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Developments In The Law


The decision in Sharaka v. E & A, Inc., 2014 WL 860304 serves as a harsh reminder to the commercial landlord of the importance of an accurate statutory notice. A commercial landlord that serves a grossly inaccurate statutory notice not only risks the prejudicial dismissal of its eviction action, but risks being subjected to a malicious prosecution action (and an adverse punitive damages award). In Sharaka, the Landlord served a three-day demand notice, and subsequently filed an eviction action based upon a Tenant’s failure to pay outstanding CAM expenses. The Landlord had included past CAM charges for years past, without having properly invoiced the Tenant for the CAM charges – as required by the Lease. After a bench trial and Landlord’s appeal, the courts were in agreement that 

(1) Landlord breached the Lease by failing to provide the Tenant with yearly CAM statements in accordance with the Lease,

(2) the statutory three-day demand notice was defective for seeking CAM expenses for which annual statements had not been provided, and

(3) an eviction action cannot stand on an improper three-day demand notice. In turn, the Tenant filed an action for malicious prosecution against the Landlord, claiming that the previous eviction action was filed without probable cause. The Landlord filed a motion for summary judgment, arguing that the ruling on the eviction action did not constitute a bona fide termination of the underlying eviction action, because it was a technical termination based on waiver, rather than a final determination of the merits of the case. The trial court agreed with the Landlord, entered final summary judgment in Landlord’s favor, and Tenant appealed. In reversing the summary judgment in favor of the Landlord, the appellate court determined that a “bona fide termination of the prior litigation” for malicious prosecution purposes means that the prior action was terminated on the merits in a manner that demonstrates the prior suit lacked merit. The court determined that termination of the prior eviction suit upon that basis that Landlord failed to provide a proper three-day demand notice constituted an adverse ruling on the merits. The case was remanded to the trial court, and the Tenant was free to continue its pursuit of malicious prosecution damages against the Landlord.

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