Metropolitan News-Enterprise


Monday, November 1, 2021


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Department Store Chain Saks Is Not Entitled to Attorney Fees in Dispute Over Rent—C.A.


By a MetNews Staff Writer


Saks & Company LLC, which nationally operates Saks Fifth Avenue department stores, will not be able to recoup the roughly $1 million it spent on litigation over the amount of rent it is to pay under a lease of premises at the corner of Post Street and Powell Street in San Francisco, under an opinion from Div. Three of the First District Court of Appeal, filed Friday.

Saks insisted it is entitled to fees under a fee-shifting provision of its lease which provides:

“Should either party institute any action or proceeding to enforce this Lease or any provision hereof, or for damages by reason of any alleged breach of this Lease or of any provision hereof, or for a declaration of rights hereunder, the prevailing party in any such action or proceeding shall be entitled to receive from the other party all costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party in connection with such action or proceeding.”

Renewal Options

The 1991 lease was for 25 years, with Saks having the option to extend it for five 10-year periods, with the amount of the rent to be determine through arbitration upon the exercise of the options.

An arbitration took place; the lessor moved for an order confirming the award and Saks moved for an order vacating it; the San Francisco Superior Court vacated it; the lessor sought a writ of mandate; the Court of Appeal denied it. A second arbitration took place; Saks moved for an order confirming it; its motion was granted; the Court of Appeal affirmed.

Saks wanted reimbursement of attorney fees it expended in the litigation. San Francisco Superior Court Judge Charles F. Haines denied its motion.

Petrou’s Opinion

Justice Ioana Petrou said, in Friday’s opinion affirming Haines:

“The judicial proceedings in connection with the arbitration awards were not actions to ‘enforce’ or to obtain a ‘declaration of rights’ under the lease, such as a dispute over a contractual term or obligation. In the underlying court proceedings, neither party alleged that the other had violated any provision of the lease, was refusing to comply with one of its provisions, or had breached the lease.

“The parties’ resort to court in connection with the arbitration awards does not reflect a disagreement over a lease term or obligation. Rather, the judicial proceedings underlying Saks’ claim to attorneys’ fees arose from and were fully consistent with the parties’ obligations under the terms of the lease and their agreement…regarding how to settle a Fair Market Rent dispute. Therefore, Section 23.10 does not govern the instant dispute over attorneys’ fees.”

The case is California Union Square L.P. v. Saks & Company LLC, A162043.


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