The California Court of Appeals has reversed a trial court’s decision to dismiss a tenant lawsuit against a shopping center landlord based on differences between the landlord’s estimates of certain charges outlined in a Letter of Intent (“LOI”) as part of lease negotiations versus the amounts charged by the landlord upon occupancy.
Prior to entering into the lease, the landlord provided the prospective tenant with estimates of common area maintenance (“CAM”), real property taxes and insurance charges that the landlord would bill on a per square foot basis. The trial court deemed these prior estimates to be outside of the four corners of the 2005 agreement, as they were not contained in or referred to in the lease itself, which contained an integration clause. In 2009, the actual charges were approximately 2-4 times the estimates presented in the LOI, in some part due to the allocation of retail/non-retail portions of the space. The tenant sued for fraud and negligent misrepresentation, asserted mutual mistake, and requested the lease be rescinded. The Appeal Court’s reversal will allow this case to proceed.