The curtain closed Friday afternoon on the latest act of the Shakespeare Theatre Company's lawsuit against its landlord, when a District of Columbia Superior Court judge denied the defendants' motion to dismiss.
The ruling set the stage for a December 10 hearing on the theater company's motion for a preliminary injunction. The company wants Judge John Ramsey Johnson to stop Lansburgh Theater, Inc., the non-profit organization that maintains the theater's building in downtown Washington, from going ahead with a proposed rent increase that the theater claims would threaten its ability to operate.
Friday's hearing offered a preview of arguments likely to come up at next week's hearing. An attorney for Lansburgh, Patrick Conner of Morgan, Lewis & Bockius, told Johnson that Lansburgh needed more funds to pay for costly capital improvements, especially since the theater company had failed to take care of day-to-day maintenance. If the theater company couldn't or didn't want to pay the necessary costs, he said, Lansburgh could find another organization to replace it under the terms of Lansburgh's articles of incorporation.
But an attorney for the theater company, Randall Miller of Arnold & Porter, offered a different interpretation of the legal relationship between Lansburgh and the theater company. Miller said Lansburgh was bound to support the Shakespeare Theatre Company and that while certain provisions of the articles of incorporation would allow Lansburgh to find another "supported" organization if the theater company completely collapsed, for instance, that wasn't the case here. He also said the theater had "begged" the landlord to make repairs, to no avail.
Lansburgh was created in 1992 as a non-profit organization with the sole purpose of maintaining the Lansburgh Theatre and supporting a designated charity – in this case, the Shakespeare Theatre Company. Lansburgh was given a $1 million donation, paid out in installments over 14 years, to help fund the theater's upkeep, but Conner said that Lansburgh's only significant revenue since those funds stopped coming in was the rent paid by the theater company.
Lansburgh and the theater company renegotiated the terms of the lease on several occasions, according to statements made by both sides during Friday's hearing.
The theater company sued Lansburgh and several individuals affiliated with the Lansburgh and the property in June, claiming that Lansburgh had asked for a 700 percent increase in base rent during the latest lease negotiations and was doing so at the property developer's behest to push out the theater company and open the door to potentially more lucrative uses (an allegation Conner denied at Friday's hearing).
The theater company has been allowed to continue using the Lansburgh Theater since filing the lawsuit. The company also puts on performances and programs in another downtown space called Sidney Harman Hall, but the dispute in Superior Court doesn't involve that building.
The preliminary injunction hearing was originally scheduled for October 29, but was rescheduled when the court closed because of Hurricane Sandy.