Love and Death on Rockville Pike

admin   March 12, 2010   Comments Off on Love and Death on Rockville Pike

In “Love and Death,” Woody Allen’s take-off on Tolstoy’s “War and Peace,” the Woody Allen character, a crazed Russian nobleman, clutches a clod of dirt in his quivering hands and moans ecstatically, “Land, laaand.” Woody Allen might have exaggerated the affinity of the Russian gentry for the soil, but he got it just about right when it comes to the roots of real property law in the United States. Anyone subjected to a law school course in real property remembers the dull pain occasioned by the effort to sort through fee simples, fee tails, remainders and reversions — springing, vested, contingent and otherwise. But what I remember best is the concept of “seisin” — not what it means, but the “Love and Death”-like fascination of our Anglo ancestors with its symbolic function. 

During the Middle Ages, really good (as opposed to less than really good) title to land required the symbolic conveyance of seisin. Conveyance of seisin (pronounced season) occurred in a ceremony in which the grantor handed a twig or a clump of dirt to the grantee. 

Modern title companies don’t do clumps of dirt, and they don’t do seisin, at least not explicitly. The seisin concept, however, together with other practices and rules dating from a time “to which the memory of man extendeth not” live on in our real property law. Deconstruct the deed to your house, and you’ll find an encyclopedia of medieval lore. Furthermore, rules rooted in British common law also lie at the foundation of another common property instrument, the lease. 

Property rights vs. contract rights 
A lease is a hybrid of property and contract principles. While the essence of athe landlord-tenant relationship involves a conveyance of property, most of what the parties fuss over are the contract terms: rent increases, insurance and the like. Only when a party breaches, usually the tenant, do the rights and obligations of the parties pivot on the nature of the parties’ property rights. 

Delivery and execution of a lease creates a property right in the tenant, so that property principles apply to when and how the tenant can be dispossessed of that right. If I own something, then, for the most part, only a court can take it away (as in “No person shall … be deprived of life, liberty, or property, without due process of law”). These property rights tend to be traditional, case law-derived rights and tend to have an air of the archaic about them. 

Contract rights, on the other hand, have a perky, plainspoken force to them: Here are the hours you have to operate your store. Here are the times the elevator runs. Here is what you pay if the rent is late. The legally significant distinction is that my contract rights can, unlike my property rights, be cut off by someone with a competing interest even if I haven’t breached the contract. 

Consider a theater ticket. The ticket is a license, not a property right. If the theater owner decides to exclude me from my seat, my only remedy is to sue for damages. No court will order the owner of the venue to allow me to occupy my seat. That’s because my ticket embodies purely contract rights, and no property rights. 

Case in point 
When landlords and tenants fight, as they did in a recent case, Circuit City Stores v. Rockville Pike Joint Venture, they use every weapon at hand, real property concepts and contract rules alike. In the Circuit City Stores case, the tenant decided to abandoned a location which it had agreed to continuously occupy (a perky, plainspoken contract term). It had also agreed that if it breached its lease obligations, the landlord could terminate the lease (that’s a property concept). 

Many years and countless attorney’s fees later, the case landed before the Maryland Court of Appeals, primarily on the question of whether the landlord had an obligation to “mitigate” the damages resulting from the tenant’s abandonment of the site. That issue, in turn, depended substantially on whether the controversy involved property law (under which there is generally no duty to mitigate) or contract law (under which there is a duty to mitigate). 

The court ruled, surprisingly, all of the above. More specifically, it ruled that there was an obligation to mitigate based not only on the contract element of the lease but under an elusive “modern trend” of property law as well. 

Consider what this surprising ruling means for landlords. In any given regional mall, it seems as if there are between 5,000 and 10,000 women’s shoe stores, 20,000 or so men’s clothing stores, and somewhere between 5 million and 10 million women’s clothing and accessory outlets. Layered over that teeming mass of retailers is an elaborate theory of merchandising that dictates how stores are paired, where they are located in relation to anchors, and on and on. 

According to the decision in Circuit City Stores, mall managers now must, in addition to consulting with their phalanx of retail consultants, make decisions with an ear cocked to a newly anointed group of merchandizing experts: Circuit Court judges. 

Howls about a new law from this chamber of commerce, and squawks about a new regulation from that association of manufacturers notwithstanding, what businesspeople want is certainty. 

They love to give legal work to lawyers who work on deals (me), and they hate to hire litigators (my partners). Litigation bespeaks a breakdown of consensus and cooperation: Getting to yes has morphed into getting over on the other guy. 

The Circuit City Stores decision means uncertainty, which means more preventive drafting for me, more litigation for my partners and little promise of profit for landlords or tenants.

© Maryland Gazette. Reprinted with permission.