Area malls sue former tenants to recapture money lost

Credit: Journal News

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Liberty Center mixed-use dining, shopping and living complex

Credit: Journal News

Liberty Center seeks payment from restaurant, gaming center that never moved in

Liberty Center, Bridgewater Falls, Cincinnati Premium Outlets and the Towne Mall have all sued former tenants, which from a public relations standpoint may make them look like “bad guys” — but experts say it’s just business.

All told, the four mall properties have tried to recapture at minimum $1.34 million — plus interest and other charges — through breach of contract lawsuits after tenants either never materialized or closed up shop before their leases were up. The Towne Mall in Middletown is also in Warren County; those court records are not available online but there are at least 30 cases where the mall sued business owners.

Most recently, Liberty Center has sued former tenant Lotus Pad Asian Cuisine for $175,378 in outstanding rent; they claim In the Game owes them $855,641 for never moving into the mall development, and they sued the Moochie & Co. pet supplies store for $19,533 after it closed up shop in January 2018.

In the Game is the only former tenant being sued for never occupying space. The lawsuit claims Family Entertainment Group LLC signed a lease agreement to move an In the Game entertainment center into 16,879 square feet of space at the mall in Liberty Twp. The move-in date was supposed to be Sept. 19, 2019.

In the Game never materialized at the mall, and Liberty Center claims it is owed at least $855,641 in rent and late fees, plus other damages. Family Entertainment Group could not be reached for comment.

Lotus Pad and In the Game are still pending; Moochie & Co. settled after less than four months.

Liberty Center General Manager John Taylor told the Journal-News going to court is not their first course of action.

“It’s a common practice, just like if anybody breaks a contract; you negotiate, and if the two sides can’t work it out, oftentimes you go to litigation,” Taylor said. “It isn’t the ideal solution, not always, but it can create a new understanding or it can end another way. These things aren’t rushed into.”

Especially during the pandemic, Bayer Properties worked with their Liberty Center tenants to help them survive the crisis, according to President Libby Lassiter.

“To sit and do nothing is not the right answer, that’s why we were proactive with tenants through COVID in sitting down and talking, trying to understand their business and their sales, their cost to do business and working with them,” Lassiter said. “There has been no shortage in trying to work with any of these tenants.”

Bridgewater Falls has sued tenants three times, according to court documents: The Stash clothing store for $72,660, Euphoria Spa for $63,369 and the Butler County Republican Party for $39,704. The Journal-News reached out to the management company but they did not respond to a request for comment.

Bridgewater Falls sued The Stash women’s clothing boutique opened in February 2012 but closed up shop in August the next year. The lawsuit was filed in October 2013 and they claimed the owner owed $2,552 in back rent and $70,108 for the balance of the lease. According to court records the owner could not be located and the case was dismissed in April 2014.

ExploreLiberty Center sues third former tenant for more than $175,000

In the case of Euphoria Spa, which opened at Bridgewater Falls in 2007, they renewed their lease with new mall owners in 2009 and were given a deferral of part of their monthly rent obligation from $5,759 to $2,083. The total deferred amount of $54,901 was due in 2010, but went unpaid and they vacated the space in February 2011.

The lawsuit was filed in March 2011 and includes several other charges and interest for a total of $63,369. The case is intertwined with other legal actions and in an affidavit Euphoria co-owner William Schmidt said “I was advised that it was not intent of Bridgewater Falls to recover deferred rent despite the language in the proposed amendment to our lease.”

He also noted when the mall rented to Massage Envy it damaged their business and he believed violated the terms of his lease and there were other issues.

“Our business at Bridgewater Falls never performed in the manner Premier Properties represented and promised that it would. In light of that fact, we found it very difficult, if not impossible, to pay rent in the amount called for in the lease.”

The case was settled for $56,561 in March 2012 and it allowed for installment payments.

The Butler County Republican Party was also sued by Bridgewater Falls in December 2013. The GOP was having some financial difficulties and was sued for $10,898 in back rent and $28,805 in future rent. The case was settled four months later for an undisclosed amount.

Cincinnati Premium Outlets that resides in the Warren County portion of Monroe sued Subway in April 2019 for $16,782 for defaulting on their lease. The case settled less than three months later for an undisclosed amount.

The outlet mall also sued Shinola watch and leather goods retailer for $75,039 in unpaid rent and expenses after it vacated the premises in February 2020. A jury trial is scheduled for October.

There is one case in the Butler County courts where Towne Mall in Middletown sued Mad Caps in 2000 and won a default judgement for $24,635. The mall is listed as a plaintiff in 34 cases in Warren County but the Journal-News could not confirm whether all or any are breach of contract cases against tenants.

The majority of those lawsuits predate the recent trend of eschewing brick and mortar shopping venues for online purchases and the crippling COVID-19 pandemic. Taylor told the Journal-News Liberty Center owners have invested about $10 million in helping tenants survive the pandemic and attract new businesses.

Taylor said they have given rent relief to existing tenants and Yavonne Sarber, owner of Agave & Rye who has multiple locations, said Liberty Center was the only landlord to offer a rent break — and “it was huge for us.”

“When COVID hit we had four locations that were open and Liberty was the only one that made any kind of concession on rent,” Sarber said. “The other four landlords did not, we still had to pay every penny that was owed. Not only were they the only landlord that made any kind of concession but the only landlord that would even talk about it.”

Greater Hamilton Chamber of Commerce President and CEO Dan Bates told the Journal-News these lawsuits kind of make the landlords “like the bad guy” but the tenants were legally obligated when they signed leases and “you can’t just walk away.”

“Bills still have to be paid, and even if it’s big corporations that own these malls, business is business,” Bates said. “I’m empathetic to both sides, however, if you sign a lease that is a legal binding document and you promised to pay that lease.”

He encouraged tenants in financial trouble to try to work with their landlords before it gets to the litigation stage.

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