Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Real Estate newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360 (May 5, 2020, 5:17 PM EDT) -- Ross Stores Inc. owes $5.5 million in unpaid rent, according to its landlord, who filed suit against the clothing retailer Monday in Florida federal court, claiming the impact of the coronavirus pandemic isn't a good enough reason to skip out on the obligation.
While landlord Palm Springs Mile Associates Ltd. said it "recognizes the challenges" posed by COVID-19 on businesses and tenants, Ross is obligated to continue paying rent on three of its stores in Lake Worth, Florida, under its lease agreements.
"While the leases do contain a force majeure provision, the provision does not apply to these circumstances," Palm Springs said.
According to the 13-page complaint, Ross breached its lease agreements when it failed to pay rent May 1 and said its nonpayments "will continue" as a result of the COVID-19 crisis.
The COVID-19 pandemic led Ross, which sells department and specialty store brands at a discounted rate, to shutter all of its stores in mid-March. The company had planned to reopen its stores by April 4, but with the continuing spread of the novel coronavirus, it nixed that plan and furloughed the majority of its store and distribution center employees, according to company announcements.
All furloughed employees will keep their health benefits and the company will pay the employee portion of premiums, the announcements noted.
And on April 24, the company and the Ross Stores Foundation announced they had jointly pledged $1.5 million to local and national organizations providing COVID-19 relief services. Some of the donation will support food banks in New York City and Northern and Southern California, according to the company.
On Monday, Palm Springs asked the court to issue a declaratory judgment stating that the "force majeure" provision under the lease does not excuse Ross' obligation to pay rent and that the failure to pay constitutes a breach of the lease. The landlord wants Ross to pay what it owes in rent, as well as interest and attorney fees, according to the suit.
This isn't the only lawsuit Palm Springs has lodged recently against one of its tenants.
Last month, the landlord sued AMC Theaters for $7.5 million in unpaid rent, also saying that the coronavirus pandemic isn't a reason to skip out on payments.
The pandemic led AMC, which claims to be the largest movie exhibition company in the world, to shutter its U.S. theaters in mid-March. Prior to the pandemic, AMC operated roughly 1,000 theaters worldwide and employed roughly 39,000 full- and part-time workers.
Counsel for Palm Springs declined to comment Tuesday, and Ross did not immediately respond to a request for comment.
Palm Springs Mile Associates is represented by Kevin C. Kaplan of Coffey Burlington PL.
Counsel information for Ross was not immediately available.
The suit is Palm Springs Mile Associates Ltd. et al. v. Ross Dress For Less Inc. et al., case number 1:20-cv-21865, in U.S. District Court for the Southern District of Florida.
--Additional reporting by Hannah Albarazi. Editing by Daniel King.
For a reprint of this article, please contact reprints@law360.com.
