Sie sind auf Seite 1von 2

Reid v.

Mutual of Omaha Insurance Company

• Mutual (D) appeals from judgement in nonjury trial finding it liable to Reids (P)
• D contents trCt erred in rejecting its claim that Ps had constructively evicted Mutual and that it
also erred in calculating damages due the Reids.
• Mutual, as tenant, and Reids , a landlord, entered a 5 year lease agreement for office space at a
monthly rate of $1,100.
• Lease was to end Oct. of 1985
• Mutual took possession of property and used it for insurance sales business.
• Soon after, another tenant moved into the next door property
• The other tenant, Intermountain marketing, operated doore to door cookware sales business and
• Made lots of noise, took up all of Mutual's parking spaces, interfered with Mutual's business
• Mutual reported this to the Reids, but felt the Reids did not respond adequately
• Mutual vacated and Reids filed suit.
• Reids want value of lease for three and a half year term remaining in the lease.
• Mutual claims CONSTRUCTIVE EVICTION, b/c Reids failure to control activities of
• IM took up the space for a rent comparable to what Mutual would have paid. However, in
1982, IM vacated and declared bankrupcy.
• TRCT awarded Reids total unpaid rents, included those during litigation, less rents received by
IM, plus cost of attorneys fees.
• Mutual contends it only owes damages from start of lease until the time that IM rented.

HOLDING: affirmed liability for breach but reverse in part determination of damages.
• Whether Reids gave constructive eviction
• Whether Utah law imposes a duty upon landlords to mitigate damages by reletting
premises after a tenant has wrongfully vacated and defaulted on the covenant to pay

1. “surrender and acceptance”: Under this doctrine, hen a tenant surrenders the premises to
a landlord bf lease expires, and landlord accepts surrender, tenant is no longer has no
obligation for any rents accruing after the date of acceptance.
2. NEW RULE: landlord who seeks to hold a breaching tenant liable for unpaid rents has
an obligation to take commercially reasonable steps to mitigate its losses. Usually
means landlord must relet premises.

1. At CL, Reid's acts were not conclusive evidence of a surrender.
2. Court looks to
1. Traditional rule: landlord not required
2. Trend rule: landlord has some obligation to relet.
Justification for Trad Rule (1)
• can be easily obviated
• Trend has some concern that breaching party should not be able to force its landlord to seek
other tenants on pain of losing bargained for rents.
• Unfairness eliminated.
• Stems from ancient property law concepts
◦ However, these are no longer consonat with most modern landlord tenant relationships
Court adopts TREND RULE
• Policy reasons.