Safeway filed a lawsuit in federal court Wednesday against WY Plaza, which owns the grocery store’s building in Laramie, for refusing to repay Safeway $1.1 million that had been handed over in rent payments since 2006.
WY Plaza is owned by Utah-based real estate company Woodbury Corporation.
The lawsuit was filed in federal court because the company’s principal places of business are housed in different states.
The Idaho-based grocery store claims WY Plaza is in violation of a 1980 lease agreement, which states that “if lessee constructs (an) addition, lessee may deduct from percentage rent … an amount equal to said percentage rent until such time as the balance in the amortization account, hereafter created, equals zero.”
Safeway completed a 7,550 square foot expansion of its store in 2001 that cost $2.6 million.
In the 13 years preceding 2019, Safeway made $1.1 million in rent payments without deducting any portion of amortization account from the 2001 expansion, according to the Idaho-based grocer’s complaint.
Interest on the amortization account has since brought the balance of that account to $6.1 million, “which amount continues to accrue interest at the rate of 5% per annum.”
That current balance equals 50 years of rent payments, at least at 2018’s rate.
The 1980 lease agreement says that interest at a bond rate “in effect at the time of the completion of said addition, shall accrue on the balance of said account” and that “after accrual of said interest, lessee shall deduct from said account an amount equal to the amount to be deducted … from percentage rent.”
“On November 7, 2018, Safeway notified defendant that Safeway had inadvertently not deducted any portion of the amortization account against its percentage rent obligation and, as a result, Safeway had overpaid percentage rent in the amount of $1.1 million,” the complaint states.
The grocery story requested WY Plaza reimburse the company.
In December, an agent of the WY Plaza told Safeway that the company was “refusing to pay Safeway for percentage rent overpayments of $1.1 million and that no percentage rent credits would be allowed ‘in the future.’”
Safeway is asking the federal court to award the company $1.1 million “plus prejudgment interest as allowed by law.”