Introduction
The Ohio Supreme Court in 2025 issued an opinion in the case entitled Ashland Global Holdings, Inc. v. SuperAsh Remainderman Ltd. Partnership, 2025-Ohio-2835, in which it held that the negligent failure by a commercial tenant to timely renew an option to lease commercial property was not sufficient to preclude the recovery of the commercial property in favor of the landlord even though substantial improvements by the sublessee of the commercial tenant had been made to the commercial property.
Ashland Global Holdings is an important case because it is potentially applicable to every business entity that is a party to a contract. Business entities need to be cognizant of and be in compliance with every term in every contract applicable to the business entity, including contract deadlines. Failure by the business entity to do so could subject the business entity to a significant financial penalty that may be set forth in the contract to which it is a party.
Business Law Insight
Every contract contains obligations that must be satisfied. Missing a contractual deadline—even unintentionally—may result in the loss of valuable legal rights, substantial financial consequences, or litigation that could have been avoided.
A synopsis of the facts of Ashland Global Holdings and the decision of the Ohio Supreme Court are set forth below.
Facts of the Case
The commercial tenant in Ashland Global Holdings leased twenty-four properties from the landlord under twenty-four separate leases to be used as Speedway retail gas and convenience stores. The legal entity that operated the Speedway retail gas and convenience stores subleased the properties from the commercial tenant. Speedway invested more than $10 million in the construction of capital improvements to the properties after the properties were subleased to it.
The leases contained renewal options subsequent to the expiration of the initial five-year lease term that gave the commercial tenant the option to renew the leases multiple times. The first renewal term was for five years and, thereafter, there were two successive one-year renewal terms.
The commercial tenant was required under the leases to submit written notice to the landlord of its intent to renew the leases 120 days before the expiration of the leases. Failure by the commercial tenant to exercise its options to renew the leases would cause any improvements to the property to vest in the landlord as well as cause the properties to revert back to the landlord.
Unfortunately, the second one-year option to renew the leases was not timely transmitted by the commercial tenant to the landlord. The attorney for the commercial tenant had timely drafted a renewal notice for the second one-year option and transmitted the renewal notice to the vice president of the commercial tenant for signature. However, neither the attorney nor the vice president transmitted the signed renewal notice to the landlord in accordance with the deadline required by the leases.
In response, the landlord ultimately notified the commercial tenant that the leases would expire at the end of the previously renewed one-year lease term because the commercial tenant had failed to timely exercise its renewal option in compliance with the renewal deadline established by the leases.
After the commercial tenant and the landlord were unable to successfully renegotiate replacement leases, the commercial tenant filed a lawsuit seeking a court order declaring that its option to renew the second lease term was effective. The landlord filed a counterclaim for breach of the leases and requested a court order evicting the commercial tenant.
Court Ruling
The Ohio Supreme Court ultimately ruled that the failure by the commercial tenant to timely exercise its option to renew the leases constituted an act of negligence. Negligence, by itself, was not sufficient to invoke the equitable power of the Court to excuse the failure to comply with the contractual renewal deadline.
Consequently, the commercial tenant was not permitted to renew the second lease term despite the fact that Speedway forfeited more than $10 million in capital improvements that had been made to the subleased properties and the properties reverted to the landlord pursuant to the lease agreements.
The Takeaway
Compliance with the contract deadline with respect to the exercise of the option to renew the leases would have precluded the fate that the commercial tenant and its sublessee sustained in Ashland Global Holdings.
A business entity cannot depend upon a court to rescue the business entity from either a contract with unfavorable terms which the business entity has signed or to rescue the business entity from a forfeiture or financial penalty to which the business entity is contractually subjected due to the failure by the business entity to comply with the terms of the contract.
Courts are very busy with significant numbers of cases assigned to them and are not obligated to render decisions that might otherwise rescue a business entity from the failure to comply with a contractual obligation. Even if a trial court or an appellate court were to render a decision favorable to the legal interests of the business entity, the Ohio Supreme Court, as occurred in Ashland Global Holdings, could reverse the lower court decision and render a decision contrary to the legal interests of the business entity.
Practical Steps Every Business Should Take
- Read every contract from beginning to end before signing.
- Negotiate out objectionable contract provisions whenever possible.
- Memorialize every contractual deadline in a reliable calendar or reminder system.
- Understand and approve every business and legal provision before signing.
- Seek clarification of any contract language that is ambiguous or unclear.
- Respect and remain in compliance at all times with every contractual deadline.
Accordingly, to avoid a similar fate to that of the commercial tenant and its sublessee in Ashland Global Holdings, a business entity should at all times read every contract from beginning to end before signing. Any objectionable term should, if possible, be negotiated out of the contract before the contract is signed.
All contract deadlines should be memorialized in a calendar or other reliable method that will cause the business entity to remember the deadlines. A business entity should understand and approve every term in the contract before signing. Clarification should be sought with respect to every business or legal provision that may be ambiguous or require explanation.
Finally, all contract deadlines should be respected and complied with at all times. A business entity that is informed and educated with respect to every contract to which it is a party is a business entity that will most likely be a party to contracts that protect its legal interests.
Questions About Your Business Contracts?
Whether you are negotiating a new commercial agreement, reviewing an existing contract, or evaluating important contractual deadlines, experienced legal counsel can help identify potential risks before they become costly legal disputes.
Richard K. Heiser focuses his practice on representing business entities, business owners, and entrepreneurs in matters involving business law, contracts, and commercial transactions.
To discuss your business law needs, contact Richard K. Heiser Attorney At Law, LLC.
Disclaimer: The information contained in this article has been written solely for general informational purposes. It should not be interpreted as legal advice to any person or entity. Reading this article does not create an attorney-client relationship between the reader and Richard K. Heiser or Richard K. Heiser Attorney At Law, LLC.