Monday, September 26, 2016

Pizza Hut refuses to surrender to Maywood Mart

The war continues between Pizza Hut and Maywood Mart.  Maywood Mart is trying to terminate Pizza Hut's lease but Pizza Hut took the fight to court.  It appears both sides have dug in for some trench warfare as they refuse to budge from their positions.  A trial is scheduled for next summer unless they settle the case. 

JJ reported in July that Pizza Hut sued Maywood Mart owner Tei Equities, LLC (NY) in U.S. District Court.  Pizza Hut alleged that Tei had been trying for several months to move out of its current Maywood Mart location facing I-55N.  It is easy to see why Pizza Hut wants to stay where it is in the shopping center.  The storefront faces the interstate, is highly visible, and is in front of the entrance to the shopping center. Earlier post.

However, Tei has other plans for Pizza Hut.  It wants to move Pizza Hut to another location in the shopping center.  It forced out the tenants that were north of the Pizza Hut location and tore down the building that housed them.  It is currently constructing a new building that will host a Petco.

Pizza Hut has a lease that expires in 2020.  It pays annual rent of $29,186. Pizza Hut accused Tei of attempting to kick it out of its current site so it could rent the location to another tenant that will pay higher rents.  Tei said Pizza Hut's building is unsafe.  It claims Yazoo clay caused the roof to change its shape.  Water no longer falls off of the roof but instead ponds.  It alleges the ponding has become dangerous and the only way to solve the problem is to demolish the building.  It repeatedly cites the example of a building's roof collapsing due to the ponding of water over at Jackson Prep as proof of an allegedly dangerous structural condition.   Tei is consistent if nothing else  It repeats the words Yazoo clay and Jackson Prep whenever possible.  One would think Yazoo clay is the most destructive substance known to man when one reads Tei's pleadings.  Tei also claimed that if offered another location in Maywood Mart to Pizza Hut that was higher then its current rent but lower than what the market value rent would be (Is this "market value rent" something like Amazon's list price?).

Pizza Hut argued only 25% of the property was damaged- if any was damaged at all by the alleged ponding.  Tei counterclaimed and asked the court to terminate the lease as well as awarding damages to the New York-based landlord.

The two sides continue to skirmish in court.  Pizza Hut is represented by Lord Snow.  U.S. Magistrate John C. Gargiulo issued a case management order that stated a settlement conference will be held on April 13, 2017 and a jury trial will be held during Judge William Barbour's four week term. 

Brunini law firm attorneys William Drinkwater and Matt Allen represent Tei Equities, LLC.

Kingfish note: It will not be surprising if this case goes to trial.  Tei has been kicking out tenants left and right.  Their position is pretty concrete.  Pizza Hut wants that location as well.  Question: Did Tei offer to allow Pizza Hut to have its old location if a new building is available for rent? 


Les Miles said...

Are they hiring? I could use a job.

Anonymous said...

With Butler Snow v. Brunini they have probably spent more in legal fees than all of Maywood Mart is worth.

Anonymous said...

10:44 am has a point. It will cost Pizza Hut more in legal fees than the rent savings between now and when the lease is up.

KF, unless they want to put Pizza Hut where Le Nails or Nandy's is currently, I can't think why their visibility wouldn't improve and the access to I-55 really doesn't change.

If it's a jury trial, the Pizza Hut legal team shouldn't pick anyone who can do math. And, the building/Yazoo clay arguments will put a Mississippi jury to sleep.

Joe Domino said...

The last time I dined on a Pizza Hut product I could have sworn in was Yazoo Clay. The garlic-bread sticks are still decent unless served cold.

Anonymous said...

Go Pizza Hut. Glad they are willing to fight to maintain the integrity of their lease. Greed never wins. This could set principle and precedent in future cases.

Anonymous said...

The lease has an attorney fee shifting that whoever loses likely has to reimburse the other side for its reasonable attorneys' fees.

That will require its own separate mini trial.

What a waste of resources.

Anonymous said...

Maybe so, but I would rather have PH's argument. They have a lease for a term. Out-of-state landlord has history of moving other folks out, wanting to remake the building. If they want PH gone, they should do like LSU and attempt to buy out the lease, not force them to move to a higher rent, less desirable location.

Anonymous said...

So why is the Yayoo Clay an excuse? The landlord has an obligation to maintain the exterior of the building. Rip the roof and insulation off and replace it one with more slope. Or put a new roof over the whole thing that has a lot more slope. Or buy out the lease for a price that Pizza Hut agrees with. Either way the land lord is responsible and has options that would correct the problem. The landlord is pretending that their is no other solution, but oblivious that is not true. AND if the tenant can show that the landlord has a history of doing this in other locations, it's over.

Anonymous said...

12:12; the landlord, according to what's posted, offered other space at the same rent. But, I agree it's worth fighting. More landlord bullying.

Kingfish said...

Landlord offered another space but at a higher rent. But it was below "market value" which is whatever the landlord says market value is.

As I wrote, like Amazon pricing. Take a $300 retail object, sell it for $200 but say it's list price is $500 so Amazon is giving you a huge savings.

Anonymous said...

12:53, no - according to what is posted, the landlord did not offer other space at the same rent. Even if they did, the tenant is not required to give up a good and current lease for 'other' space. PH chose the space at this entrance to the center - which is certainly better than one on the side with the messy parking situation; and forget relocation costs.

