Reid v. Mutual of Omaha Ins. Co.

Facts

In 1980, Mutual of Omaha (Defendant) leased property from Reid (Plaintiff) for a term of five years. Soon after, the adjacent space was leased to Intermountain Marketing (Intermountain). Defendant complained to Plaintiff that Intermountain’s employees were too noisy, occupied all of Defendant’s parking spaces, and otherwise interfered with Defendant’s operations. In 1982, Defendant vacated the premises, and Plaintiff sued to recover unpaid rent for the remainder of the lease term. Defendant counterclaimed for constructive eviction based on Plaintiff’s failure to address the former’s complaints regarding Intermountain. During litigation, Plaintiff remodeled Defendant’s former space and leased it to Intermountain for the remainder of the five-year term. Several months later, however, Intermountain filed for bankruptcy and vacated, after which the property remained unoccupied. The trial court rejected Defendant’s constructive eviction claim and awarded Plaintiff the total rent due for the remainder of the lease term minus rents received from Intermountain for the subject premises. Defendant argued on appeal that it was only liable for the rent that was due between Defendant’s last payment and the reletting to Intermountain because the reletting amounted to an acceptance of the breach and a mutual termination of the lease. Defendant also argued that even if it was liable for rents after the reletting to Intermountain, Plaintiff had a duty to seek a replacement tenant after Intermountain vacated.