New Gourmet Concepts, Inc. v. Siedo Investments Co., LLC; Eric, Inc. v. Siedo Investments Co., LLC

Summary

The Alabama Supreme Court held that a condemnation clause in a commercial lease was ambiguous as to the effect of a total taking of the leased property. Construing the ambiguity in favor of the lessee, the court concluded that the lease did not automatically terminate upon condemnation and that the lessee and sublessees retained the right to share in the condemnation proceeds. The court reversed and remanded for a determination of the sublessees' interests.

Holdings

1. The condemnation clause was ambiguous because its four subparts plausibly could govern a total taking, and they provided differing consequences for the lease.
2. Because the condemnation clause was ambiguous, the lease had to be construed more strongly against the lessor and more liberally in favor of the lessee.
3. The lease did not automatically terminate upon the total taking, so BSD's and, by extension, NGC's and Eric's rights to share in the condemnation proceeds were not extinguished.

Questions Presented

1. Whether the condemnation clause in the lease was ambiguous as to the effect of a total taking of the subject property.
2. Whether the lease automatically terminated upon UAB's total taking of the property.
3. Whether NGC and Eric retained the right to share in the condemnation proceeds through their leasehold interests.

Disposition

reversed_and_remanded