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Case: Hellyer Communications, Inc. v. WRC Properties, 888 F.Supp. 94 (S.D.IN 1995)

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that the 10 year contract statute of limitations would apply but for the more specific rent recovery statute which superseded the general contract statute of limitations in this case.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.