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Law360 (November 13, 2020, 10:17 PM EST ) A restaurant in a Puerto Rico mall that's behind on rent is seeking $1 million from its landlord in a lawsuit alleging the closure of the building during the COVID-19 outbreak, subsequent failures to safely reopen, and the withholding of permission to sell its business violated their contract.
Vota Inc., operating as Casa Mofongo Xpress in Las Catalinas Mall in Caguas, lodged its suit in Puerto Rico federal court Thursday against Urban Edge Caguas LP and Urban Edge Properties. It also filed for Chapter 7 bankruptcy the same day.
In its case against its landlord, Vota not only said it doesn't owe Urban Edge about $75,000 in back rent and utilities fees, but said the pandemic is a force majeure situation and asserted the mall operator should repay the restaurant and that its lease should be substantially changed or even terminated.
"Thus, the subject lease and applicable law nullified any obligation to pay rent beginning on March 15, 2020, [the day of the] first lockdown, that entitles tenant to a refund of rent and expenses paid in advance from March 15, 2020, and requires that the lease be prospectively and drastically modified, or rescinded, canceled, or terminated as a matter of law," according to Vota's suit.
"These circumstances not only imposed a severe and irreparable hardship on tenant, they frustrated the core purpose of the lease and made their principal object illegal, impossible, and impracticable, all for a period of time that remains unknown and unknowable," Vota added.
In 2013, Vota signed a 10-year lease in the food court of the mall located about 20 miles south of San Juan to serve its Caribbean-Puerto Rican-Latin cuisine as part of the Casa Mofongo chain, it said.
But without the ability to operate its restaurant at the mall, the transactions between Vota and Urban Edge don't make any sense, it said.
After Las Catalinas reopened in June from the pandemic-related closure, the lack of adequate instructions and restrictions for limiting the spread of the novel coronavirus prevented the restaurant from safely serving customers and created liability issues, Vota said.
The company warned Urban Edge that its procedures didn't fully comply with requirements set out by the Centers for Disease Control and Prevention, and Vota said that signs for social distancing were only in English. Spanish is the first official language of Puerto Rico before English, and according to a 2010 report by the U.S. Census Bureau, 80% of Puerto Ricans on the island said they speak English less than "very well."
Among other things, personnel at the mall entrance were screening only at random and no supervision on compliance was given by the administrators to the employees and customers, the suit said.
"Reopening this small restaurant not only poses a risk to employees and customers, but a potential for liability from tenant and even landlord by these groups of civilians," the suit added.
Vota also claims damages by Urban Edge for its decision to withhold permission for the franchise to sell itself to a third-party prospective buyer on account of Vota allegedly being in default during the lockdown, according to court documents.
"The resulting damages caused by withholding consent ... unreasonably to a sale authorization sent Vota Inc. downhill since this small business operated on such small margins that they didn't survive the pandemic recession and had to file for bankruptcy," it said.
Vota said it's seeking a court finding that the alleged rent debt is the sole responsibility of Urban Edge, for protection from any possible legal action to collect money from the personal guarantors, $1 million for breach of contract, costs of bringing the suit and attorney fees, and any other relief it's entitled to.
Counsel for Vota and a representative for Urban Edge did not immediately respond to requests for comment.
Vota is represented by Atabey Lamela Gandía of Lamela Law Offices.
Counsel information for Urban Edge was not available.
The case is Vota Inc. v. Urban Edge Caguas LP et al., case number 3:20-cv-01634, in the U.S. District Court for the District of Puerto Rico.
--Editing by Bruce Goldman.
For a reprint of this article, please contact reprints@law360.com.
