Supermarkets, Successors and Mitigation of Damages

ALAMEDA, CA – The supermarket industry is rather fascinating. There seem to be an unending number of competing chains. The chains go in bankruptcy and get bought out. Each time, all of their locations are reviewed. Some are kept. Some are rejected.

In a recent lawsuit filed in Alameda Superior Court, a property owner alleges the Mi Pueblo chain, branded Cardenas, owes $6.5 million for lost rent at a Newark site, a site which was kept when the chain exited bankruptcy but later shut down for lack of profitability.

There are a couple issues that are in the forefront. The first is successor-in-interest liability. The complaint goes to great lengths to allege the existing operator of the chain is the successor to the previous company who signed the lease. Successor liability may be imposed if assets were purchased for inadequate consideration.

The second issue is mitigation of damages. A party to a contract who is looking at suffering damages from a breach must take steps to mitigate that damage. In the case of a landlord, this means re-leasing the space. There will likely be a fight about whether the landlord has met the mark.

This blog reports on cases filed in and around the San Francisco Bay Area. The statements made are based on the allegations in court-filed documents. Allegations are just accusations, and may or may not be true.
The authors of the blog are attorneys at the San Francisco litigation firm, Wood Robbins, LLP. If you have a legal issue, send them an email. If they cannot help you, they will try and point you in the right direction.


Categories: Commercial

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