SeaWorld, which continues to insist that it doesnt owe millions of dollars in back rent to the city of San Diego, filed a motion in federal court this week demanding that a judge decide in its favor now, instead of waiting for a trial next summer.
At issue is a lawsuit filed last year by the city alleging that the Mission Bay theme park violated its lease by failing to pay more than $12 million in rent and fees during the height of the pandemic when it and many other California theme parks were forced to shut down. SeaWorld, in turn, filed a countersuit contending that the city’s forced closure was a violation of its lease and it, therefore, owes nothing to the city.
SeaWorld made a similar argument in a motion it filed Tuesday seeking a summary judgment of its case, a legal move that allows a party to ask for a ruling in its favor based on its contention that the facts of the case are undisputed and therefore no trial is needed.
The terms of the Lease, the amount of rent paid, and not paid, by SeaWorld, the issuance of the City’s closure orders, and the City’s forced closure of the Park are not in dispute, SeaWorlds attorneys argued in their summary judgment motion. These undisputed facts establish that the City breached the terms of the Lease by closing the Park, violated the duty of good faith and fair dealing it owed to SeaWorld, and violated SeaWorld’s right to quiet possession of the Premises and its right to occupy and use the Premises for the purposes authorized, and required, under the Lease.
SeaWorld was instead authorized to remain in possession of the Premises and to make reduced rent payments to the City during the periods when the City had closed the Park or ordered the Park to only open with limited operations.
In all, the San Diego park, which shut down and reopened at various times in response to state and local orders, was closed for a total of 15 months, fully reopening in June of 2021, SeaWorld states in its legal brief.
While a trial is scheduled for next year — a final pretrial conference is set for Aug. 18 — SeaWorld wants to bypass that and have a decision rendered by as early as this December.
SeaWorlds latest motion was filed just a day before a mandatory settlement conference was held on Wednesday before Magistrate Judge Daniel E. Butcher. The judge set a follow-up settlement hearing for Nov. 21.
San Diego City Attorney Mara Elliotts office would not comment Thursday on the motion for summary judgment. However, at the time the citys lawsuit was filed in September of last year, Elliott noted that SeaWorld took the position that because it was impacted by the pandemic, it should be relieved of its lease terms and the city should just swallow the losses, which we’re not willing to do. She added, This is a very lucrative company that’s done well. We’ve got a long-term relationship and we expect them to pay what’s due, just like everybody else did.”
Long before the lawsuit was filed, city officials had consistently argued that no exceptions were made for any of the hundreds of tenants that leased city-owned land during the pandemic, which forced shutdowns or limited operations of many businesses, including hotels and restaurants.
While the city agreed early on to defer rent payments for a time to help struggling tenants like SeaWorld recover financially, that concession ended in mid-2021, and the city offered instead a 24-month payment plan. Some of the city’s tenants took advantage of the plan, but SeaWorld never did, maintaining all along it was not subject to the city’s base minimum rent during the park closure time frame. Its base rent at the time was $10.4 million, plus a 3 percent surcharge.
SeaWorld remains the only city lessee out of more than 800 tenants in default for unpaid rent.
While the theme park blames the forced closures of its Mission Bay operation on the city of San Diego, it acknowledges there were also state and federal orders related to pandemic shutdowns. But it makes a distinction between San Diego and those other mandates.
In response to this motion, SeaWorld expects the City will argue that it did not cause any harm or damage to SeaWorld because it did not directly cause or require SeaWorld to close, but that instead federal, state, and county closure orders caused SeaWorld to close, and that the City was merely following federal and state orders and requirements when it issued its own closure orders, SeaWorld wrote in its brief. These arguments are self-serving and unavailing in equal measure. It is undisputed that the City did not just follow or adopt closure orders issued by other entities, but issued its own, stricter, closure orders.
Hedging its bets, SeaWorld also invoked the force majeure clause in its lease that it says bars the citys claim against SeaWorld. The clause, sometimes referred to as an “act of God” clause, can be raised on rare occasions like natural disasters to relieve parties of their contractual obligations when circumstances are outside of their control.
Elliott predicted last year that SeaWorld might try to invoke the clause in its legal fight but told the Union-Tribune that in California, landlords have prevailed in COVID-19 force majeure cases.