## Facts

- Amoco Oil Company leased a service-station premises to Llewellan K. Jones, who had operated the station under Amoco leases since 1968 using Amoco’s standard-form documents with minimal negotiation.
- The operative lease (Oct. 26, 1984) required Jones to keep the premises and adjoining areas in “good repair, appearance, and order,” perform “necessary upkeep and maintenance,” and surrender the premises in “substantially as good condition as when received,” ordinary wear and tear excepted.
- The lease did not assign responsibility for obtaining fire insurance.
- The lease included a destruction clause allowing Amoco to terminate if all or a substantial part of the premises was destroyed; rent would abate if the premises became untenantable, and Jones would have a limited right of first refusal if Amoco later rebuilt and re-franchised the site.
- On Dec. 24, 1985, a fire substantially damaged the station; neither party was negligent or otherwise at fault.
- Amoco terminated the lease under the destruction clause and then sued Jones for breach, alleging failure to return the premises in the required condition and seeking roughly $118,850 in restoration costs.
- After Amoco presented its evidence at trial, the district court granted a directed verdict for Jones, concluding the lease did not impose a duty to restore after severe casualty loss.

## Issues

1. Whether a commercial tenant’s general covenants to keep premises in good repair and to surrender them in substantially the same condition obligate the tenant to rebuild or restore premises substantially destroyed by a no-fault fire.

## Decision

- The Minnesota Court of Appeals affirmed the directed verdict for Jones.
- The court held that the lease’s general repair and surrender covenants did not require a faultless tenant to rebuild or restore premises substantially destroyed by fire.
- The court rejected the argument that intent to impose a rebuilding duty created a triable fact issue because the lease, read as a whole, did not reasonably support that obligation.

## Legal Principles

- General covenants to maintain premises in good repair and to surrender them in substantially the same condition ordinarily address upkeep and ordinary repair, not reconstruction after substantial casualty loss absent clear contractual language.
- Lease interpretation follows ordinary contract principles; older rules automatically imposing a rebuilding duty from general repair language are not controlling where inconsistent with the contract’s text and structure.
- A destruction/termination clause that grants the lessor options upon substantial destruction, without imposing an express rebuilding duty on the tenant, supports reading the lease as leaving rebuilding decisions and risk allocation with the lessor.
- Ambiguities in a standard-form lease drafted by the lessor are construed against the drafter (contra proferentem).

## Conclusion

The court affirmed judgment for the tenant, holding that broad repair and surrender clauses, without an express casualty-rebuild obligation, do not shift to a faultless commercial lessee the cost of reconstructing premises substantially destroyed by fire.


Amoco Oil Co. v. Jones, 467 N.W.2d 357 (Minn. Ct. App. 1991)