## Facts

- The Marion County Prosecutor’s Office (MCPO) leased 9,356 square feet of basement space in the Victoria Centre building for a term beginning August 1, 1999.
- The lease required the landlord to maintain common building systems and keep the premises in good order and repair.
- The lease contained an exclusive-remedy clause stating that, for landlord breach, MCPO could seek injunctive relief or damages but could not terminate the lease or withhold, set off, or abate rent.
- Starting in 2001, the premises suffered repeated and severe water intrusions, including leaks from building systems and sewage backups, damaging MCPO property and interfering with office operations and evidence storage.
- MCPO repeatedly notified the landlord; remediation was incomplete or delayed, and moisture problems continued.
- In October 2002, the landlord instructed MCPO to stop using portions of the premises susceptible to water damage, limiting MCPO’s use of leased space.
- After a major January 2003 incident in which water poured from the ceiling, MCPO vacated the premises and stopped paying rent.
- The landlord sued for unpaid rent and related damages; MCPO asserted defenses and counterclaims alleging actual eviction, constructive eviction, and wrongful eviction.
- Following a bench trial, the trial court found actual and constructive eviction and entered judgment for MCPO; the landlord appealed.

## Issues

1. Whether an exclusive-remedy clause barring termination or rent abatement prevents a tenant from asserting actual or constructive eviction based on the landlord’s acts or omissions.
2. Whether the evidence supported the trial court’s findings of actual eviction and constructive eviction.
3. Whether a contractual time-to-sue limitation barred MCPO’s eviction-based defenses and counterclaims.

## Decision

- The court affirmed the judgment for MCPO.
- The exclusive-remedy clause did not bar MCPO from asserting actual or constructive eviction.
- The trial court’s findings of both actual and constructive eviction were not clearly erroneous.
- The contractual limitations provision did not preclude MCPO’s defenses and related counterclaims as asserted in response to the landlord’s rent suit.
- Because eviction was established, MCPO’s obligation to pay rent ended as a matter of law.

## Legal Principles

- Actual eviction occurs when the landlord’s acts or omissions deprive the tenant of possession and beneficial use of any part of the leased premises.
- Constructive eviction occurs when the landlord’s wrongful act or failure to act materially interferes with the tenant’s beneficial enjoyment of the premises, and the tenant vacates within a reasonable time.
- Once actual or constructive eviction is shown, the tenant’s duty to pay rent terminates by operation of law.
- Lease provisions restricting remedies (including clauses purporting to forbid lease termination or rent withholding) cannot eliminate the legal consequences of eviction.
- Contractual limitations periods may be enforceable against affirmative claims but do not necessarily bar eviction-based defenses or recoupment arising from the same transaction when asserted to defeat a landlord’s rent claim.

## Conclusion

The court held that persistent, severe water intrusions and the landlord’s inadequate response supported findings of actual and constructive eviction, and that eviction terminated MCPO’s rent obligation by operation of law despite a lease clause limiting remedies and a contractual time-to-sue provision.


Village Commons, LLC v. Marion Cnty. Prosecutor’s Off., 882 N.E.2d 210 (Ind. Ct. App. 2008)