Whole Foods' Landlord Will Fight for Lease Default
Updated: Dec 27, 2019
Whole Foods' Glover Park landlord formally responded to the lawsuit filed against them and it seems they are prepared to fight. See the background of the case at the previous blog post here. Wical, led by real estate investor Sylvan Herman, filed a strongly worded opposition to the complaint on June 27th. Wical seeks to have the court deny Whole Foods' request for an injunction preventing Wical from enforcing its lease default notice. In their response, Wical disputes every reason given in Whole Foods' complaint.
Wical sought default based on the lease clause that Whole Foods may not close the store for more than 60 days. On top of that, they claim in their response that Whole Foods also failed to keep the store free of rodents, failed to do any updates to the store for more than 10 years and unlawfully failed to seek city permits before demolishing the interior. They claim that Whole Foods has created its own so called "emergency" as a result of this neglect. Wical claims that Whole Foods is thus not entitled to the injunction nor should the court allow rent payments to be handled by the court.
The Wical default notice, Whole Foods lawsuit and Wical's strongly worded response all beg the question of "Why?" Why have Wical and Whole Foods not sought a way to negotiate a deal for re-opening? The store obviously cannot be opened now, so the notice demanding that the store be opened or be in default is not substantive. If Whole Foods continues to make rent payments and sincerely does intend to spend millions and greatly improve the store and re-open, why not work out a plan with the landlord so everyone is happy? Why has Whole Foods been so secretive about their plans both with their landlord and the community?
Wical alludes to a couple of possible reasons in their formal response to the complaint.1) They claim that they have been harmed by Whole Foods actions because the property could not be re-let in its current state. This claim is questionable since a new tenant likely would completely renovate the interior anyway, but have they been seeking a new tenant? Do they have one ready to go? and 2) they cite a court case in which the Government of Jamaica sought to stop the sale of a property but they were denied by the court on the grounds that "The public interest favors the orderly disposition of property and the enforcement of binding contracts." Is this a hint that Wical seeks to sell the property now and sees this as a quick way to evict Whole Foods and get it sold? If so, have they had a buyer in mind all along or feel this is an opportunistic time to sell? There is no proof yet of this theory, but the facts of the case do suggest that the paths taken by Whole Foods and Wical, for the reasons given in the complaint and response are not rational. It seems there might be other motives not yet revealed, which might come to light at the scheduled 9/1/17 court hearing.... Stay tuned!