Landlord Sues Tenant For $8M For Breach Of Lease

Jun 05, 2012 No Comments by

On Jan. 5, the offices of the Hogan Lovells law firm in Miami’s Brickell district were flooded, forcing the law firm to relocate.

Now, the landlord of Sabadell Financial Center, a limited liability company called 1111 Brickell Office, says the law firm owes it more than $8 million for breach of lease.

After the flood at Sabadell Financial Center, Hogan Lovells sent a letter terminating its lease, which runs until 2015. The lease allows Hogan Lovells to terminate the agreement if its offices are destroyed “to the extent of twenty-five percent or more of the replacement cost,” according to the complaint, filed in Miami-Dade Circuit Court.

But the landlord, represented by Robert Allen Law, said Hogan Lovells “substantially overstated the replacement cost of carpeting and used an unreasonably high estimate for demolition and construction.” The damage claim, it alleges, was simply a ruse to find smaller quarters, at a better rate, elsewhere.

A leak started on the 22rd floor and damaged most offices beneath it. The Hogan Lovells offices were on the 19th and 20th floors.

Hogan Lovells first went to temporary quarters at 2525 Ponce de Leon Blvd. in Coral Gables and has since relocated to the Southeast Financial Center at 200 S. Biscayne Blvd. However, according to several sources, the firm has settled on a permanent move to the new 600 Brickell at Brickell World Plaza building.

The dispute appears to center on how the word “premises” is defined. The 25 percent lease termination rule applies to premises, but there is disagreement on what that covers. Hogan, in calculating its losses, included secretarial stations, “which are removable trade fixtures that are not part of the ‘Premises’ as defined in the office lease,” the lawsuit reads.

In its termination letter, Hogan Lovells defined “premises” as the improvements it made, the complaint says, an assumption that “ignores the plain meaning of the office lease and the defined terms contained therein.” Besides, the law firm’s estimated damage was “overstated and inflated,” the landlord added.

Hogan Lovells “did not have the right to terminate the office lease and its termination letter constitutes [an] unjustifiable breach of the office lease,” the complaint states. It said it has the right, therefore, to accelerate all future payments due under terms of the lease.

Source: DBR

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