Art league sued for breach of contract

The Rehoboth Art League’s attempt to operate a satellite campus on Route 9 in Lewes ended in March when the league vacated an exhibition and studio space at the Vineyards.

Now, the company that owns the building is suing the league for $31,000 in unpaid future rent the company says the league owes. The league has asked a Delaware Superior Court judge to dismiss the suit.

Vineyards 3E Holdings LLC, a New Jersey-based company, owns the building in the Vineyards where the art league had set up a satellite campus in March 2015. According to the suit, the art league agreed to a five-year lease with payments starting at $58,000 the first year and escalating to $76,000 in the final year. The contract specifies in the event of a default, Vineyards 3E has the right to collect unpaid rent and other related costs.

The suit said the art league paid the rent from June 1, 2015, the date of the first scheduled payment, until February. In March, Vineyards 3E’s suit alleges, the art league paid no rent and defaulted. The art league did not pay within 10 days and vacated the building March 26.

Vineyards 3E is seeking $31,000 in back rent plus money for damages, interest and attorneys fees.

The art league argues Vineyards 3E is not entitled to collect lost future rent, but only to terminate the lease and take possession of the leased property. In a motion to dismiss, Mark Dunkle, attorney for the art league, said Vineyards 3E terminated its lease with the art league March 21. The league vacated the premises and Vineyards 3E repossessed the building March 31.

Dunkle argued commercial leases are not subject to landlord tenant code but to general contract law. Under the lease’s termination agreement, he said Vineyards 3E is not entitled to recover future rent. Dunkle said the landlord set March 31 as the date of termination, cutting off any rent payments beyond that. Both parties agree the art league owed $5,000 in past due rent for March. However, Dunkle said the league paid a $6,400 security deposit upfront, which fully compensates Vineyards 3E for the March rent.

Finally, Dunkle argued that Vineyards 3E has chosen to terminate the lease and recover the space. He said Vineyards 3E is now attempting a “double recovery,” in getting both possession of the building and rent payments. Dunkle said the law limits the landlord to only one form of recovery. He is asking Delaware Superior Court Judge Richard Stokes to dismiss the suit with prejudice.

The art league opened the 6,500-square-foot facility as a gallery and studio. The league announced its closure in early March. All events that were to have taken place there were moved to the league’s main campus in Henlopen Acres.

Art league President John Schroeder said the genesis of the campus was to serve a demand from patrons who lived outside Henlopen Acres. He said the art league studied opening a facility on Route 9 and came upon the space at the Vineyards. Unfortunately, Schroeder said, the revenue the facility was expected to generate did not materialize and the costs to maintain the campus were having an impact on the art league’s financial resources. At that point, he said, the league made a business decision to cut ties.

“It was a tough decision,” Schroeder said. “But it was in the best interests of the future of the Rehoboth Art League.”

The motion to dismiss will be heard at a Delaware Superior Court hearing at 11 a.m., Friday, Oct. 7, in Georgetown.