Austin Hill Country Realty, Inc. v. Palisades Plaza, Inc

In Austin Hill Country Realty, Inc. v. Pacific Palisades, Inc., 948 S.W.2d 293 (Tex. 1997), a landlord sued the tenant for anticipatory breach of a commercial lease. See id. at 295. At trial, the tenant sought to prove that the landlord had failed to mitigate its damages resulting from the tenant's alleged breach, and it requested an instruction asking the jury to reduce the landlord's damages based on the landlord's failure to mitigate. See id. The trial judge rejected the request, and the jury returned a verdict for the landlord. See id. The appeals court affirmed the judgment. See Austin Hill Country Realty, Inc. v. Pacific Palisades, Inc., 938 S.W.2d 469, 473 (Tex. App.--Austin 1995), rev'd, 948 S.W.2d 293 (Tex. 1997). In reversing, the Texas Supreme Court held that a landlord has a duty to make reasonable efforts to mitigate damages when the tenant breaches the lease and abandons the property, unless the commercial landlord and tenant contract otherwise. See Austin Hill Country Realty, Inc., 948 S.W.2d at 299. In its analysis, the Court outlined the four causes of action available to a landlord against a tenant who has breached the lease. See id. at 300. The Court noted that, under the second remedy, "the landlord can treat the breach as an anticipatory repudiation, repossess, and sue for the present value of future rentals reduced by the reasonable cash market value of the property for the remainder of the lease term." Id. The Supreme Court of Texas recognized that a commercial landlord has a duty to make reasonable efforts to mitigate damages when the tenant breaches the lease and abandons the property. The rule in Palisades Plaza has since been codified: "A landlord has a duty to mitigate damages if a tenant abandons the leased premises in violation of the lease." Tex. Prop. Code Ann. 91.006(a) (West 2007). The landlord's duty to mitigate requires him to use "objectively reasonable efforts" to re-lease the premises to a tenant "suitable under the circumstances." Palisades Plaza, 948 S.W.2d at 299. If the landlord fails to use reasonable efforts to mitigate damages, his recovery from the tenant is barred to the extent that damages reasonably could have been avoided. Id. the reasonableness of the landlord's efforts to avoid damages is an issue for the fact finder. See Hunsucker v. Omega Indus., 659 S.W.2d 692, 698 (Tex. App.--Dallas 1983, no writ) ("issues such as reasonableness and foreseeability are inherently issues for a jury"). The tenant bears the burden of proof to demonstrate that the landlord has failed to mitigate damages and the amount by which the landlord could have reduced his damages. Palisades Plaza, 948 S.W.2d at 299.