Fairfax Square, L.L.C. v. Hermes of Paris, Inc.

89 Va. Cir. 406, 2015 Va. Cir. LEXIS 8
CourtFairfax County Circuit Court
DecidedJanuary 13, 2015
DocketCase No. 2014-06509
StatusPublished

This text of 89 Va. Cir. 406 (Fairfax Square, L.L.C. v. Hermes of Paris, Inc.) is published on Counsel Stack Legal Research, covering Fairfax County Circuit Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fairfax Square, L.L.C. v. Hermes of Paris, Inc., 89 Va. Cir. 406, 2015 Va. Cir. LEXIS 8 (Va. Super. Ct. 2015).

Opinion

By Judge John M. Tran

This matter came before the Court upon the Complaint for Declaratory Judgment and Permanent Injunction filed by the Plaintiff, Fairfax Square, L.L.C. (“Fairfax Square” or “Landlord”) and a Counterclaim Complaint for Declaratory Judgment by Defendant, Hermes of Paris, Inc. (“Hermes” or “Tenant”). The Court writes this letter to explain its decision to award judgment in favor of Hermes.

I. Parties and Background

Fairfax Square owns and operates a premium office and retail complex in the Tysons Comer area (“the Property” or “Fairfax Square”). The Property is located off Route 7 (Leesburg Pike) and positioned across the street from Tysons I, more commonly known as the Tysons Corner Center Mall, a highly regarded shopping mall in Northern Virginia. The Property is also located less than one mile from Tysons II, referred to as “Tysons Galleria Mall,” another large shopping mall occupied by numerous distinctive retailers of luxury goods.

[407]*407The Lease, or more specifically the Lease Addendum at issue here, was entered into on January 10, 1990, between Hermes and Fairfax Square Associates II, a Virginia General Partnership and the predecessor in interest to the Plaintiff. Fairfax Square, L.L.C., the Plaintiff in this action, assumed ownership and management of the Property in 1999.

The Property consists of three buildings (referred to as “Towers”) placed in a U-shape configuration with two of the buildings (the end of the U) fronting the street upon which the Property sits with a third building set back. Tiffany & Co. occupies one of the front buildings (Tower 3). Hermes (and at one time, also Gucci) occupies the other building fronting the Property (Tower 2).

Hermes, an original tenant since the opening of Fairfax Square in 1990, is an internationally known iconic and easily recognized global brand that designs and sells a mix of luxury goods, including leather and silk purses, high-end accessories, and other household goods. It has been in business since 1837 and is considered one of the world’s most exclusive designers and retailers of luxury goods.

Tiffany & Co. is an internationally known iconic and easily recognized global brand selling primarily jewelry and is also considered one of the world’s most exclusive retailers of luxury goods.

There are eight retail spaces on the street level of the Property. Over the past twenty-four years, the tenants, owner, and property manager have changed. Tiffany and Hermes have remained.

On February 14, 2014, Hermes sent notice to Fairfax Square alleging that it had been in breach of its material covenant under the 1990 Lease Addendum since 2011. Under the Lease Addendum, there is to be a mix of retail tenants composed of quality retailers selling the highest quality goods and that are luxury tenants selling premium brands, such as Louis Vuitton, Gucci, and Fendi. Plaintiff’s Exhibit # 6.

Paragraph 25 of the 1990 Lease Addendum provides, in pertinent parts, that:

Landlord covenants to Tenant that it will operate the retail and office portion of the Property as a premium office and retail center. It is a material covenant on the part of the Landlord that the mix of tenants in the retail section of the Property shall be composed of quality retail establishments which sell the highest quality good and which are “luxury” tenants selling premium brands, such as by way of example, Tiffany’s [sic], Fendi, and Gucci, and shall operate their establishments in a manner in which suggests the highest quality for their type of operation. High quality service businesses such as banks are also permitted.
[408]*408If Landlord is in violation of any covenant, in this Paragraph, then continued violation of this covenant for 90 days after written notice of such violation from Tenant to Landlord without limiting Tenant’s other rights against Landlord shall entitle Tenant to terminate this Lease without further costs or obligations of any tenant to Landlord. Tenant need not choose between such right of termination and its other rights, but may exercise one or more of them jointly.

Plaintiff’s Exhibit # 2 (emphasis added). Plaintiff’s Exhibit # 2, The contract between the parties consist of the following: Lease dated January 10,1990 (PTX #1); Lease Addendum dated January 10, 1990 (PTX # 2); Second Addendum to Lease (PTX # 3); Third Addendum to Lease (PTX # 4); and Lease Extension Agreement dated September 29, 2004. (PTX #5.) The contested provision regarding the “mix” of tenants under paragraph # 25 of the Lease Addendum dated January 10,1990, remained unchanged through subsequent addenda to the Lease.

The Landlord complained that the February 14, 2014, notice was inadequate to appraise it of the basis for the purported breach of the Lease. The Court finds that the February 21, 2014, letter sent by Thomas Roth, counsel to Vomado, Charles E. Smith, responding to the February 14,2014, notice on behalf of the Landlord, clearly defined the issues that went to trial. At the time of trial, the issues had been clearly defined as (1) whether the existing vacant retail spaces in February 2014, although leased and in the process of being built for incoming tenants, constituted a breach of ¶ 25 and (2) whether the tenants in place met the requirement under ¶ 25 that the mix of tenants in the retail section of the Property be composed of “quality retail establishments which sell the highest quality good and which are 'luxury’ tenants selling premium brands, such as by way of example, Tiffany’s [sic], Fendi, and Gucci.”

By the summer of 2014 and ninety days after the February 2014 notice, all but one of the eight retail spaces were leased and occupied. The eight tenants included USAA bank and Miele in Tower 1, Elizabeth Arden Red Door Salon, a vacant space, Hermes, and Liljenquist & Beckstead in Tower 2, and Tiffany & Co. and Chef Geoff’s in Tower 3.

The new tenants who arrived in 2014 included a bank branch of USAA, Miele, an internationally known luxury and upscale appliance retailer, and Liljenquist & Beckstead, a well-known local jeweler that sells luxury goods and internationally known luxury brands such as Rolex watches.

Fairfax Square contends that the mix of retailers would satisfy the definition of luxury tenants under ¶ 25 of the 1990 Lease Addendum. On May 13, 2014, it filed a four count Complaint for declaratory judgment, permanent injunction, and attorney’s fees. The Complaint sought to enjoin Hermes, as one of the two bookend tenants, from terminating its lease, which is otherwise set to expire in 2020.

[409]*409On June 4, 2014, Defendant Hermes filed a Counterclaim in addition to answering the Complaint. Defendant sought a declaration that Fairfax Square was in breach of the material covenant under paragraph 25 of the Lease Addendum and asked for attorney’s fees.

At the conclusion of the Plaintiff’s case, the Court sustained a motion to strike Count II of the Plaintiff’s Complaint for Déclaratory Relief and that part of Count III of the Complaint seeking injunctive relief.

Count II pleaded that the February 14, 2014, complaint was deficient. After taking the evidence in the light most favorable to Fairfax Square, the Court finds that the complaint sufficiently placed the Landlord on notice of the applicable material covenant at issue.

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Cite This Page — Counsel Stack

Bluebook (online)
89 Va. Cir. 406, 2015 Va. Cir. LEXIS 8, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fairfax-square-llc-v-hermes-of-paris-inc-vaccfairfax-2015.