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a landlord’s destruction of the vacated premises of a tenant may be considered part of its duty to mitigate damages from the tenant’s breach, the Maryland Court of Appeals ruled on Aug. 1. Circuit City Stores Inc. v. Rockville Pike Joint Venture L.P., No. 122. When Circuit City decided to leave the shopping center owned by Rockville Pike, it proposed subletting the space to a musical instrument store. The developer rejected the offer and sued for breach of contract. That case ended in 1999 with the judge entering an order against Circuit City on two liability and three damages issues. The court reserved jurisdiction to weigh issues that might arise as to any credits Circuit City might be entitled to apply to its obligations under the contract. Several months earlier, Rockville Pike entered into an agreement with the Food Lion grocery chain that required destruction of the old Circuit City store. In 2001, Circuit City went back to court to modify the judgment concerning credits it should receive once Food Lion opened. The court granted Circuit City’s motion and ordered Rockville to refund Circuit City payments it had made after demolition of the old building. The Court of Appeals reversed and remanded. It held that, while the 1999 judgment was final, Circuit City can get a separate judicial determination about possible credits. The court noted Rockville had a duty to mitigate its damages, so if its agreement with Food Lion was reasonable, then the trial court would need to determine how much Food Lion’s rent offset Circuit City’s. If the agreement with Food Lion was not reasonable, Rockville had breached its contractual obligation to mitigate and Circuit City’s obligations cease.

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