Entertainment company GameWorks sued for allegedly breaching leases at malls in San Jose, California, and Bethesda, Maryland

Mall giant Unibail-Rodamco-Westfield is seeking more than $20 million in damages from entertainment and esports company GameWorks Inc. for allegedly abandoning its spaces in two Westfield-branded shopping centers in San Jose and Bethesda, Maryland.

San Francisco-based GameWorks had more than eight years left on its San Jose lease before Unibail-Rodamco terminated it and more than a decade left on its Bethesda space before the Paris-based firm took back possession of it, according to Unibail-Rodamco’s complaint filed with the Los Angeles County Superior Court on Sept. 2. The complaint also alleges that the guarantors of each of those lease agreements — GameWorks owner ExWorks Capital LLC for the San Jose space and GameWorks for the Bethesda space — also breached their corresponding guaranties, meaning they allegedly failed to guarantee that GameWorks would fulfill its obligations in both of those agreements.

Robyn Cottelli, Unibail-Rodamco’s director of public relations in the United States, told The Real Deal that the firm does not comment on pending litigation. Representatives for GameWorks and ExWorks Capital, as well as the plaintiff’s attorneys, Gregory Korman and Meegan Maczek of Katten Muchin Rosenman LLP, did not respond to emails and calls seeking comment. The plaintiff in the lawsuit is Westfield Property Management LLC, the property manager for the owners of the Westfield Oakridge mall in San Jose and the Westfield Montgomery center in Maryland.

In May 2019, GameWorks signed a 10-year lease with two five-year extension options on a 23,519-square-foot space at the Westfield Oakridge, the site of its first esports — competitive video gaming — venue in the Bay Area, according to Westfield’s complaint. Similar to its seven other locations spread across the United States, the company’s two-story San Jose space would have a large, dedicated lounge for esports as well as an arcade and restaurant. GameWorks was attracted to Silicon Valley because of the “considerable number” of video game publishers and technology companies in the area and its large gamer population, Philip Kaplan, the company’s CEO and chairman, said in a July 2019 news release announcing its new Westfield Oakridge venue.

GameWorks initially planned to open that space during the winter of 2019/2020, it said in the release, but that didn’t happen. In February 2020, the Unibail-Rodamco affiliate that owns Westfield Oakridge, Oakridge Mall LLC, and GameWorks agreed to amend the lease so that it would commence April 1, 2020, and end March 30, 2030, two months after it was initially supposed to start and end, according to Westfield’s complaint.

The company’s website says its Silicon Valley location is coming soon, although on or around May 12, Oakridge Mall LLC sent GameWorks a notice that said it believed it had abandoned its space, according to Westfield’s complaint. The company still hadn’t completed construction of its new venue; its applications to make tenant improvements to its space were either under review, under inspection, or couldn’t be processed until certain fees were paid, according to San Jose’s online permit center.

On May 27, the mall’s landlord terminated the company’s lease, the complaint said. Meanwhile, Westfield Oakridge’s website no longer lists GameWorks on its directory of stores.