Home / Others / Judge sides with Simon and forbids Starbucks to close stores Teavana | 2017-12-05 | Indianapolis Business Journal

Judge sides with Simon and forbids Starbucks to close stores Teavana | 2017-12-05 | Indianapolis Business Journal

Simon Property Group Inc. has won a major victory in its bid to prevent Starbucks Corp. from closing 77 Teavana stores in its shopping centers across the country.

Simon, the largest shopping center operator in the country, ] sued Starbucks in August requesting temporary and permanent precautionary measures to prevent the coffee giant from breaching its lease agreements, some of which they extend until January 2027.

A Marion Superior Court judge sided with Simon and accepted the company's application for the temporary injunction until the case is decided at trial, which is likely to happen next year.

"If the court allowed Starbucks to close its stores, abandoning the obligations in the leases, the court would be relieving Starbucks of the failed risk it took simply because Teavana has now proven to be useless to Starbucks," Judge Heather wrote. Welch in his decision of November 27.

Neither a spokesperson for Simon nor a lawyer representing Starbucks returned messages seeking comment on the judge's decision.

Starbucks, based in Seattle, announced in July that it planned to close all 379 Teavana stores next year, with most closures in the spring of 2018. [19659002] In January 2013, Starbucks-led by the then CEO Howard Schultz-bought the Atlanta-based tea retailer for $ 620 million. At that time, Teavana had about 300 stores. Schultz predicted that the business would increase in size and that his company "would do for tea what we did for coffee".

The prophecy never came to fruition. Starbucks argued to the judge that he will lose $ 15 million if Teavana is forced to remain open in Simon's shopping centers until October, if she is forced to wait so long for a final court decision.

Locally, Teavana has stores in the Circle Center mall, the Fashion Mall in Keystone, Castleton Square Mall and Greenwood Park Mall.

Welch said in her decision that she could simply grant Simon the remaining rent for each of the 77 lease contracts. But the amount would not adequately capture the damage Simon would suffer from the "sudden influx of unoccupied commercial space."

Welch's decision depended in part on the continuing operations agreements included in Teavana's leases. The agreements require that tenants, usually large retailers such as Starbucks, operate continuously in the leased premises throughout the terms of the leases.

Simon stated in his arguments that finding in favor of Starbucks would make futile any future attempt to enforce the agreements. . The company is already struggling to fill the space of the unoccupied shopping center with a large number of bankrupt retailers.

John Rulli, president of shopping centers and chief administrative officer of Simon, testified that the company's shopping centers have a total of more than 2 million square feet of bankruptcy vacancies above 500,000 square feet available from expiration dates of natural leasing.

For example, Simon submitted evidence to the court showing that only 16 of the 72 retail stores closed as a result of the limited bankruptcy have new tenants in them. [19659002] Starbucks, however, argued that no court has filed a temporary or permanent injunction to enforce continuous operations agreements against a non-anchor tenant.

"A review of the jurisprudence suggests that Starbucks appears to be correct in this matter," Welch wrote.

Welch ordered Simon to deposit a $ 15 million security bond in case the injunction was found in trial by court order The amount covers the $ 15 million that Starbucks expects to lose by keeping Teavana stores open until trial.

A pretrial conference was scheduled for December 20.

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