The U.S. Court of Appeals for the Fourth Circuit ruled Thursday that White Flint Mall was within its rights to evict entertainment chain Dave & Buster’s from its property last year.
In a 2-1 decision, the court upheld a federal district court ruling that Dave & Buster’s had violated its lease with the mall by opening another location at the Arundel Mills Mall in Anne Arundel County.
In 2012, as White Flint Mall prepared for its planned redevelopment, it notified Dave & Buster’s that the business was violating a “radius restriction clause” in its lease by operating the Anne Arundel location within close proximity of North Bethesda.
“It does not require expert testimony to determine that another Dave & Buster’s, which is a unique entertainment experience, operating nearby would affect the number of customers visiting the White Flint Mall location,” wrote Judge J. Harvie Wilkinson III in the Court of Appeals majority opinion.
The mall and Dave & Buster’s tried to negotiate a resolution to the dispute, but in October 2013, the mall told Dave & Buster’s to leave its property within a month.
The Texas-based company has since moved closer to finalizing a lease for a new location at the former City Place mall in downtown Silver Spring, which is being renovated and rebranded as Ellsworth Place.
White Flint Mall hasn’t been able to start its redevelopment project because of an ongoing legal dispute with anchor tenant Lord & Taylor. The mall has said demolition should start soon.
In its appeal to the U.S. Court of Appeals in Richmond, Dave & Buster’s argued that White Flint Mall had knownabout the Anne Arundel County location since it opened in 2006.
At the time, White Flint Mall notified Dave & Buster’s that out of “deference to the longstanding, mutually beneficial relationship between the parties,” the company had “elected not to formally place Dave & Buster’s in default under the Lease” even though “the Arundel Mills situation constitute[d] a significant violation of the Lease.”
Dave & Buster’s attorneys argued the statute of limitations had run out on the mall’s breach of contract claim and that the mall essentially waived the radius restriction clause when it allowed the entertainment chain to continue operating until it wanted to demolish and redevelop the property.
Judge James Wynn Jr. wrote a dissenting opinion in which he said Dave & Buster’s could’ve reasonably assumed the mall had waived the radius restriction clause.
But Wilkinson and Judge G. Steven Agee thought White Flint Mall’s intentions were clear.
“The evidence here is clear that White Flint intended to reserve its right to enforce the radius restriction clause,” Wilkinson wrote. “Although White Flint continued to accept rent from Dave & Buster’s location at White Flint Mall, it plainly explained in the April 2006 letter that it was choosing not to pursue its remedies under the Lease at that time only out of ‘deference to the longstanding, mutually beneficial relationship between the parties.’”