## Facts

- American Community Stores Corporation (ACS) leased three Nebraska grocery store buildings under long-term leases with renewal options.
- Each lease prohibited assignment without the landlords’ prior written consent but allowed subletting without consent.
- ACS decided to close its Nebraska stores and arranged for continued operations through Nash-Finch Company and downstream operators.
- ACS initially executed documents styled as assignments to Nash-Finch; the landlords refused consent.
- Within roughly two weeks, ACS rescinded the assignment documents and replaced them with subleases to Nash-Finch.
- Each sublease ended two days before ACS’s underlying lease term ended, leaving ACS a reversionary interest, and provided ACS a right of reentry upon breach.
- The subleases allowed Nash-Finch to extend during periods corresponding to ACS’s renewal options if ACS exercised those options.
- ACS sought declaratory judgments that the transactions did not breach the anti-assignment clauses; the landlords counterclaimed for possession alleging unauthorized assignments.
- The district court granted summary judgment for ACS and dismissed the landlords’ counterclaims; the landlords appealed.

## Issues

1. Whether ACS’s transfers to Nash-Finch constituted prohibited assignments or permissible subleases under the lease terms.
2. Whether ACS’s reserved reversionary interest and right of reentry required the transfers to be treated as subleases as a matter of law.
3. Whether the earlier, short-lived assignment documents or Nash-Finch’s extension rights created an uncured default entitling the landlords to possession.

## Decision

- The Nebraska Supreme Court affirmed summary judgment for ACS and dismissal of the landlords’ counterclaims.
- The court held the operative transfers were subleases, not assignments, because ACS retained a reversionary interest (including by ending the subleases before the prime lease terms) and a right of reentry.
- Any earlier assignment documents were rescinded within a period that did not exceed the leases’ cure provisions; thus, no uncured default supported forfeiture or possession for the landlords.
- Nash-Finch’s ability to extend into option periods did not convert the subleases into assignments because extensions depended on ACS’s exercise of its options.

## Legal Principles

- An assignment transfers the tenant’s entire remaining lease term, leaving no reversionary interest in the tenant.
- A sublease transfers less than the tenant’s entire estate; if the tenant retains any reversionary interest, the transfer is a sublease.
- A sublease that expires before the end of the prime lease term creates a reversionary interest in the tenant and is not an assignment.
- Lease covenants restricting transfer are construed narrowly; restrictions are not expanded beyond their plain terms, and ambiguities are resolved in favor of the lessee.
- Where the lease allows a cure period before forfeiture or repossession, a temporary or rescinded transfer that does not persist beyond the cure period does not support possession based on an uncured default.

## Conclusion

The court held that ACS’s restructured transactions were permissible subleases because ACS retained a reversionary interest and right of reentry, and the landlords therefore could not treat the transfers as unauthorized assignments or obtain possession based on default.


American Cmty. Stores Corp. v. Newman, 232 Neb. 434, 441 N.W.2d 154 (Neb. 1989)