PFG trucks can be seen in the parking lot of its distribution center on Ranco Road in Henrico County. (BizSense file photos) This ongoing legal battle between Performance Food Group and its landlord, Ranco-Ric LLC, has drawn significant attention. The locally based Fortune 500 food distribution giant is not willing to leave its 332,000-square-foot facility without a fight.

The Battle for Henrico's Food Distribution Hub

Initial Lease and Renewal Disputes

In recent weeks, PFG sued the warehouse's owner for refusing to recognize its lease renewal claims. This move followed the landlord's lawsuit earlier in the year, arguing that PFG had violated the lease agreement and was ineligible for renewal. PFG's trucks were still loading and unloading at the Ranco Road facility after the conclusion of its initial 22-year lease on September 30. The company claimed it had appropriately initiated a five-year extension. 1: PFG's complaint stated that instead of honoring its contractual obligations, the landlord embarked on a campaign of harassment to force PFG out of the facility so that it could obtain higher rent from someone else. This shows the seriousness of the situation and PFG's determination to hold onto the property. 2: Ranco, on the other hand, argued in an amended complaint that PFG continued to unlawfully occupy the property. The landlord claimed PFG failed to meet its obligations to maintain the facility and defaulted on the lease. This highlights the different perspectives in the dispute and the complexity of the legal issues involved.

Alleged Facility Issues and Responsibilities

The landlord claims that the Henrico facility, with its dry and cold storage capabilities, warehouse and office space, is in need of $5.6 million of work. Ranco discovered the warehouse's issues in 2021 after PFG informed the landlord of its plans to exit the property and move to Hanover. PFG later changed course and now operates in both facilities. 1: Ranco stated that PFG "unexpectedly" informed the landlord of its intention to leave in early 2021. The landlord said it didn't know about PFG's plans until the governor's office announced the project in late 2021. This shows the lack of communication and coordination between the two parties at the beginning of the dispute. 2: As part of the move-out process, Colliers was tapped to do an inspection of the facility, which identified various problems. Ranco argued that PFG was on notice of its failure to maintain the property but PFG argued that the report wasn't an actual default notice.

Renewal Rights and Communication

PFG determined it was responsible for $1.3 million worth of work identified in the report. The company argued that an event of default involves specific conditions and that most of its interactions with the landlord regarding alleged defaults occurred over email, which didn't meet the requirements. 1: Between 2022 and early 2023, Ranco's brokers led tours of the facility with prospective tenants. PFG representatives communicated their intention to vacate the facility during this period. Ranco argued that these communications constituted PFG relinquishing its renewal rights. 2: However, PFG argued that the emails during this period did not constitute a formal relinquishment of its ability to renew the lease. The company said the correspondence was not an official statement regarding a move to exit the property under the lease agreement.

Final Stages of the Dispute

In April 2023, Ranco sent its final notice of default. PFG reported completing all the work that fell under its purview in early June 2023, but Ranco argued that it provided insufficient proof and determined that PFG hadn't done the work it claimed. 1: Ranco sued PFG over the lease dispute earlier this year and the court ruled against its initial motion for a declaratory judgment. Ranco then filed an amended complaint claiming breach of contract and seeking various remedies. 2: PFG also claimed breach of contract and seeks a court order that allows it to remain in the facility. Ranco is seeking a court order forcing PFG to vacate the property, pay repair and maintenance costs, and grant it ownership of PFG's property at the plant.PFG stated that the landlord agreed to allow it to continue to operate at the site through June 2025. Ranco declined to comment through an attorney and PFG didn't respond to requests for comment. Attorneys Noah Sullivan and Ryan Starks of Gentry Locke are representing Ranco and PFG is represented by Ryan Frei, Patrick Dillard and George Martin of McGuireWoods.