Foundation Development Corp. v. Loehmann's, Inc.

163 Ariz. 438, 788 P.2d 1189 (1990)

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Nature of the Case

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Facts

Loehmann's (D) entered into a lease of retail space in a shopping mall owned by Foundation (P). Under the terms of the lease, D was to pay a monthly rental payment and would be assessed a maintenance charge based on its proportionate share of the total square footage in the mall. D's usual practice with respect to the maintenance charge was to make partial payments quarterly, and upon receiving a year-end statement from P reflecting actual maintenance expenses, to pay the balance owed. D generally did not pay the balance until more than thirty days after it received the statement. The lease contained a provision that, if D failed to make rental or other payments and did not cure within ten days after receipt of notice of their failure to make such payments, P could, prior to D's cure, elect to terminate the lease. The lease year ended January 31. On February 23, P's agent sent D a notice of the maintenance charges for the prior year. D's balance due was $3,566.44. On March 18, D's agent, believing that D had been overcharged, sent an inquiry to P. P responded on March 25, informing D that D's share of the total had been increased because a portion of the complex had been sold. On April 10, P sent a demand letter to D, reinstating the time of the essence provision in the lease, and requesting payment within ten days of receipt of the letter. D received the letter on April 17, issued a check on April 24, and claims to have mailed it on April 25. P filed this action on April 28 and received D's check on April 29. P then moved for summary judgment, because D had breached its obligation to timely pay the common area charge. D filed a cross-motion, arguing that the payment was timely, but if not forfeiture was improper because its failure to pay was a mistake. The trial court found that, although D had breached, the breach was trivial, and D was not in unlawful possession. P appealed. The court of appeals reversed, holding that P was entitled to forfeiture, even if D's breach was not material. The court further found that, because P had reinstated the time of the essence provision, the failure to make timely payment was a material breach. D appeals.