The Portland, Ore.-based owner of downtown Springfield's 14-screen movie theater has taken its lease dispute with landlord Scott Tillman to federal court.
Hollywood Theaters Inc. filed a lawsuit against College Station LLC on May 8 in U.S. District Court. The cinema chain - the country's ninth largest - has alleged in the suit that Tillman failed to repay more than half of a $1.6 million cash allowance agreed upon by both parties in a 20-year lease signed in August 2005. Tillman has reimbursed Hollywood Theaters for about $720,000 of the allowance, according to the suit.
Court records show the lease was amended in August 2006 and again in July 2007, with the most recent version including a formula for calculating the tenant allowance.
In a Feb. 19 letter to Tillman, Hollywood Theaters Senior Vice President and Chief Operating Officer Clyde Cornell estimated the tenant allowance at about $1.6 million based on a $4.91 million bid for landlord's work and a certified building size of 44,886 square feet, according to a Portland architect hired by the theater. In a March 5 letter to Hollywood Theaters, WPH Architecture Inc. principal Tony Brizendine said the theater's square footage was based on final plans submitted to the city of Springfield's Building Development Services Department.
In Cornell's letter, the cinema executive requested that Tillman remit the remaining $878,000 of the allowance to Hollywood Theaters no later than March 9. He also cited a provision within the lease that authorizes the cinema to credit the unpaid portion of the allowance against future rent payments.
Tillman's Springfield attorney, Aaron Lyons, said a confidentiality clause precluded him from commenting about the suit's specific allegations, but he pointed to the second lease amendment as the preeminent legal document in the dispute. According to that document, the theater's size is 47,833 square feet, or roughly 2,900 square feet more than Brizendine's certified measurement.
"The square footage that College Station is relying on was agreed to by the parties," said Lyons, with Hamburg & Lyons LLC. "We would expect that Hollywood Theaters would comply with the terms of the agreement."
Kansas City attorney Ron Bodinson, who filed the suit on Hollywood Theaters' behalf, said the original lease indicated that the parties would mutually agree to the theater's gross leasable area when construction was complete. The second amended lease, however, was adopted the month before theater construction began.
"The landlord is saying, 'We did a second amendment that set the square footage,' and our position is that it didn't change the fact that - once it was built as constructed - we were going to figure out exactly what (the square footage) was," Bodinson said. "That (second) amendment wasn't entered into after (the theater) was constructed."
The lease includes a mechanism designed to settle disputes about the building's size by calling on a judge to appoint an independent third party who would determine the square footage, said Bodinson, with Shook, Hardy & Bacon LLP. U.S. Magistrate Judge James England has assigned the case to an outside mediator.
"We're relying on our architect, who is trained to do this kind of work," he said. "We didn't ask the architect to come up with our number. The architect measured it. If someone comes in with a little more or a little less, we'll acquiesce to that."
Hollywood Theaters continues to pay monthly rent based on the square footage number in the amended lease, but Bodinson said he's filed a motion that would allow his client to pay "excess rent" into a court coffer until the dispute is resolved. To date, Hollywood Theaters has overpaid Tillman some $28,000, he said, adding that future rent payments based on the adjusted square footage would be about $4,200 less each month.
"We've always paid what the landlord thought we should pay, but we keep telling them it's too much," Bodinson said.
Lyons said he would likely be filing a counterclaim against the theater - possibly the week of May 18 - on Tillman's behalf, but he declined to provide details.
"I think that's going to shed a lot of light on this," Lyons said, "but I would like to make it clear that College Station did not breach any term or provision of the lease, and College Station has not withheld any of these funds."[[In-content Ad]]
