Simon Brothers tea party by fiat

[church mouse guy]

Indianapolis-based Simon Brothers, who started with nothing after World War II and now own more shopping centers than any other company in the USA, recently argued in court in front of an Indianapolis judge that Starbucks could not close their bankrupt Teavana stores in Simon Malls.

This seems to be a strange ruling that forces a business losing money to stay in business. Perhaps Simon Brothers realizes the absurdness of the ruling but they are trying to stall and keep the stores open until the end of the year. The lawyers run everything. Wouldn't Simon Brothers have a lease contract with Starbucks to recover monies when a store goes out of business? Are we watching the end of malls?

Simon Malls Forcing Starbucks to Keep 77 Failing Teavana Stores Open

 

[rsr]

Last question first: Malls are in trouble. The first super mall in Oklahoma City — a behemoth that was a tourist destination when it opened — is closed after many years of decline.

As to the lawsuit: I doubt that the judge's ruling could survive an appeal. Breaking a contract is requires the landlord to be compensated, and it is up to the court to determine the proper damages; the mall company could make a viable claim that it is due not only lost rental income but losses caused by the removal of a business from the mall mix. Given that Teavana is not an especially popular business, that contention might be difficult to prove.

But the judge, so far as I know, does not have the power to force a tenant to keep operating against its will, except perhaps unless it would present a threat to public safety or welfare, and even that's a stretch. The mall owner will eventually lose; maybe it's just buying some time.