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Law360 (February 11, 2021, 9:03 PM EST) -- The owner of two South Jersey malls has hit Regal Cinemas with a pair of lawsuits, alleging the company failed to pay more than $2 million in rent over the course of a nearly yearlong mandatory shutdown of Garden State movie theaters due to the coronavirus outbreak.
Two subsidiaries of the Philadelphia-based Pennsylvania Real Estate Investment Trust — which filed for bankruptcy amid the pandemic — launched the suits Wednesday in New Jersey state court over Regal Cinemas' alleged nonpayment of rent owed for theaters at Moorestown Mall and Cumberland Mall.
The suits from Moorestown Mall LLC and Cumberland Mall Associates are seeking minimum payments of approximately $1.4 million and $764,000 in unpaid rent, respectively.
"Simply stated, Tenant, a corporation responsible for operating over 500 movie theaters in the United States — 11 of which are in New Jersey — has occupied the subject premises, and continues to occupy the subject premises, without making a single payment to Landlord pursuant to the terms of the subject lease since March 2020," the suits each allege.
The malls said they each notified Regal Cinemas on Oct. 26 that it was "in default of its obligation" to pay them rent, and demanded payments owed for the period between March 31 and Oct. 31. Moorestown Mall sought about $902,000 and Cumberland Mall Associates called for roughly $484,000, according to the suits.
Each notice provided Regal Cinemas until Nov. 9 to "cure its default" by making the payments, but the company failed to do so, the suits allege.
Those notices allegedly came three weeks after Regal Cinemas' U.K.-based parent company, Cineworld Group PLC, announced on Oct. 5 that it would suspend operations at all of the Regal Cinemas' theaters in the U.S. due to the challenges posed by the pandemic.
"Despite our work, positive feedback from our customers and the fact that there has been no evidence to date linking any COVID cases with cinemas, we have not been given a route to reopen in New York, although other indoor activities — like indoor dining, bowling and casinos were already allowed," Cineworld CEO Mooky Greidinger said in a statement at the time.
"The prolonged closures have had a detrimental impact on the release slate for the rest of the year, and, in turn, our ability to supply our customers with the lineup of blockbusters they've come to expect from us," Greidinger added. "As such, it is simply impossible to continue operations in our primary markets."
In New Jersey, the troubling landscape facing the cinema business stems from state orders that have largely kept theater doors closed since March due to the outbreak.
Regal Cinemas, other movie theater owners and their trade associations ultimately brought a federal lawsuit in July against Gov. Phil Murphy and the state health commissioner over those orders. The plaintiffs ended the action in September after Murphy allowed theaters to reopen on a limited basis.
In their earlier unsuccessful bids for a temporary restraining order and preliminary injunction, the plaintiffs said economic losses for theaters in the state will worsen if screens remain dark during what are typically busy summer months for movie-going.
"Defendants' orders requiring the entire movie theatre industry in New Jersey to remain closed for nearly four months and with no end in sight is causing an existential crisis for the movie theatre industry in the State," the plaintiffs said in a July 14 brief. "Plaintiffs have suffered an ongoing and complete loss of revenue and profits since mid-March 2020."
The public health crisis has not left retail industry players like the Pennsylvania Real Estate Investment Trust unscathed, either. The real estate investment trust filed for Chapter 11 protection in Delaware federal court Nov. 1 after dealing with government-mandated travel restrictions and business closures that caused many of the tenants at its 26 retail facilities to forgo rent payments or go out of business themselves.
On Nov. 30, a Delaware bankruptcy judge approved the company's Chapter 11 plan, clearing the way for the business to emerge from bankruptcy with a restructured debt load as the holiday shopping season hit full stride.
A Regal Cinemas representative and counsel for Moorestown Mall and Cumberland Mall Associates did not immediately respond to requests for comment Thursday.
Moorestown Mall and Cumberland Mall Associates are represented by Peter A. Lesser and Christopher R. King of Sirlin Lesser & Benson PC and Michael A. Pensabene of Rosenberg & Estis PC.
Counsel information for Regal Cinemas was not immediately available.
The cases are Moorestown Mall LLC v. Regal Cinemas Inc., case number L-299-21, in the Superior Court of the State of New Jersey, County of Burlington; and Cumberland Mall Associates v. Regal Cinemas Inc., case number L-82-21, in the Superior Court of the State of New Jersey, County of Cumberland.
--Additional reporting by Vince Sullivan and Rose Krebs. Editing by Regan Estes.
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