Virginia Lawyers Weekly

Plaintiff Boulevard Associates may pursue a damages claim against defendant Wawa for alleged breach of a contract to lease property in Virginia Beach for a gas station and convenience store, for which Wawa could not obtain the necessary construction permits, a Norfolk U.S. District Court says.

Construing the alleged facts in the light most favorable to plaintiff, the court finds that plaintiff has stated plausible claims for future damages based on rent and property-tax payments. Boulevard correctly points out the legal distinction between contracts to lease and contracts for lease. In a contract to lease, the landlord-tenant relationship never exists and default is considered a breach of contract, which allows for the recovery of future damages. In a contract for lease, the recoverable damages do not include future damages.

Boulevard has alleged facts that its agreement with Wawa was, in fact, a contract to lease and not a contract for lease.

Because part of the property that Wawa planned to lease was already occupied by another tenant, Boulevard argues that Wawa could not have yet been a tenant. Boulevard also contends that because Wawa did not have to pay rent until the “Rent Commencement Date,” it was not yet a party to a contract of lease. Boulevard argues that a series of conditions needed to be met before creating any leasehold estate – most importantly, removal of prior tenants by Boulevard. These alleged facts support the assertion that Wawa breached a contract to lease, permitting Boulevard to seek recovery for future damages, such as rent and property taxes.

Based on the alleged facts, Boulevard also merits the opportunity to prove damages for lost rental value, marketability and tenancy, Boulevard asserts the existing tenants in the shopping center were profitable and that the construction of the Wawa gas station would have benefited those entities, making the shopping center more desirable and allowing Boulevard to raise rents for these commercial spaces. Boulevard asserts it will submit expert testimony as to the plausibility of these lost profits. The alleged facts also support that, to accommodate Wawa, Boulevard did not renew the lease of a tenant and thus sustained damages as a direct result of Wawa’s breach of contract. For purposes of a motion to dismiss, Boulevard has stated plausible claims for these damages.

Defendant’s partial motion to dismiss is denied.

Boulevard Associates I LP v. Wawa Inc. (Smith, J.) No. 2:09cv111, June 3, 2009; USDC at Norfolk, Va.; Steven R. Zahn for plaintiff; Robert W. McFarland for defendant. VLW 009-3-317, 5 pp.

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