United States National Bank of Oregon v. Homeland, Inc.

Homeland (defendant) leased commercial real estate from a predecessor in interest of United States National Bank of Oregon (plaintiff). Homeland defaulted on the lease, abandoning the premises and making no further rent payments. The property sat vacant for a time while the lessor made efforts to find a new tenant. A new tenant, Sebastian’s International, rented the property at a higher rent than what Homeland had paid. The term of the new lease extended beyond the original term of Homeland’s lease. Sebastian’s defaulted and abandoned the premises before the expiration of Homeland’s original lease term. The lessor marketed the property again and ultimately found a third tenant. The bank filed suit to enforce the lessor’s rights against Homeland. The bank sought damages in the amount of Homeland’s rent due under the terms of its lease, less the amount received from Sebastian’s, for the period of time between Homeland’s default and the commencement of the lease to the third tenant. Homeland argued that its lease terminated as soon as the premises were relet to Sebastian’s and that any claim for damages should be limited to the time between Homeland’s default and the start of the lease to Sebastian’s. The trial court and the court of appeals agreed with Homeland and limited damages to the start of the lease to Sebastian’s. The bank petitioned the state supreme court for review.