Legal Question in Business Law in California

business problem

Hello. My business partner and I recently opened a dance studio in Huntington beach. We signed the lease in December and were given 1 month free rent to start up. That was fine until about 2 weeks into it the city closes down our major street and acess into out complex is difficult and almost impossible to get in and out of. We call our management company and told them that we would havenot signed the lease had they told us the street would be blocked off until May 2007, because we are two young girls and its a brand new business, we can not afford to have almost zero foot traffic. They knew about the project, the sewer and water liason spoke with us and she sent them letters, both through mail and hand delivered, and the management is acting like they didn't know. The liason sent us copies and dates the letters were sent out. But the management company never told us when we looked at the place or signed the lease. In fact there are other business in our complex with the same problem. Other business were given at least 3 free months of rent to set up, and yes I know we signed the lease based on just one free month, but we were never informed of the street issue. I am curious if we have a case or not.


Asked on 1/24/07, 2:33 pm

3 Answers from Attorneys
Terry A. Nelson Nelson & Lawless

Re: business problem

You have a claim of misrepresentation and fraud in the inducement of the contract. Every party owes a duty of good faith in their contract dealings, including disclosure of such material problems. That might be leverage enough to renegotiate the terms, or terminate the lease. Call if interested in getting legal help doing so.

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Answered on 1/24/07, 3:34 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: business problem

Mr. Nelson is right. You might want to consider filing in Small Claims Court; it's faster and cheaper and the claim limit is now $7,500. Get a book on how to prepare, file and win in small claims. Merely filing the suit may be sufficient to convince the landlord to give you a big discount. In preparing your complaint, be sure to describe the landlord as knowing about the street repairs, having a duty to disclose that information, and failing to act on that duty. Then describe the financial harm you have suffered in dollar terms and state that this harm was caused by the failure to disclose. Also state that the landlord breached its duty to contract fairly and in good faith.

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Answered on 1/24/07, 3:54 pm
Matthew Mickelson Law Offices of Matthew C. Mickelson

Re: business problem

You may have a claim for misrepresentation with regard to the lease, but of course the landlord (if it wants to fight you) may claim that you should have known about the street work by inquiring with the city. Feel free to call me if you'd like to discuss whether litigation is a good option.

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Answered on 1/24/07, 4:37 pm


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