Jenner & Block Slams Landlord's 'Evasive Tactic' In Rent Fight

By Dave Simpson
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Law360 (July 30, 2020, 11:22 PM EDT) -- Jenner & Block LLP's Chicago landlord, which alleges in Illinois state court that the firm is $3.7 million behind on its rent while its office space goes largely unused because of the COVID-19 pandemic, is wasting the court's time with its attempt to nix testimony from the landlord's lease negotiator, the firm said Wednesday.

Hart 353 North Clark LLC, an affiliate of global real estate investment management firm Heitman LLC, sued the firm in May and asked the court in June to strike a declaration from real estate developer Richard Stein, who the firm claims was the lead negotiator "across the table" from Jenner & Block when the 15-year, $185 million lease was agreed to in 2005. The affidavit does not meet the court's pleading standards, the landlord argued. But on Wednesday the firm called this an "evasive tactic."

"The motion is a baseless waste of time and diversion from the merits," the firm said.

In June, Jenner & Block told the court that the landlord owes the firm $840,000 thanks to a rent abatement provision triggered by the COVID-19 pandemic.

The firm claimed that the landlord's complaint failed to attach the actual lease, which it said "contains clear and explicit, hard-negotiated rent abatement provisions" and proves that Jenner & Block paid Hart 353 everything it is owed.

"Jenner & Block negotiated the abatement provisions in 2005 to cover any unforeseen event, such as a pandemic, that could result in Jenner & Block's inability to use and occupy its space in the normal course of business as reasonably determined by Jenner & Block," the firm said.

The firm made this determination in March, following a "thorough, careful process," it said in June, noting that it hadn't used at least 89% of its space since March 16, dropping from 579 in-office workers to a skeleton crew of 12 on average.

Stein's testimony was included as an exhibit attached to the firm's June response.

"I believe that ... Jenner & Block is not obligated to pay rent for the material amount of space that it has reasonably determined it cannot use as it intended in the normal course of business as a result of the COVID-19 pandemic," he said. "I believe the current pandemic is the very type of disruptive event to which Jenner & Block was referring in lease negotiations and for which Jenner & Block sought and received protection, in the form of rent abatement."

But the landlord responded later that month that the firm's response "effectively constitutes a defendant issued press release."

Jenner & Block's reply on Wednesday focused on an argument that the landlord is trying to keep the court from reaching the merits.

"It started this action by filing a complaint that failed to attach the lease at the center of the dispute and that completely ignored the lease's provisions which establish Jenner & Block's clear right to rent abatement," the firm said. "Now, the landlord seeks to avoid its obligation to timely respond to Jenner & Block's defenses and counterclaims by filing an unnecessary and unjustified motion to strike."

The landlord says in the May 20 lawsuit in Cook County Circuit Court that Jenner & Block didn't pay its rent for April and May and owes $3.7 million, plus late fees and interest. Jenner & Block leases about 416,000 square feet of office space in the downtown Chicago tower at 353 N. Clark St., the suit says.

The complaint alleges that the law firm didn't pay the delinquent rent within five days of receiving written notice of nonpayment, constituting a default of the lease agreement.

The landlord claims the firm also owes about $68,000 in "unpaid reconciliations" from 2018 and $92,000 in unpaid cafe charges.

Jenner & Block is not the only firm in a dispute with its landlord over office space that has been largely unused since the outbreak.

Earlier this week, Simpson Thacher & Bartlett LLP filed an $8 million suit against its New York City landlord, saying that the firm was entitled to rent abatement due to the pandemic and that the landlord had ignored the terms of the lease.

The firm says its lease for its longtime office space at 425 Lexington Avenue in Manhattan included a provision for "force majeure" events and that the closures caused by the COVID-19 pandemic met this criteria.

Hart 353 North Clark LLC is represented by John M. Riccione, William J. Serritella Jr. and Brianna M. Skelly of Taft Stettinius & Hollister LLP.

Jenner & Block LLP is represented in-house by David J. Bradford, Andrew W. Vail, and Abraham M. Salander.

The case is Hart 353 North Clark LLC v. Jenner & Block LLP, case number 2020L005476, in the Circuit Court of Cook County.

--Additional reporting by Celeste Bott. Editing by Peter Rozovsky.

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