Isbey v. Crews
284 S.E.2d 534 (1981)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Where a lease requires a landlord's consent for a sublease but does not include a clause requiring that such consent not be unreasonably withheld, the landlord has an absolute right to refuse consent for any reason. Additionally, while a landlord has a duty to mitigate damages after a tenant's breach, the burden of proof is on the breaching tenant to show that the landlord failed to exercise reasonable diligence.
Facts:
- Plaintiffs Isbey and Morris leased commercial property to the defendants.
- The lease agreement contained a clause forbidding the lessee from subleasing the premises 'without the written consent of the lessor.'
- The lease did not contain a provision stating that the lessor's consent would not be unreasonably withheld.
- The defendants proposed a sublease to Isbey and Morris.
- Isbey and Morris refused to consent to the proposed sublease.
- On May 22, 1980, the defendants moved out of the leased space.
- The defendants subsequently stopped making rental payments, with the breach occurring on September 17, 1980.
- The leased space remained vacant after the defendants abandoned it.
Procedural Posture:
- The plaintiffs (lessors) sued the defendants (lessees) in trial court for breach of the lease agreement for failure to pay rent.
- The plaintiffs filed a motion for summary judgment.
- The trial court granted the plaintiffs' motion for summary judgment.
- The defendants appealed the trial court's entry of summary judgment to the North Carolina Court of Appeals.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a commercial lease clause that requires the lessor's written consent to a sublease, but does not state that consent will not be unreasonably withheld, grant the lessor absolute discretion to refuse consent?
Opinions:
Majority - Hedrick, J.
Yes. A lease clause requiring a lessor's consent to a sublease, without language limiting the lessor's discretion, grants the lessor the absolute right to withhold consent for any reason. The court reasoned that it will not insert terms into a contract that the parties themselves elected to omit. Since the lease did not contain a 'reasonableness' standard, the court refused to impose one, thereby giving the lessors the right to exert their own subjective criteria in approving subtenants. The court further held that while landlords have a duty to mitigate damages, the burden is on the breaching tenant to prove the landlord failed to exercise reasonable diligence. In this case, the defendants offered only a conclusory statement that the plaintiffs made no effort to re-rent the space, which was insufficient to create a genuine issue of material fact and overcome summary judgment.
Analysis:
This decision solidifies the principle of freedom of contract in North Carolina commercial lease law, emphasizing that courts will enforce lease terms as written. It serves as a critical warning to tenants to negotiate for a 'reasonableness' standard in consent-to-sublease clauses, as the default rule grants landlords absolute discretion. The ruling also places a significant evidentiary burden on breaching tenants, requiring them to affirmatively prove a landlord's failure to mitigate damages rather than merely alleging it. This makes it more difficult for tenants to reduce their liability after abandoning a lease.
Unlock the full brief for Isbey v. Crews