Georgetown Retailer Sues Landlord, Seeks To Terminate Lease Because Of Pandemic
A retailer that opened last year in Georgetown is looking to use the coronavirus pandemic as a reason to terminate its lease.
The Candle Bar filed a lawsuit Aug. 14 against an affiliate of Bethesda-based Cascade Realty Partners, its landlord at 1065 Wisconsin Ave. NW, after notifying the landlord it was terminating the lease.
The lawsuit, filed in the U.S. District Court for the District of Columbia, asks the court to declare that the retailer is discharged from its obligations under the lease. It says it has the right to terminate the lease because its performance as a tenant has been made impossible by the coronavirus and the ensuing government regulations on nonessential businesses.
The Nashville-based retailer signed a 2,111 SF lease on the second floor of the building in January 2019. The building, sitting near the prime intersection of Wisconsin and M streets NW, is also occupied by apparel retailer South Moon Under.
The Cascade Realty Partners affiliate, 1065 Wisc LLC, acquired the building in 2016 for $7.3M, property records show. Cascade didn't respond to requests for comment on the lawsuit.
Before opening in D.C., The Candle Bar operated two locations in Nashville and one in Charlotte. It also signed a lease last year to open in Reston Town Center. In addition to selling candles, the retailer hosts candle-making classes.
The retailer was unable to operate its D.C. location after the mayor ordered the closure of nonessential businesses March 24, and it was also unable to open when Phase 1 began May 29, according to the lawsuit. The second phase of reopening June 11 allowed The Candle Bar to reopen, but it says the restriction to 50% capacity has made its operations "impracticable."
The Candle Bar reached an agreement with its landlord June 1 that included a temporary rent abatement through October, according to the lawsuit. But it says the pandemic and related restrictions still made its ability to operate its business impossible.
"Throughout the shutdown, and subsequently limited reopening, it has been impossible and commercially impracticable for TCB to engage in its retail business, including its custom-making candle classes," the retailer's attorney, Dykema Gossett Senior Counsel Charles Chotvacs, wrote in the lawsuit.
The tenant notified the landlord Aug. 11 it was terminating the lease as of Aug. 14, and the landlord maintained that The Candle Bar wasn't discharged from its lease obligations. The lawsuit also includes Designworks Investments as a plaintiff, as the investor is the guarantor of The Candle Bar's performance under the lease. It is asking the court to discharge it from that guarantee.
This is not the first case of a retail tenant citing the pandemic as a reason to terminate its lease. Multiple retailers in New York City, including Victoria's Secret, have sought to get out of lease agreements for the same reason. But a New York judge ruled one Manhattan tenant couldn't legally avoid its obligations, and one attorney told Bisnow she saw the strategy as a "Hail Mary."