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Clothing chain sues over Brookline landlord's demand for rent on a store ordered shut due to coronavirus
By adamg on Sat, 09/05/2020 - 1:50pm
Who should shoulder the cost of rent for stores shuttered by Gov. Baker's shutdown of "non-essential" businesses in March due to Covid-19? In a suit filed this week, the Gap argues its Coolidge Corner landlord should eat the expense - and be made to suffer damages for not doing so.
The Gap shut its store at 306 Harvard St. in Coolidge Corner and furloughed the staff there on March 19 - and did not make its April rent payment. After its landlord, a Wellesley real-estate concern called Brookline Investment, LLC, demanded rent, the chain did make two partial rent payments, but that wasn't good enough and it ordered the Gap to move out.
In its lawsuit, filed in US District Court in Boston, the clothing chain is asking a judge to declare that the landlord has some nerve demanding rent in the middle of a pandemic that forced the shutdown of many retail stores: It's asking for the judge to block any eviction, order the landlord to repay the partial rent of roughly $22,000 it did pay after April 1 and to order the landlord to change the lease to specifically call for similar rebates should the store be forced to close again due to the pandemic.
The Gap argues that its lease was for full use of the premises for a set number of months, and that it never would have rented the space, which it has occupied since 2000, at the rates it did if it had known it would be knocked out of business due to a global pandemic between March 19, when it shut the store to comply with one of Baker's orders, and June 8, when it was allowed to re-open, but under limits of how many people could be in the store at once.
These circumstances not only imposed severe and irreparable hardship on Gap, they frustrated the express purpose of the Lease and made the principal object of the Lease illegal, impossible, and impracticable. Thus, the subject Lease and applicable law nullified any obligation to pay rent from, at a minimum, mid-March through June 8, 2020, with future rent also potentially subject to such nullification, and entitle Gap to a refund of rent or expenses it paid in advance for March 2020 and requires that the Lease be modified as a matter of law.
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Comments
why do I feel like...
Why do I feel like I've heard this before? Maybe not Brookline, but Gap, Inc. (Gap's parent) hasn't been paying landlords across the country due to forced store closures, across all their brands (Gap, Old Navy, Banana).
I mean I get it and I can't really blame Gap Inc. Sure they seem like a massive clothing conglomerate but in reality, like all brick & mortar retail, its suffered in the past few years due to the growth of online shopping. Then a pandemic hit. And last month they announced they are closing over 225 stores across all their brands. (Link)
Its not right but Gap lost a ton of money, and had to invest more to re-open stores when they could. This is not unique to Gap, as we've see other retail and restaurants are suffering.
Like you and your personal finances, if you don't have the $, you dont have the $ for it. So its hard to get super-angry at Gap, they are in a bind too like the rest of us.Something had to give.
Not sure what the solution is, but it'd be sure nice to have a federal government with a real plan for relief, and not just checks or 'cutting payroll taxes'
Here's why I'm mad at Gap.
Here's why I'm mad at Gap. Because they have the resources to fund a legal battle over this, while Mom and Pop are screwed. I don't know if I hate Gap or the landlords more. They should both go to hell. Corporations can afford to defend themselves, but they don't give a good damn about main street. They'll be happy when the only place you can buy clothes is Gap.
Not sure why you hate the
Not sure why you hate the landlords. Did their expenses somehow get wiped out?
Sometimes
When you make an investment, you lose a bit of money because shit went south.
What are their expenses?
What are their expenses? Would they really bankrupt them and force them to lose the property? Because that's what is happening to our businesses.
Seems unlikely this is the case. As we've seen plenty of scummy landlords in this city happily keep places vacant for years after businesses refused to pay insane rent increases.
GAP has vast gaps in understanding....
... it’s responsibilities to the the people who work for them and who make the clothes they sell.
So do the landlords who rent to them.
I’m happily anticipating the day when those stores will be replaced with secondhand shops where I can buy better quality clothes than Gap crap and be part of a recycling plan at the same time.
Downtown really could use a Morgie’s right now.
Ok, hear me out
If a company can stay in business through cash flow management, then they are better able to, you know, employee people. The people getting hit the hardest by the retail closures are women and minorities, so sure, you can root for more of them to be unemployed as a cool take.
