While businesses have been suing their insurers, commercial landlords have also been filing claims against tenants that have skipped rent, citing similar coronavirus losses. While no database tracks these cases, several recent rulings have gone against tenants.
Movie theaters — one of the sectors the pandemic has pushed to the brink — have found little solace in the courts.
In early April, a Regal Cinemas theater near Boca Raton, Florida, was ordered to pay $886,000 to landlord Terranova for 10 months of missed rent.
In his decision, Circuit Judge G. Joseph Curley said the “court was sympathetic and mindful of the difficult circumstances brick-and-mortar businesses have endured.” But he said the law gave him no wiggle room. It has been a common refrain among judges.
Retail stores have fared no better.
Gap, which has refused to pay rent at many of its locations, including at Brookfield Property Partners’ malls, in March lost its federal lawsuit against another landlord, Ponte Gadea. Last year, Gap contended it didn’t have to pay rent at its East 59th Street location in Manhattan because of the government-imposed shutdown, an argument it has used at numerous stores nationwide during the pandemic.
Regal Cinemas and Gap lost despite force majeure clauses in their leases that generally provide for unforeseen circumstances that are outside a business’ control.
In ruling against Gap, the federal judge noted that the retailer still operated stores for part of last year, both as online fulfillment centers and for curbside pickup.