Austin Hill Country Realty v. Palisades Plaza

Palisades Plaza, Inc. ("Palisades") owned an office complex in Texas.

Austin Hill Country Realty, Inc. ("Austin") operated a real estate business. Austin was run by 3 people.

Austin entered in a lease agreement with Palisades. Moreover, the 2 parties entered into a site improvement agreement.

The operators of Austin sent Palisades conflicting improvement plans.

Palisades demand a single representative for Austin. Austin ignored the request.

Palisades becomes the plaintiff; Austin becomes the defendant.

Palisades sued Austin for anticipatory breach of the lease.

Austin introduced evidence that Palisades failed to mitigate its damages. However, Palisades wins in the trial court.

Does a landlord who's suing for anticipatory breach of a lease have a duty to mitigate damages?

The majority of the Supreme Court of Texas decided that the landlord should have made objectively reasonable efforts to re-let the space.

Yes. A landlord suing for anticipatory breach of a lease must attempt to mitigate damages.

The modern approach to impose a duty to mitigate losses:

1. encourages the productive use of property
2. discourages economic waste
3. protects against property destruction

Under traditional common-law rule, landlords had no duty to mitigate damages.