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Law360 (June 22, 2020, 8:36 PM EDT) -- Italian fashion brand Valentino on Sunday sued its Fifth Avenue landlord, telling a New York state court that it has been blocked from moving out of the Manhattan space even though the lease has been rendered void by the COVID-19-spurred shutdown.
The luxury brand's American branch says in its complaint that the pandemic and its resulting government orders and mandatory closures have "massively disrupted" its sales. In fact, the closures have frustrated the very purpose of its Fifth Avenue lease with building owner 693 Fifth Owner LLC, Valentino says.
Per the lease, Valentino is required to "continuously operate" at its space, it says. But in the midst of the pandemic, Valentino is unable to offer in-store sales or associated services like fittings, which are vital to its business and central to the lease's purpose, according to the suit.
"In the current social and economic climate, filled with COVID-19-related restrictions, social-distancing measures, a lack of consumer confidence and a prevailing fear of patronizing in person, 'non-essential' luxury retail boutiques, Valentino's business at the premises has been substantially hindered, rendered impractical, unfeasible and no longer workable," the company said.
Valentino says it notified 693 Fifth that it would be packing up and leaving by the end of the year. But the building's owner refused to accept such a surrender, arguing that notwithstanding the pandemic, Valentino's obligations haven't been excused, per the suit.
Valentino occupies the entire retail space in the building, which was recently redeveloped by architect David Chipperfield, according to the building's website. The rest of the 20-story, 100,000-square-foot building is used for office space.
According to Sunday's suit, Valentino has a 15-year lease that permits it to use the building's lower level, ground, second and third floors. And up until today, the company has "faithfully and diligently" complied with the terms of the lease, including staying up-to-date on rent payments during the pandemic, it says.
But now the store has been closed since March 17, in accordance with an executive order from New York Gov. Andrew Cuomo requiring all nonessential employees to stay home, Valentino says.
"Furthermore, even in a post-pandemic New York City, (should such a day arrive), the social and economic landscapes have been radically altered in a way that has drastically, if not irreparably, hindered Valentino's ability to conduct high-end retail business at the premises," Valentino said.
The company is after declaratory judgment stating that the pandemic has prevented Valentino from occupying the premises and operating its business as contemplated under the lease. Valentino is also alleging that its landlord has failed to properly maintain the building pursuant to the lease and take reasonable precautions in light of the pandemic to ensure Valentino can safely occupy the premises.
Counsel for Valentino and representatives for 693 Fifth didn't immediately return requests for comment Monday.
As the pandemic ravages the retail industry, a number of well-known brands have filed similar suits or been sued by their landlords over unpaid rent. Earlier this month, Victoria's Secret sued the landlord of its midtown Manhattan store, claiming the building's owners attempted to collect more than $1 million per month in rent after the shutdown despite the terms of the lease being unenforceable.
In May, the NBA was accused of failing to pay rent for its store on Fifth Avenue for two months and purportedly owes its landlord more than $1.2 million. Similarly, the Gap and Ross Stores Inc. have also been sued over unpaid rent, according to complaints in New York and Florida federal courts, respectively.
Valentino is represented by Lucas A. Ferrara and Jarred I. Kassenoff of Newman Ferrara LLP.
Counsel information for the building owner wasn't immediately available Monday.
The case is Valentino USA Inc. v. 693 Fifth Owner LLC, case number unavailable, in the Supreme Court of the State of New York, County of New York.
--Additional reporting by Craig Clough and Lauren Berg. Editing by Orlando Lorenzo.
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