American Community Stores Corp. v. Newman

441 N.W.2d 154 (1989)

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Nature of the Case

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Facts

American Community Stores (P) operated Hinky Dinky stores. It had leases on buildings for 20-year terms with options to renew for 5-year periods. P announced that it was closing its stores in Nebraska and other stores were also closed. Each store was reopened under different management the day after it closed. P assigned the leases to Nash-Finch Company, and Nash was to sublease the stores to various operators. Assignment agreements were signed to that effect. After public announcements of the closings, P then went to the landlords requesting permission to assign the leases. The landlords did not consent to any assignments, and they noticed P of default on the leases. Counsel for P wrote letters telling the landlords of its new intent to sublet the stores. The original leases allowed for subletting the premises. The express terms of the leases all required written acceptance of the landlord to any assignment and that failure to get it would represent a default of the lease with the right to reenter and retake possession. P attempted to cure the claimed defaults with new contracts to sublet for terms that were two days less than the original ones and rights to renew for five year periods. The trial court granted P’s motion for summary judgment holding that the subleases were valid and were not prohibited by the contract and that any default related to the assignments had been cured within the required 20-day contractual terms. The fact that the options on the sublease would run as long if not longer than the expiration of the original lease is not as a matter of law invalid because these options did not run from the date of origination of the primary lease but ran from their date to the end of the primary leases and the lessee retained a reversionary interest. Newman (D) appealed contending that the original assignments were still valid in that they were not formally rescinded. D also contends that the subleases were in fact assignments.