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Law360 (January 5, 2021, 10:04 PM EST ) Gym operator LA Fitness said its Universal City landlord, a unit of NBCUniversal, is trying to squeeze it for full rent, even though the fitness center has been closed for nearly nine months because of the coronavirus pandemic, according to a lawsuit lodged Monday in Los Angeles court.
Fitness International LLC, which operates LA Fitness, said in its complaint that it has consistently paid nearly $15 million in timely rent for more than 150 months to its landlord, NBCUniversal Cahuenga LLC, but now — with the gym closed because of the pandemic — the company is demanding that LA Fitness pay full rent, in breach of the lease.
LA Fitness said it is entitled to use the Universal City premises as part of its lease, but since the outbreak of the pandemic, the gym has been shuttered for almost nine months. The gym said its landlord cannot expect to receive full rent when the tenant is prohibited from using the rented space.
The parties first entered into the lease agreement in December 2003, according to the complaint, in which LA Fitness would have exclusive control and use of the premises without hindrance or interruption. If such a hindrance occurred due to something outside of the parties' control — a so-called force majeure event — then performance of an act under the lease would be excused for the period of delay, according to the complaint.
When the pandemic hit in March, California Gov. Gavin Newsom issued a statewide "Safer at Home" order that immediately closed gyms and other "non-essential businesses," according to the suit. LA Fitness said it was closed from March 17 until June 12 when it opened for a brief period until July 13.
Indoor gyms and fitness centers are still currently closed in the Los Angeles area, including the Universal City LA Fitness.
In June, LA Fitness and its landlord entered into a letter agreement in which the landlord deferred all rent that was due for May 2020 and June 2020 to a date no later than Nov. 1, with LA Fitness reserving all rights with regard to the deferred rent, according to the suit. LA Fitness said it paid the deferred rent in September.
"The government-mandated closures resulting from the COVID-19 pandemic are unanticipated events, completely out of the control of tenant and catastrophic in result," LA Fitness said.
Under the lease, LA Fitness said its payment of rent during the closure periods are legally excused and it is entitled to proportionately abate rent. During the closure, LA Fitness hasn't been able to collect membership dues or other monetary payments, according to the complaint, and the company's ability to use the premises and operate its business is a condition precedent to its obligation to pay rent.
But even though LA Fitness placed its landlord on notice that its obligation to pay rent during the closure was excused and offered to extend the lease term in proportion to the closure, NBCUniversal Cahuenga demanded that LA Fitness pay rent in full.
In its suit, LA Fitness is seeking damages and lost profits, a declaration that it has no obligation to pay rent during the closure periods and a declaration that the landlord must return the gym's rent money that it has already paid during the closure, as well as attorney fees and costs.
Counsel for LA Fitness did not immediately respond to a request for comment Tuesday evening and contact information for NBCUniversal was not immediately available.
Since the start of the pandemic, a growing number of retailers and their landlords are facing litigation over rent.
On Monday, a bevy of Westfield shopping center landlords and property managers across the country accused kids' clothing retailer The Children's Place and Korean beauty company Amorepacific of owing millions of dollars in rent.
In July, WeWork's landlord at a Los Angeles office building said the coworking company owed at least $54 million in damages after it backed out of a 10-year lease agreement. That same month, Italian fashion brand Valentino sued its Fifth Avenue landlord, arguing it has been blocked from moving out of the Manhattan space even though the lease has been rendered void by the COVID-19-spurred shutdown.
Similarly, Jenner & Block LLP said its Chicago landlord actually owes the firm $840,000 thanks to a rent abatement provision triggered by the pandemic.
Victoria's Secret has also sued the landlord of its midtown Manhattan store, claiming the building's owners attempted to collect more than $1 million per month in rent after the shutdown despite the terms of the lease being unenforceable.
And last month, New Jersey Gov. Phil Murphy and members of his cabinet were hit with a lawsuit by a group of landlords challenging his executive order allowing tenants to use their security deposits to cover back rent during the COVID-19 crisis. The lawsuit contends the governor does not have the right to meddle in private contracts.
LA Fitness is represented by Terry J. Kent and Stephen D. Weisskopf of LevatoLaw LLP.
Counsel information for the NBCUniversal subsidiary was not immediately available.
The suit is Fitness International LLC v. NBCUniversal Cahuenga LLC, case number 21STCV00075, in the Superior Court of the State of California, County of Los Angeles.
--Additional reporting by Hailey Konnath, Dave Simpson, Craig Clough and Jeannie O'Sullivan. Editing by Emily Kokoll.
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