In the ongoing breach of contract federal court dispute filed by Regal Cinemas against its landlord, the town of Culpeper, the beleaguered-due-to-COVID movie theater chain this week filed a 24-page memorandum in opposition to the town’s motion to dismiss the civil lawsuit.
The town says Regal Cinemas has failed to state a claim in the action seeking $75,000 and other damages in the suit filed in February in U.S. District Court Western Division of Virginia in Charlottesville.
But the company reiterates, in its latest filing April 5, its allegation that the town improperly and underhandedly tried to terminate its land lease for the theater at 210 S. Main St., which has been closed for most of 2020 due to COVID-19, and is still closed.
Town Council voted in February to terminate the lease with Regal for more than $50,000 in unpaid rent, activating a contract clause allowing the town to terminate its agreement if Regal vacates, abandons or deserts its property or ceases operations for 120 days or more.
Regal has since paid the back rent to the town, according to court documents, though the local theater, like many more worldwide, has seen no revenue due to the ongoing pandemic.
Regal contends in its recent memo opposing the town’s motion to dismiss that it never vacated the property but “has only temporarily suspended full operations in an effort to protect public safety in the midst of a global pandemic.”
The memo states the town attempted to end the lease early and without proper notice all the while threatening to take the property, “contending that Regal’s temporary suspension of full operations during COVID-19 to protect the public health constituted a cessation of operations for 120 days or more.”
“In an underhanded and rushed effort to seize this valuable property from Regal, the Town sought to improperly, and without notice, terminate the Lease early in violation of the clear terms of the parties’ agreement and in the midst of the global COVID-19 crisis, so that the Town could take the theatre and thereafter rent the Property to the highest bidder,” states the motion submitted by Washington, D.C. attorney Lela Marie Ames.
“Moreover, the Town intentionally lulled Regal into not protecting its rights or taking action in connection with the Lease while the 120-day clock ran by assuring Regal that the parties’ relationship under the Lease would continue into 2021 without issue,” she wrote.
Regal has operated the four-theater movie house on Main Street for more than 20 years on town-owned land under the terms of the long-term lease that remains in full force and effect, the company contends. Per the lease negotiated in 1999, the town, as landlord, receives more rent money from Regal when its movie and concession sales are higher.
During its period of closure due to COVID in 2020 and 2021, Regal was conducting necessary modifications or repairs at the theatre relating to COVID-19 and that time should not count toward the 120-day time period for termination described in the lease, according to the memo.
“Unfortunately, the Town disagrees, apparently arguing that it is not in the public interest for the Town to abide by its obligations under the Lease because the Town is being harmed through lost rent by Regal’s temporary suspension of operations during a pandemic that has resulted in the deaths of over 550,000 Americans,” the attorney for Regal wrote in the memo.
“Moreover, it is in indisputably in the public interest for businesses to take necessary precautions such as temporary suspension of operations, even at their own expense or detriment, as Regal has done, to prevent the spread of a deadly virus.”
The town’s claim that public interest weighs in its favor due to the lost rent is “half baked,” Ames wrote, arguing the lease cannot be terminated because Regal never abandoned the property.
“Regal has every intention to re-open soon, when it is safe to do so,” the memo stated.
The fact that the movie theater got behind on its rent “is excused because it was the direct result of: unexpected and/or unforeseeable circumstances not contemplated at the time the parties entered the Lease,” the attorney said, mentioning governmental mandates and restrictions that forced theater to close in early 2020. Ames, in addition, wrote it was “the duty of Regal to remain closed due to the continued threat that COVID-19 poses to the public, the lack of new films to exhibit, and customers’ unwillingness to patronize the movie theatre during a worldwide pandemic.”
Ames asked the court to deny the town’s motion to dismiss the complaint.