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Lockdowns, Landlords, & Litigation: Abercrombie & Fitch Flips The Script on Simon Property Group Inc.

Client Alert

Novel litigation between commercial property owners and tenants arises from COVID-19 lockdowns. Typically, owners sue for nonpayment of rent. But in Franklin County, Ohio, a large retail tenant turned the tables and sued the owner to recoup payments.

Abercrombie & Fitch (A&F), Columbus-based apparel retailer, recently filed suit against one of the nation’s largest landlords, Simon Property Group Inc. A&F, which leases properties from Simon, alleges that Simon “wrongfully extracted” rent payments on those properties during the lockdowns that covered the nation. The amount of rent and number of stores impacted by the lawsuit is not disclosed, but according to public filings, A&F demands return of all rent payments to Simon during a specified period.

A&F essentially argues that it was not obligated to pay rent because it was locked out of its premises. More specifically, A&F argues that “the government-mandated closures amounted to ‘prohibitions’ under the terms of the lease agreements such that A&F was, and is, entitled to an abatement of any and all rent and other charges” during the lockdown. A&F maintains that Simon’s mere demand for payment during the lockdown constitutes a breach of contract, and any/all payments remitted were “under protest” and should be returned.  

Seeking to gain leverage by adopting an aggressive posture is a classic litigation technique that is now being applied in these unprecedented times. Whether the tactic will be fruitful depends on innumerable variables that begin with the contract language between the parties. Given the size and sophistication of the litigants, copycat actions and/or landmark precedents are likely to result.

For more information, please contact our Real Estate or Litigation teams.

To stay updated, please visit our Resources page regularly.


Valley National Bank/Trulieve Loan: A Big Step Out of the Shadows

In a late December press release, Trulieve announced that it had secured a $71.5 million commercial bank loan. In addition to the amount of the loan, which may be the largest commercial bank loan to date to a cannabis company, the release prominently identified Valley Bank and featured both a quote from Valley’s Senior Vice President, John Myers, and a description of the Bank’s service platform and commitment to the cannabis industry.

The End of Non-Competes? The Impact It Will Have on the Healthcare Industry

On January 5, 2023, the Federal Trade Commission (“FTC”) announced a proposed rule that, if enacted, will ban employers from entering into non-compete clauses with workers (the “Rule”), and the Rule would void existing non-compete agreements. In their Notice, the FTC stated that if the Rule were to go into effect, they estimate the overall earnings of employees in the United States could increase by $250 billion to $296 billion per year. The Rule would also require employers to rescind non-competes that they had already entered into with their workers. For purposes of the Rule, the FTC has defined “worker” to also include any employees, interns, volunteers, and contractors.”

2022 Healthcare Recap and 2023 Healthcare Check-Up

As the country begins to return to a new “normal” following the COVID-19 pandemic, there are many healthcare rules changing on both the federal and state levels as a result. Thus, it is important for healthcare providers and their employers to be aware of these changing rules, and any implications they may have on their practice. Look back on healthcare in 2022 and find a checklist for 2023.

Direct Support Professional Retention Payments

On December 15, the Ohio Senate and House passed House Bill 45, which authorizes the Department of Developmental Disabilities (DODD), in conjunction with the county boards of developmental disabilities, to launch their initiative to issue retention payments to Direct Support Professionals (DSPs). These retention payments will be distributed quarterly to participating home and community-based waiver providers to address the workforce crisis in the direct provider sector. Governor DeWine needs to sign the Bill to begin the payments, but he is expected to do so by the end of 2022.

Real Estate Investors Position for 2023 Opportunities

Real estate investors weathered another year in a post-pandemic world, with the year closing with yet another interest rate increase coupled with both uncertainty and heightened interest carrying into 2023. Just last Wednesday, the Federal Reserve raised its benchmark interest rate 0.50 percentage points, shifting the target range to 4.25% to 4.50%. The new level is the highest the fed funds rate has been since December 2007 and marks the seventh rate hike this year. So what does this mean to investors, brokers, lenders, and others in the real estate world? Read a few perspectives below from stakeholders familiar with our BMD clients and the markets in which they do business.