The landlord wants PH out - the standard for such a situation is that the landlord needs to buy out the lease or negotiate a settlement to get control over the space. They knew of the existing leases when they purchased the center - and now are trying to bully their way through the existing tenants.

Anonymous said...

When the casinos came to Biloxi one casino bought out a large building to remove to make a parking lot. A small bar inside the building had a lease for several more years. The bar owner refused to move. He ended up getting a very large sum of money for the remaining time on his lease but he did have to hide out for a while before they came to an agreement.

Anonymous said...

ALL IN, MAYWOOD IS APPROXIMATELY $40.00 PER SQUARE FOOT INCLUDING CAM CHARGES. WOW !!!!!!! That's is more than The RENAISSANCE. Maywood Mart sucks !!!!!! One machine gun spraying away from being vacant !!!!!! Across the Interstate from the highest crime area in Jackson.

Anonymous said...

What is the end game for this shopping center? They've moved out a number of tenants, but it isn't like they've brought in anything high profile. I'd be trying to get rid of Dollar Tree and Dress Code long before I spent money fighting Pizza Hut.

Anonymous said...

Wonder just who it is they want to clear that space for.

Anonymous said...

3:03 evidently uou don't know your Jackson geography very good. Across the interstate ain't even close to the highest crime rate of jackson. Not the same question but across the interstate within a half mile is one of the highest per capita income neighborhoods in the state.

But if you want to find those high crI'm areas you talk of, let's go ride a few miles across the interstate and a few miles south. But can't spray those machine gun bullets that far.

Not worth $40/sqft in my opinion but it's not based on your reasoning.

Anonymous said...

Is Beemon's next?

Twelve Fitty Three said...

I'm 12:53 and would like to apologize to the group and moderator for falsely stating that another space at the same price was offered. I misread something and am contrite, willing to undergo whatever penalty you want to impose. Please forgive me and don't jump my shit to hard and often.

Anonymous said...

It will settle. None of the lawyers on the pleadings have the stones to go to trial.

Anonymous said...

Morgan and Morgan says, "They know who will go to trial and who won't".

Anonymous said...

I don't support Pizza Hut anymore. The quality of their products has declined several fold over the years.

Bring Back Perfect Pizza said...

There was a time when you got home and opened your boxed pizza and everything was perfectly aligned and positioned, nothing over-lapping or falling off the side or worse, missing. An OCD dream. No more.

Anonymous said...

I agree that there's landlord bullying. A clause allowing recovery of legal fees to the winner at the end of the day is good.
But, the fact remains from a purely business point of view that the Pizza Hut owner will be paying legal fees out of pocket until the case is resolved.
What he should have been doing is negotiating a lease buy out and looking for another location. That's especially true when you factor in the value of time lost with meetings with attorneys, depositions and time in court and the personal toll of the stress.
Pizza Hut could buy Steak Out ( $249000 ) which may end up being less than their legal fees ( neither of the law firms have low hourly fees and then you tack on the support staff fees) and there's business time lost. For certain, their legal fees would be a healthy down payment on owned property or pay for remodeling a new lease location( and the lease is going to run out anyway).

Money talks said...

@3:03. Being hirer priced than Renaissance just proves there is more disposable income in Northeast Jackson. Much more desirable location. Just look what happened to Juniker Jewelry Store after they moved from Northeast Jackson....round the hole and down the bowl

Anonymous said...

How can you possibly make that claim, 7:36. They only opened six months ago, if that? But thanks for playing, Jerry Lake.

Hershey Squirt said...

Offering another space, even at lower than "market value" is still not doing them a favor.
I'm not a Pizza Hut fan cause I've already had diarrhea but moving a restaurant/food service business takes more time and $$$ than a simple retail business where all you have to pick up are the widgets and the cash register.

Anonymous said...

@ 7:36 - And I bet you thought Trump won the debate last night.

Delusions of grandeur

Anonymous said...


Between Freds and all the new 'Dollar' stores on every corner in Jackson, your $$$ goes a lot further than those poor folks out in Madison/Ridgeland.

Anonymous said...

Just goes to show you the mark up in pizza prices. Makes me want to open one now that I see that the margin is so great.

Anonymous said...

That Pizza Hut location is awesome. Best in Jackson Area in my opinion, and I do "pizza friday" every friday. Easy to get in and out of, and never any parking issues.

They open up the pizza and ask if it is the correct order.

Only one time has it been incorrect, and the manager let me keep the pizza for having to wait longer and a fresh, correct one was made within 10 minutes.

I'm all for PH fighting the principle behind this issue. PH signed a lease and now they are clearly being bullied out of the lease on a BS yazoo clay excuse and re-offering to move them somewhere else at a higher rate.

Landlords, especially out of state ones, get away with this all too often.

I'd be curious if there are any other PH locations owned by this same company elsewhere in MS or in the country. It could be that they don't want to set this precedent and risk many more locations.

Let's Get This Skraight.. said...

Actually it's "Round the bowl and down the hole".

Kingfish said...

The problem with that Steakout Location was PH would've run into the same problem that Olga's ran into. People can come in off of the interstate and get right back on it at Maywood Mart. Move it to that location and then it takes 5-10 minutes to get on the interestate. Have to go down frontage road and then turn around somewhere.

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