Indianapolis-based shopping center giant Simon Property Group is in line to recoup about $5.5 million in unpaid rent from a national movie theater chain after a judge ruled the COVID-19 pandemic didn’t excuse the company from its financial obligations.
Simon won judgement in a Delaware state court Monday against Regal Entertainment Group, which operates theaters in at least 10 Simon properties—including Greenwood Park Mall—after the company failed to pay its rent between March 2020 and April 2021.
The dispute involves theaters at four Simon shopping malls: Cape Cod Mall in Massachusetts, Coconut Point in Florida, McCain Mall in Arkansas and Shops at Nanuet in New York.
The judge in the case found that the pandemic didn’t excuse Regal from covering its rent at the theaters, which are now in default for the lack of lease payments. Superior Court Judge Mary M. Johnston said extraordinary-event, or force majeure, clauses in the leases were clear.
“The provisions very broadly allocate the risk of unforeseen events,” Johnston said in her case order. “There is no authority presented or basis to find that a force majeure provision must list every possible event or circumstance that may excuse performance under the lease.”
The ruling follows another case between the parties in Marion Commercial Court, which also resulted in Simon securing back-rent from Regal. That case involved leases between Regal and Simon at Greenwood Park Mall and Circle Centre in Indianapolis, the latter of which is no longer managed by Simon.
Regal closed all its theaters when the pandemic began and most remained closed for several months—some extending for as long as one year. Even when they did reopen, most were still restricted to no more than 50% audience capacity and didn’t have many films to show until late in 2021.
Simon has Regal-owned theaters in 11 properties across nine states, including Colorado, Florida, Georgia and Pennsylvania, according to its 2021 annual report.