Owner Must Have Realistic Expectations for Restaurant Tenant

August 24, 2017
| Share | Print

If you rent space for your restaurant, you might worry that nearby tenants could complain about odors and there could be a clash with the owner over this type of “nuisance.” But there’s good news from a Massachusetts trial court that determined that a tenant's use of cooking equipment was permitted by its lease—despite the fact that cooking odors became an issue within the property.

In that case, a sushi restaurant began operating in the basement space of a mixed-use brownstone building that included other commercial space and some apartments. It became apparent that cooking odors were wafting into the first-floor commercial space, which was vacant but being shown to prospective tenants by a realtor. Several prospective tenants didn’t sign leases because of the odor. The tenant took steps to ameliorate the cooking odor, but the landlord continued to complain about that and other unrelated supposed lease defaults. Eventually, the landlord sued the tenant.

A Massachusetts trial court ruled in favor of the tenant. The court noted that the restaurant was leased to the tenant for use as “a sushi restaurant, and for no other purposes.” Some Korean-style food that required frying was served, but an expert testified that it was the practice of all sushi restaurants to serve this type of food. The landlord offered no evidence that the tenant served any items not generally served by all sushi restaurants or engaged in any cooking or other activities not typically engaged in by sushi restaurants. In particular, all sushi restaurants serve dishes that include fried food that must be prepared in a fryolator—which was believed to be the source of the cooking odors.

The court also found that the real estate brokers who showed the commercial space to prospective tenants testified that it was the smell of Asian fried food that was noticeable in the commercial space. That food was prepared by the tenant in a fryolator that was in place when the restaurant was purchased from the previous tenant—also a sushi restaurant—and the landlord assented to the assignment of the previous tenant’s lease to the tenant. Similarly, a ventless hood was installed in the space when the previous tenant was there, and therefore effectively approved by the landlord as the means of addressing the cooking smells that would result from the use of the fryolator.

Additionally, the lease expressly permits the use of a fryolator, as long as all necessary permits are obtained and it is regularly maintained. The landlord offered no evidence that the tenant lacked any necessary permits, or that the fryolator was misused or improperly maintained. The tenant hadn’t violated any provisions of the lease that would warrant a default. The court noted that for much less than the price of attorney’s fees and litigation, the landlord could’ve purchased a more sophisticated ventilation system that would’ve eradicated the problem [254 Newbury, LLC v. Wabora Newton, LLC, March 2017].