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Commercial Leasing Law & StrategyFeaturesCommercial LawLandlord Tenant LawLitigation

<i>Simon v. Starbucks</i>: Preliminary Injunction Granted to Prevent Store Closings

By Marisa L. Byram
April 01, 2018

On Nov. 27, 2017, the Marion County Superior Court in Indiana granted Simon Property Group, L.P. (Simon) a preliminary injunction prohibiting Starbucks Corporation from “(a) Failing to occupy and conduct business as usual in the leased premises for any of the Teavana stores at any Simon shopping center owned in whole or in part or managed by Simon, including any failure to be open and operating during normal business hours, as required by the Leases; and (b) Conducting, promoting, or advertising any fire, 'going out of business,' or similar sale, as prohibited by any of the Leases.” Simon Property Group, L.P. v. Starbucks Corporation, No.49D01-1708-PL-032170, 2017 WL 6452028, at 27 (Ind. Super. Nov. 27, 2017).

Not surprisingly, by January 2018, reporters at The Wall Street Journal, The New York Post and Forbes had already reported that the parties had settled their dispute.

While the court will not have the opportunity to rule on the merits of the case, the facts relied upon by the Indiana Superior Court and the conclusions reached in rendering its decision are still instructive for practitioners drafting continuous-use provisions and advising clients on potential breaches or anticipatory breaches of such provisions.

The Dispute

Starbucks acquired all of the controlling interests in Teavana Corporation, a retailer of premium loose-leaf tea, artisanal tea and other tea-related merchandise on Jan. 1, 2013. In 2016, Starbucks merged with the Teavana subsidiary. Upon the merger, as the surviving entity, Starbucks became the tenant under all of Teavana's leases, subject to all of their terms and directly liable for all of the obligations of the tenant thereunder. These leases included 77 leases for stores in 26 states across the United States under which Simon was either directly or indirectly the landlord or property manager (the Simon Leases). Id. at 1-3.

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