Valentino has settled a legal battle over the lease for its sweeping store on Fifth Avenue in New York. In a joint statement on Monday, the Italian fashion brand and its former landlord 693 Fifth Owner LLC confirmed that they reach an “amicable settlement” in connection with their respective lawsuits, that both parties are “satisfied,” and that Valentino’s lease for the Fifth Avenue store “will be terminated.” The statement comes almost two years after Valentino filed a lawsuit against its then-landlord in a New York state court, alleging that its business in the four-story midtown Manhattan boutique “has been substantially hindered and rendered impractical, unfeasible and no longer workable.”
Filing suit against 693 Fifth Owner LLC in June 2020, Valentino argued that “the current social and economic climate, filled with COVID-19-related restrictions, social distancing measures, a lack of consumer confidence and a prevailing fear of patronizing, in-person, ‘non-essential’ luxury retail boutiques,” has prevented it from operating its store as usual, something that it does not see changing in the near future. As such, the complaint pointed to a provision in the parties’ lease, which started in August 2013, that mandated that it use the retail space in a manner that is “consistent with the luxury, prestigious, high-quality reputation of the immediate Fifth Avenue neighborhood.”
This was made impossible as a result of the global health pandemic, according to the Valentino lawsuit, which set out claims of impossibility of performance, rescission based on failure of consideration, constrictive eviction, and declaratory judgment for frustration of purpose, and argued that it was unable “to offer in-boutique retail sales, or associated services such as fittings.”
In a loss for the fashion brand, Justice Andrew Borrok of the New York Supreme Court granted 693 Fifth Owner LLC’s motion to dismiss the complaint in February 2021, holding that the parties had “expressly allocated the risk that Valentino would not be able to operate its business” in their May 2013 lease agreement, making it so that Valentino is “not forgiven from its performance, including its obligation to pay rent by virtue of a state law,” and prompting an appeal from the fashion brand. At the same time, 693 Fifth Owner initiated a separate – but related – lawsuit of its own against Valentino, in which it accused the brand of breaching the terms of the lease by abandoning the space in December 2020 and failing to pay rent even before that, while also allegedly failing to repair damage to the property.
Despite Valentino’s claims that it was damaged significantly as a result of the pandemic and resulting lockdowns and marked drops in luxury goods sales, 693 Fifth Owner argued that the brand blamed the pandemic in order to get out of the lease, when in reality, the brand “had been suffering since well before the COVID-19 pandemic,” and has opted for a smaller – and less expensive – lease at 135 Spring Street.
With the foregoing in mind and given the property damage that was allegedly caused by the brand, including “sizable holes” in and paint on the Venetian Terrazzo marble panels within the store space, 693 Fifth Owner sought more than $200 million in damages – $15.3 million for the damages and rent lost during the time that repairs were being made, $6.6 million for unpaid rent between September 2020 to February 2021, and $184 million in rent for the rest of the 16-year lease’s duration.
The terms of the parties’ settlement have not been disclosed.
As for a Valentino lawsuit that is still very much underway, that would the high-stakes case it initiated against Mario Valentino back in July 2019. In a status report filed with Judge John Kronstadt of the U.S. District Court for the Central District of California in January, lawyers for both of the Italian brands revealed that proceedings are currently underway in federal court in the U.S., as well as in Italy – and in one instance, will require at least two more years to resolve. The latest update from the like-named but unaffiliated brands comes two and a half years after Valentino filed suit against Mario Valentino in the U.S., accusing it of breaching a co-existence agreement they signed more than 40 years ago in an attempt to avoid legal complications stemming from their nearly-identical monikers.
The case is Valentino USA, Inc. v. 693 Fifth Owner LLC, 652605/2020 (N.Y. Sup).