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Law360 (May 6, 2020, 10:59 PM EDT) -- A Manhattan landlord has sued the Gap for allegedly failing to pay hundreds of thousands of dollars in rent, adding the clothing retailer to the growing list of businesses taken to court over unpaid rent in the midst of the coronavirus pandemic.
According to the complaint filed Monday in New York federal court, the Gap Inc. owes property owner 48th Americas LLC more than $530,000 for the space it leases at 1212 Sixth Ave. near 48th St. in New York City. The Gap failed to pay April and May rent as well as water charges and snow removal fees, 48th Americas said.
The Gap has therefore breached the terms and conditions of its 2015 lease extension, the complaint said, and 48th Americas is seeking the rent payment as well as at least $20,000 in attorney fees and court costs.
The lease dates back to February 1991, according to San Francisco-based 48th Americas. Under its current terms, the Gap pays about $264,200 in fixed rent per month as well as water charges and snow removal fees. In April and May, the retailer failed to pay rent as well as $1,171 for water and $783 for snow removal, 48th Americas said.
The lease also states that the Gap is liable to 48th Americas for all attorney fees and court costs racked up while the landlord goes after the retailer for rent, the complaint says.
"Plaintiff has incurred, and will continue to incur, expenses in the form of, inter alia, attorneys' fees and expenses, all as a result of the defendant's default of its payment obligations pursuant to the lease, the precise sum of which will be determined at trial or earlier conclusion of this action," 48th Americas said.
Monday's suit comes in the wake of similar litigation against other retailers over unpaid rent during the COVID-19 pandemic. On Tuesday, Ross Stores Inc.'s landlord Palm Springs Mile Associates Ltd. said the discount clothing chain owes $5.5 million in unpaid rent, adding that the impact of the pandemic isn't a good enough reason to skip out on the obligation.
Last month, the same landlord sued AMC Theaters, saying the movie theater giant owes $7.5 million in rent. Palm Springs Mile Associates said in that suit that while it "recognizes the challenges posed by COVID-19, including on its own business," AMC is nonetheless "obligated to pay rent and that obligation is not excused."
The J. Crew apparel chain filed for bankruptcy protection this week, citing the coronavirus as well as years of financial struggles before the pandemic hit. And there may be more bankruptcy filings to come. Other longtime retailers like Neiman Marcus and J.C. Penney are also on the verge of insolvency after the outbreak worsened their already strained financial situations.
Counsel for 48th Americas and representatives of the Gap didn't immediately respond to requests for comment late Wednesday.
48th Americas LLC is represented by Efrem Z. Fischer of Klein Law Group CRE PLLC.
Counsel information for the Gap wasn't immediately available Wednesday.
The case is 48th Americas LLC v. The Gap Inc., case number 1:20-cv-03471, in the U.S. District Court for the Southern District of New York.
--Additional reporting by Vince Sullivan, Hannah Albarazi and Lauren Berg. Editing by Jill Coffey.
For a reprint of this article, please contact reprints@law360.com.
