Ashland leases 24 commercial properties from SuperAsh. Speedway subleases the properties from Ashland. Each Master Lease grants Ashland term renewal rights, predicated on 120-day advance notice.
If Ashland fails to exercise its options, then all improvements made to the properties vests in SuperAsh.
Speedway invested more than $10 million in capital improvements across the 24-property portfolio. Consequently, it was vitally important to Speedway and Ashland that all leases are timely renewed.
Ashland successfully renewed the leases once. Ashland’s second renewal was two months late. But SuperAsh accepted it anyway – perhaps because it was only for a one-year option term.
The third attempt was less successful as SuperAsh wasn’t willing to forgive the late notice. So SuperAsh notified Ashland that the lease would expire without further extension.
As a result of SuperAsh’s notice, Ashland filed a lawsuit seeking a declaration that the late exercise of its renewal was effective. SuperAsh responded with a claim for eviction due to Ashland’s breach of the leases.
The trial court granted judgment for tenant Ashland, based on principles of equity. The court explained that equity could forgive an unintended error if it was an inadvertent, honest mistake. The trial court then concluded that SuperAsh was precluded from terminating the leases.
Landlord SuperAsh appealed, challenging the trial court’s application of equitable relief based on honest mistake and estoppel theories.
The Court of Appeals affirmed the trial court’s judgment, holding that equity will relieve a tenant’s failure to give timely notice if it results from accident, fraud, surprise, or honest mistake, and has not prejudiced the landlord. The Court of Appeals then certified the issue to the Supreme Court.
The Supreme Court began its analysis with “Strict compliance with time limits is typically not required for contracts; the general rule is that ‘time is not of the essence of a contract.’ ” Bad start for landlord SuperAsh.
But then, the high Court allowed that “the general rule does not hold true when it comes to offers: for offers, time is of the essence.” Things are looking better for SuperAsh.
The Supreme Court then distinguishes between theories of mistake vs negligence, finding that the latter is a failure to exercise ordinary care and not a basis for equitable relief. And further, the Court reasons that contract disputes should not be decided based on what is just or equitable.
In conclusion, Courts can intervene to save a contract when a party fails to act due to fraud, accident, or mistake. But not negligence.
Tenant Ashland’s failure to timely submit its renewal notice was negligent. Not a mistake. The trial court should not have granted equitable relief to Ashland.
The court’s judgment is reversed; SuperAsh wins and Ashland loses. See Ashland Global Holdings v. SuperAsh Remainderman; Supreme Court of Ohio; Slip Opinion 2025-2835; August 14, 2025: https://cases.justia.com/ohio/supreme-court-of-ohio/2025-2023-1448.pdf?ts=1755177276.
Stuart A. Lautin, Esq.*
* Board Certified, Commercial and Residential Real Estate Law, Texas Board of Legal Specialization
Licensed in the States of Texas and New York