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Trial Verdict for Restaurant Franchisee

We represented a restaurant franchisee in a dispute with a commercial landlord, KRG Portofino, LLC, which is a subsidiary of Kite Realty (the "Landlord"). The case concerned positive findings of asbestos in the Portofino Shopping Center, fraud, breach of the lease, failure to return the tenant's security deposit, and other causes of action. The Portofino Shopping Center is located in Montgomery County, Texas and stores like Amazing Lash, Casual Male, Old Navy, Tropical Smoothie, Pie Town, Carters, OshKosh and the Learning Academy have rented in the shopping center.

Following a week-long trial, the Judge found that KRG Portofino LLC discovered asbestos in the Portofino Shopping Center multiple times. Specifically, the Judge found:

In addition to the discovery of asbestos at Amazing Lash and Casual Male, Landlord discovered asbestos at Old Navy, Tropical Smoothie, Pie Town, Carters, OshKosh and the Learning Academy.

And, after confirming the discoveries of asbestos, the Judge found the Landlord (Kite Realty's subsidiary KRG Portofino LLC) committed acts of fraud, finding:

Even though the Portofino Shopping Center contained toxic asbestos and Landlord knew or should have known the Portofino Shopping Center contained asbestos, Landlord’s employees and agents, Kilroy and Reedy, made voluntary, material, and false representations about asbestos in the Portofino Shopping Center to [our client]. Landlord’s false representations included (i) asbestos being discovered in the Portofino Shopping Center was only a possibility when, in truth, asbestos had already been discovered, (ii) the Portofino Shopping Center was asbestos-free when, in truth, the shopping center contained asbestos, and (iii) Landlord had only discovered asbestos in other shopping centers when, in truth, Landlord had already discovered asbestos in the Portofino Shopping Center.

The Judge further determined that Kite Realty's subsidiary committed acts of fraud "intentional, reckless and lacked any regard for the health and safety of others", finding:

Landlord used intentional siloing of information relating to asbestos to conceal the truth and to deceive current and prospective tenants into believing the shopping center was not contaminated with asbestos.

Landlord continually referred to the asbestos issue as a minor financial issue, focusing solely on the cost of asbestos reporting and remediation services, and completely ignored the impact numerous asbestos findings throughout the Portofino Shopping Center would have if disclosed to current and prospective tenants as well as vendors and customers of the shopping center.

Landlord’s actions regarding the findings of asbestos and failure to disclose were intentional, reckless and lacked any regard for the health and safety of others.

Landlord’s improper remediation, both at the Premises and at the Old Navy location, further put tenants, customers, and vendors at risk for health, safety, and well-being.

On the issue of breach of contract, the Judge found that Kite Realty's subsidiary breached the lease, as follows:

Because the Landlord could not and did not deliver the Premises, Saddles could not and did not have an obligation to pay rent, rent could not and did not commence and Saddles could not and did not take possession of the Premises.

Finally, the Court found damages for our client, including:

Landlord’s breach of contract caused [our client] injuries and damages including loss of monies paid for its franchise fee ($12,500), asbestos survey ($1,000), architect fees ($21,936.96), security deposit ($11,392.02) and attorney’s fees ($160,000.00).

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