue. The only witness, who had negotiated for the tenant, said that in such clauses the parties always stipulate if they intend to withhold the Tenant's kick out right in the event of an assignment by the identified cotenant.
The editor agrees that this would be common practice in the more traditional cotenancy clause where the identity of the Tenant is critical because the clause is designed to protect a Tenant from the loss of good will due to its association in the Center with the other identified tenant. But in this case, it was apparently not disputed that good will was not the issue - the original Tenant sought only to protect itself from an insufficiency in maintenance funds resulting from a failure of rent from the co-anchor's space. If this is the case, then the parties might not think to mention assignment because what they were focused on would be interruption in the rent flow. This would not happen in the event of assignment, so they wouldn't talk about assignment one way or the other.
The editor believes the type of cotenancy clause involved in this lease is relatively unusual, and that it likely is difficult to generalize about trade practices about this. Absent a clear trade practice, the editor tilts, ever so slightly, to Landlord's side. But the editor always believes that people should live with the language of their agreements. So it's very close. The editor simply believes that the language of the agreement needed further clarification as applied.
Subsequent question on DIRT:
Was there any discussion in the case or decision of the lapse of one year from the assignment by the co-anchor and the exercise of the termination right by tenant's last assignee? For more information see: www.houstonrealtyadvisors.net
or www.houstonrealtyadvisor.com