The owner of Block E in downtown Minneapolis has won a legal dispute with its tenant, AMC Showplace Theatres, Inc., regarding the terms of its lease.

U.S. District Judge Ann Montgomery last week ruled in favor of Camelot, LLC. Camelot is controlled by Minneapolis-based development firm Alatus, LLC, which acquired Block E in July 2010.

Camelot filed a complaint in October, alleging that language regarding AMC's option to renew its lease is unclear, and requesting that a judge deem the extension “unenforceable.”

The lease agreement was entered in 2007 by then-owner Block E Interests, LLC, and Kerasotes ShowPlace Theatres, LLC-which was later acquired by AMC. The initial five-year term of the lease concludes in September 2012, and AMC argued in court documents that the contract includes the option to renew the lease for two additional five-year terms.

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

The main sticking point is whether the lease provides AMC with an “option to extend,” which would continue the terms of the original lease, or an “option to renew,” which requires the negotiation of a new lease.

The judge acknowledged that the contract contains ambiguous language but stated that, in their differing interpretations, Camelot presented the stronger argument. The ruling determined that the lease offers a renewal, but not an extension.

The judge's decision might provide more options for Alatus as it aims to revitalize the struggling Block E development, which opened in 2002. Applebee's, which closed earlier this week, is the latest tenant to close up shop-joining a long list of other past tenants, including Borders, Bellanotte, Snyders Drug, GameWorks, and Hooters.

Alatus recently hired an urban retail specialist, who told Twin Cities Business in February that he hopes to have a strategic plan for the development in place by this summer.

Alatus also announced last month that it is considering adding a casino to the site-but a Constitutional amendment to make non-Indian casinos legal in the state would be required before proceeding.