Monfort sues downtown hotel over ‘bad faith mission’ to terminate 7-Eleven lease

The owner of the 7-Eleven at 1550 Court Place has sued its landlord, who owns the Sheraton Denver Downtown Hotel. (Photos by Thomas Gounley)

Denver’s largest hotel apparently doesn’t thank heaven for its 7-Eleven.

The owner of the convenience store at the corner of 15th Street and Court Place last month sued its landlord, the Sheraton Denver Downtown Hotel.

7-Eleven owner Kenneth Monfort, the son of Rockies co-owner Charlie Monfort, alleges hotel ownership “embarked on a bad faith mission to terminate the lease” for the store immediately after Monfort purchased it in October.

Kenneth Monfort (LinkedIn)

In the lawsuit, Monfort suggests the Sheraton wants the convenience store to go because of an $80 million makeover the hotel began last year.

Tony Dunn, the general manager of the 1,231-room hotel at 1550 Court Place, did not respond to a request for comment.

According to the lawsuit, Monfort bought the store from 7-Eleven corporate, which signed a lease for the space in the hotel building in September 2011. The lease extends for 10 years, with a five-year option after that. The store opened in February 2012.

In October 2018, the Sheraton hotel was purchased by Denver HS-EF Court Place LLC, described as a joint venture between High Street Real Estate Partners of Atlanta and Eagle Four Partners of Newport Beach, California. Neither firm responded to a request for comment.

In August 2019, the new ownership began what it described as an $80 million renovation package.

7-Eleven has operated at the site since 2012.

Monfort’s 7E CO Holdings LLC took control of the 7-Eleven at 1550 Court Place on Oct. 8, paying $7.25 million for it and eight other stores, according to the lawsuit. As part of the deal, the existing lease was assigned to the new ownership.

One day later, on Oct. 9, hotel ownership “conducted a surreptitious inspection” of the store, despite the lease calling for 24-hour notice to be given in non-emergencies, the lawsuit claims. On Oct. 10, hotel ownership said 7-Eleven was not complying with the lease. It cited, among other things, unclean glass doors and windows, a weathered sign and the fact that a bicycle was inside the store.

The store had never been given a default notice prior to it being purchased by Monfort, according to the lawsuit.

The store addressed the issues, the lawsuit states.

In an Oct. 31 phone call, a partner at Four Eagles — one of the hotel’s co-owners — said “yes” when asked if he wanted 7-Eleven out of the building, and asked how much money Monfort would want to be bought out of the lease, according to the lawsuit. No agreement was reached.

In November, hotel ownership again inspected the store without notice, the lawsuit states. An attorney representing the landlord later claimed this was OK because the convenience store is open to the public. The inspection resulted in another default letter, this time for things such as an open cleaning closet door, according to the lawsuit.

After another unannounced inspection in December, hotel ownership sent a notice stating that the store’s lease would be terminated on Dec. 19, according to the lawsuit, which was filed Dec. 18. As of Monday afternoon, the business was still operating.

The lawsuit states that Monfort has “significantly improved the condition and performance” of the store since buying it, citing changes that include replacing the store manager, expanding the assortment of products offered and reducing product placement on the sales counter. The lawsuit accuses hotel ownership of breach of lease, and breach of the implied duty of good faith and fair dealing.

Monfort is represented by attorneys Mark Willis, Kelly Kilgore and Thomas Isler of Kutak Rock.

Kenneth Monfort’s business activities in Denver extend beyond 7-Elevens. He and partners purchased the LoDo’s Bar & Grill chain in late 2018, and plan to convert its downtown location to a Dierks Bentley’s Whiskey Row restaurant. He and a partner also paid $2.9 million last May for a building in Ballpark, which they plan to renovate.

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