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DVM CO. v. Bricker

Arizona Supreme Court
137 Ariz. 588, 672 P.2d 933 (1983)
ELI5:

Rule of Law:

Under Arizona law governing commercial leases (A.R.S. § 33-361), a landlord may terminate a lease for any non-trivial violation of a lease provision if the lease allows for forfeiture, regardless of whether a court considers the breach to be material.


Facts:

  • DVM Company leased retail space in its Metrocenter Mall to John and Kathleen Bricker for their store, 'Basket House'.
  • The lease agreement restricted the items the Brickers could sell, including 'Arizona Souvenirs', and prohibited the sale of other items without DVM's written consent.
  • The lease contained a forfeiture clause allowing DVM to terminate the agreement and re-enter the premises if the Brickers breached any provision and failed to cure it within 30 days of written notice.
  • During the lease term, the Brickers began selling T-shirts imprinted with movie, TV, and cartoon characters, as well as popular sayings.
  • DVM sent a written notice to the Brickers demanding they cease selling these T-shirts, asserting the sales violated the lease's use restrictions.
  • The Brickers refused to comply with the notice, contending that the T-shirts qualified as 'Arizona Souvenirs' under the lease terms.

Procedural Posture:

  • DVM Company filed a lawsuit against John and Kathleen Bricker in the Maricopa County Superior Court (trial court), seeking to terminate the lease for breach of a use covenant.
  • Following a bench trial, the trial court found that the Brickers had breached the lease but ruled the breach was 'not sufficiently material' to warrant forfeiture, denying DVM's request for possession of the premises.
  • DVM, as appellant, appealed the trial court's judgment to the Arizona Court of Appeals.
  • The Court of Appeals affirmed the trial court's decision in a memorandum decision.
  • DVM petitioned the Supreme Court of Arizona for review, and the court granted the petition.

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Issue:

Does Arizona law (A.R.S. § 33-361) permit a commercial landlord to terminate a lease and repossess the premises for any violation of a lease covenant, even if a court deems the breach to be not 'sufficiently material'?


Opinions:

Majority - Justice Cameron

Yes. Arizona law permits a commercial landlord to terminate a lease for a tenant's violation of a covenant, regardless of the breach's materiality. The court reasoned that the statute governing commercial leases, A.R.S. § 33-361, allows a landlord to re-enter and take possession when a tenant 'violates any provision of the lease.' This language starkly contrasts with the statute for residential leases, which explicitly requires a 'material noncompliance' by the tenant. The court concluded that the legislature's omission of a materiality requirement for commercial leases was intentional. While a court might ignore a truly 'trivial' breach, when a commercial lease explicitly provides for forfeiture upon a violation, and the tenant is notified and refuses to cure, courts will enforce the forfeiture as a statutory right of the landlord.



Analysis:

This decision establishes a bright-line rule that distinguishes commercial from residential lease enforcement in Arizona. It solidifies a strict, contract-centric approach for commercial leases, empowering landlords to enforce specific covenants without having to prove the breach caused material harm. This provides greater certainty for commercial landlords in managing their properties and tenant mix. Conversely, it puts commercial tenants on notice that they must adhere strictly to all lease terms, as even seemingly minor violations can trigger forfeiture if the lease so provides.

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