What Happened: During the COVID-19 pandemic, a restaurant tenant abandoned its lease with six years remaining on the term. The lease contained an acceleration clause giving the landlord the option, in the event of the tenant’s default, to declare “the total amount of rent payable during the Term of the Lease, discounted to present value . . . at the rate of four percent (4%) per annum,” immediately due and payable.” The clause also stipulated that any rent the landlord received upon reletting the property “would be applied first to paying any debts other than [Tenant’s] unpaid rent, then to costs and expenses of reletting, and last to paying any unpaid portion of [Tenant’s] accelerated rent.” While acknowledging the default, the tenant claimed that the landlord didn’t mitigate its damages and that the acceleration clause was an unenforceable penalty.

Ruling: The Supreme Court of Virginia upheld the trial court’s ruling ordering the tenant to pay the landlord $410,391 in damages and $18,000 in attorney’s fees. 

Reasoning: The high court rejected the tenant’s mitigation of damages claim because under Virginia law, a commercial landlord has no duty to mitigate damages by reletting abandoned property. When a tenant abandons leased property during the lease term, the landlord has two options: 

• Refuse to accept the tenant’s surrender, do nothing, and sue for accrued rents; or
• Re-enter the premises and accept the surrender, thereby terminating and releasing the tenant from further liability under the lease.

Nor was the acceleration clause an unenforceable penalty. The tenant contended that the clause enabled the landlord to relet the premises and thus effect a “double recovery” by collecting rent from both the old and new tenant. But the court rejected the argument, citing the lease language specifically requiring the landlord to use the rent money it received in reletting the premises to any unpaid portion of the unpaid accelerated rent. 

• Bistro Manila, LLC v. Alvah I LLC, 2025 Va. App. LEXIS 6, 2025 WL 37060