Case: Hellyer Communications, Inc. v. WRC Properties, 888 F.Supp. 94 (S.D.IN
When will tenant lose an otherwise valid claim for rent
reduction based upon a space audit because the tenant waited too long
to discover the discrepancy in square footage and to file its suit?
Indiana has two statute of limitations which have
potential overlap. Actions for recovery of rents are subject to a six
year statute of limitations. Actions for breach of contract have a ten
year statute of limitations.
In this case, tenant sued landlord to recover rent which tenant
claimed to have overpaid under a 1984 lease which had been amended on
several occasions by reason of the actual rentable area of its leased
premises containing less space than the amount represented by
landlord. The tenant argued that its suit was for breach of contract
as to which the ten year statute would likely apply as a general
matter. The landlord argued that tenant sought to recover rent which
it had overpaid and that this action should be governed by the statute
of limitations which requires that actions for recovery of rent be
filed within 6 years.
The tenant argued that it should not be barred by the six year statute
because it claimed this shorter statute should only apply to landlord
actions against tenants for rent.
The appellate court held that the tenant's claim would be
limited by the six year statute of limitations. It refused to limit
the application of the rent recovery statute of limitations to
landlord actions as argued by tenant. It acknowledged that the 10 year
contract statute of limitations would apply but for the more specific
rent recovery statute which superseded the general contract statute of
limitations in this case. However, the court held that it was
premature to consider whether the 6 year statute of limitations had
run out. In order to determine that, it would be necessary to know
when the tenant knew or reasonably should have known of the square
footage deficiency. The court was unwilling to decide this issue at
the outset of the case. Tenant claimed that it was not aware of the
situation until it ran a lease audit.