Lawsuit Continues Between Rite Aid and Americana at Brand

A dust-up between the high-end Americana at Brand shopping center and Rite Aid drugstores has taken a new legal turn.

Rite Aid filed a lawsuit in Los Angeles County Superior Court over allegations that despite provisions in its lease, it was paying too much in fees at the luxury shopping center in Glendale, Calif., developed by Los Angeles businessman Rick Caruso.

An appeals court on July 19 handed down a victory for Thrifty Payless Inc., which does business as Rite Aid.

In the drugstore chain's ongoing lawsuit, the court tossed out the shopping center's contentions that Rite Aid knew what it was getting into and had thoroughly investigated the details and the issues involved in the lease before signing a letter of intent to rent.

In the trial still going on in Los Angeles County Superior Court, Rite Aid alleges it overpaid its pro rata share of property taxes, insurance and common-area maintenance fees because the lease was based on mistaken assumptions.

According to the lawsuit, Rite Aid started lease negotiations in September 2004. A letter of intent sealing the deal was signed in February 2005. The Americana opened in 2008. Because the lease was completed before the mall was constructed, lease fees were made on estimates.

When bills came due for its first year of taxes, insurance and common-area maintenance at the end of 2009, Rite Aid felt its share of expenses exceeded Americana's estimates.

It complained it was charged $169,686 in taxes rather than $43,836 as promised in the final letter of intent. Likewise, it was charged $28,110 in insurance instead of $11,689.60. It also was charged $412,307 for common-area maintenance instead of the $211,874 that Rite Aid said it agreed upon.

Lawsuits between anchor retailers and mall owners are common, said attorney Lawrence Jacobson, a Beverly Hills–based attorney who often testifies as an expert witness in commercial real estate cases. "There is a lot of head butting," he said. "You have got millions of dollars at risk. If there are any questions, they'll litigate it or threaten to litigate it."

Attorneys and representatives for Rite Aid and a representative for Americana at Brand declined to comment.