Block E Owner, AMC Theatres in Lease Dispute

AMC wants to renew its lease in Block E under the same terms of its current arrangement. The landlord is suing AMC, stating that the vague language in the lease should be considered "unenforceable," and it should not have to agree to an extension.

The new owner of Block E in downtown Minneapolis is in a dispute with its tenant, AMC Showplace Theatres, Inc., over the terms of its lease.

Minneapolis-based development firm Alatus, LLC, completed its acquisition of Block E in July. Alatus formed an entity called Camelot, LLC, to acquire the complex.

In a complaint filed earlier this month, Camelot alleges that language regarding AMC's option to renew its lease is unclear, and it is asking that a judge deem the extension “unenforceable.”

In 2007, Block E Interests, LLC-which owned the complex at the time-and Kerasotes ShowPlace Theatres, LLC, entered the lease agreement. Kerasotes was then acquired by AMC in May, according to court documents.

The initial term of the lease is five years, and it concludes on September 30, 2012. The lease includes the option for the tenant to renew for two additional five-year terms.

According to Camelot's complaint, AMC currently “is not paying any rent” to occupy the 84,000-square-foot, stadium-seating movie theater. Under its current lease, the theater's rent is based on a percentage of gross sales: 15 percent above $3 million, 20 percent above $5 million, or 25 percent above $7 million.

When Camelot acquired Block E, the company asked AMC if it planned to renew its lease. AMC said it would extend the lease and believes the current terms will continue during the renewal period.

The two parties have “a genuine and present controversy over the proper interpretation of the lease,” Camelot said in its complaint.

Some of the controversy centers on language within the lease. In a couple of fields pertaining to minimum rent, marketing expenses, and tax obligations, the lease includes the words “intentionally omitted.”

In a response filed with the court, AMC repeatedly states, “The lease is a writing that speaks for itself.” AMC acknowledged that it intends to extend its current lease, and it requests a judgment stating that the lease's provisions are “valid and enforceable”-and it should be allowed to renew its lease under the existing terms.