GAP has vast gaps in understanding....
... it’s responsibilities to the the people who work for them and who make the clothes they sell.
So do the landlords who rent to them.
I’m happily anticipating the day when those stores will be replaced with secondhand shops where I can buy better quality clothes than Gap crap and be part of a recycling plan at the same time.
Downtown really could use a Morgie’s right now.
They do indeed
have the funds to fight this fight—which is why we should be encouraging them to do so. If they win, it establishes precedent for mom & pop stores to refer to when they get sued by their landlords.
honestly, that's probably the answer.
federal gov should have paid everyone non-essential to stay home and embraced science and mask wearing / social distancing early instead of this piecemeal each state for itself thing.
???
Fail to see the connection in a lease dispute between GAP and Brookline Development.
The government could have
The government could have provided cash to Landlords or Businesses to support rent unable to be paid due to inability to run a business.
Not hard to get angry at Gap
Since 2006, their gross profit (not revenue) each and every year has been in excess of $5 billion.
Surely they have rainy day finance streams, insurance policies etc they can tap to pay rent.
Rainy day fund maybe. Rainy 6
Rainy day fund maybe. Rainy 6-month fund unlikely.
Assumption
Some don't. Big Assumption there.
Pay or leave
The current climate is pay or leave, no hand outs just pay or leave. These businesses been taking everyone’s money for decades and they don’t have a rainy year fund ?
Either pay up, or move out.
In any event, the "Either pay up or move out" has always been the climate, whether the property is commercial or residential.
And what about apartments
Do you maintain the same point of view for residential apartment rentals? From a landlord's perspective commercial v. residential is the same - use of square footage in exchange for rent payments. Yet I don't see anyone calling for the families in Roxbury/Mattapan to start packing their bags.
No, it's not at all the same
No, it's not at all the same thing if a clothing store gets evicted or if a family loses their home. Fortunately the law agrees with me and provides many more protections to residential tenants than commercial.
Gap
I worked for Gap. They s..k. Cheap and nasty to their employees. I am not surprised they lawyered up .
Rich limited liability
Rich limited liability company landlord, rich corporation tenant. Poor little guy employee loses. Same as it ever was.....same as it ever was.....
DOA
As a matter of what law would a judge issue a interlocutory order modifying a commercial lease entered into willingly by the plaintiff?
And wouldn't Baker, Commonweath, et al be the real party of interest here? Barring some provision in the lease, where would the landlord be responsible for mitigating damages caused by actions of the Commonwealth?
the problem is
the banks. They need to be giving people mortgage extensions. as much as I hate them, landlords are businesses too, and they have mortgage payments that they have to meet. It’s true in our area that landlords screw absolutely everybody. $20,000 a month is a lot to pay to rent a storefront the matter where it is. The rents on Newbury Street are much higher and are absolutely outrageous. That’s why my CPA friend says that 70% of small businesses in Boston will fail in the next two years. I wish I thought he was wrong.
I've been curious why we
I've been curious why we haven't seen anything like a no documentation needed refinance. Like it's all done over the phone.
If the Gap's logic is that
If the Gap's logic is that they should not have to pay rent because they wouldn't have rented the space if they had been told they couldn't open during a pandemic then they should continue to pay their employees on the same logic. The employees would not have taken the job if they had been told that they would not be paid during a pandemic.
Landlords aren't all jerks
Some landlords are simply evil and are wallowing in cash as they screw all their tenants. It's true! But a lot of them are smaller operations with a handful of properties (or just one) and they are running a business. They typically have a big old fat mortgage and are depending on their rental stream to mostly cover their expenses. Sure they plan to have the occasional vacancy, but it's not in their business plan to have major tenants just stop paying.
Sigh
In my mind, this pandemic can best be summed up as "it's a shit sandwich and we all have to take a bite". A functional national government with coherent public policy could do a lot to direct relief where it's needed most, and promote a common understanding of necessary sacrifice, cooperation and harm mitigation, but we don't have that, so we're all just muddling along as best we can. It's very hard to talk about a just solution when so many of the things that are needed for it are simply off the table, as inevitable consequences of living in a kleptocracy.