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Starbucks sued by biggest mall operator in America over Teavana closures

CNBC logo CNBC 9/2/2017 Sarah Whitten

Starbucks (SBUX) may have hit a hitch as it moves to shutter all 379 of its Teavana locations by spring 2018.

Simon Property Group (SPG), the largest mall operator in the U.S., slapped the coffee giant with a lawsuit last month, alleging that by removing its Teavana stores, Starbucks is breaking its lease agreement with the company, according to The Indianapolis Star.

Simon said in the lawsuit that Starbucks "put its stock price above its contractual obligations, the viability of Simon and its Shopping Centers, other retailers and consumers who count on the Teavana stores," the Indy Star reported.

Starbucks had decided to shutter its Teavana stores because they were a drag on its results, with as many as 350 of these stores hurt by reduced foot traffic. Some 78 of these locations are in Simon shopping centers.

"Starbucks does not contend that Simon breached any lease or that Starbucks cannot remain viable if it continues to honor its promises in its leases for stores in Simon's Shopping Centers," the lawsuit said. "Instead, Starbucks simply believes it can make more money if it violates the leases than if it honored the contractual promises and obligations."

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The mall operator is now seeking a preliminary and permanent injunction to prevent the coffee company from closing its stores before its leases are up.

Simon did not immediately respond to CNBC's request for comment. However Starbucks said that it is "responding to the lawsuit and are working to resolve this dispute."

Read the full report from The Indianapolis Star.


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