Nordhoff Way v. Walgreen CA2/8

FACTS AND PROCEEDINGS

In June 2007, appellant Nordhoff and respondent Walgreens entered into a lease for Walgreens to open a Walgreens store in Nordhoff’s shopping center in Northridge. Under the lease, Walgreens’s duties as tenant included making certain improvements to the property, including building out a 4,500 square foot “shop space” and painting the parking lot. The build-out was more costly and took longer than Walgreens expected, leading Walgreens to conclude that opening a store in the shopping center was not economically sensible. Accordingly, while continuing to make its rent payments under the lease, Walgreens exercised what it claimed was its right under paragraph 8(a)(i) of the lease. That paragraph stated, “Subject to any express limitation set forth in this release, [Walgreens] has the right (but not the obligation) to use the Leased Premises for any lawful purpose not in violation of applicable law, matters of record, or any then existing exclusive use restrictions [in or around the leasehold area].” Interpreting the paragraph as permitting, but not obligating, Walgreens to open a store, Walgreens instead investigated assigning the lease or subleasing the space.…