Opinion ID: 1238082
Heading Depth: 2
Heading Rank: 1

Heading: Rental Default

Text: Landes argued to the trial court that, under Utah Code Ann. § 78-36-12.6, there was a duty on the part of a commercial landlord in the case of rental default to use its best efforts to relet the premises. The court found that Olympus Hills did not use its best efforts to relet the premises. It then awarded damages against Landes for defaults in rental payments for a twenty-four-month period, from June 1985 to June 1987 ($75,000 plus interest). Other than to indicate the time period represented by the award and Olympus Hills' failure to use its best efforts to relet the premises, the court did not specifically indicate its theory behind the reduction by nearly one-half of the rental default damages sought by Olympus Hills. Therefore, the issue presented is whether the trial court erred in awarding two years' rental default damages to Olympus Hills. Landes argues that because the court found that Olympus Hills did not use its best efforts to relet, no damages award can stand. The court heard evidence of Olympus Hills' attempts to relet the premises and of prospective tenants who were refused a lease because Olympus Hills found them to be either financially unstable or only desirous of a short-term (three-year) lease. The court was aware that there was a duty to mitigate, and although Olympus Hills did not use its best efforts, it did make significant effort. Based on the court's finding, we conclude that the court implicitly determined that, had Olympus Hills used its best efforts, it could have relet the premises within two years at the rental rate in the Bagel Nosh lease. The court properly terminated Landes' liability after that time. That termination, however, does not affect his liability for the first two years. Indeed, there was testimony that Bagel Nosh left its bagel-making machinery and other property on the premises until February 1986, thus precluding any re-lease before that date. Landes argues that the standard we adopted in Reid v. Mutual of Omaha, 776 P.2d 896 (Utah 1989), should be applied, although Reid was decided after the trial court in this case rendered its decision. In that case, we held that a landlord who seeks to hold a breaching tenant liable for unpaid rents has an obligation to take commercially reasonable steps to mitigate its losses, which ordinarily means that the landlord must seek to relet the premises. Id. at 906. It appears to us that the best efforts standard employed by the trial court is equal to or greater than that required by Reid. As a result, only Olympus Hills could have been prejudiced by the trial court's limitation of the rent to two years. Since Olympus Hills has not cross-appealed and Landes has not been prejudiced, we find no error.