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Indiana Supreme Court to consider Simon, Teavana dispute

December 28, 2017

The Indiana Supreme Court will weigh in on whether Starbucks Corp. can close Teavana stores in Simon Property Group malls even though it has leases that extend for, in some cases, another decade.

The state's highest court voted on Dec. 19 to take an appeal in the case directly from Marion Superior Court, bypassing the state's Court of Appeals. That's rare, occurring only when the Supreme Court decides a case involves "a substantial question of law of great public importance and that an emergency exists requiring a speedy determination," according to court rules.

Seattle-based Starbucks announced July 27 that it planned to close all 379 of its Teavana stores in the next year, with most closures taking place in the spring of 2018. But Simon has said only two the leases it has with Teavana for stores in its malls expire prior to the spring and the other 76 extend as far as January 2027.

So Simon sued Starbucks on Aug. 21 in Marion Superior Court to stop the closures. “In order to successfully operate its shopping centers, Simon depends upon each tenant fulfilling the covenants in their respective leases,” the company said in its suit. “Crucially, each of Simon’s tenants promises that it will open and operate continuously for the entire term of its lease.”

Simon won a victory in late November when a Marion Superior Court judge sided with the mall operator’s request for a temporary injunction until the case was decided.

“If the court were to allow Starbucks to close down its stores, abandoning obligations in the lease agreements, the court would be relieving Starbucks of the failed risk it took merely because Teavana has now proven to be unprofitable to Starbucks,” Judge Heather Welch wrote in her Nov. 27 decision.

Teavana operates stores locally at Circle Centre mall, the Fashion Mall at Keystone, Castleton Square Mall and Greenwood Park Mall.

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