The transformation of White Flint Mall into an open-air, mixed-use development can proceed while Lord & Taylor continues its lawsuit against the mall’s owners, a federal appeals court ruled.
The 4th U.S. Circuit Court of Appeals issued a one-page order denying Lord & Taylor’s request for a temporary injunction against White Flint Mall LLP.
In the suit filed last July, Lord & Taylor says White Flint violated the anchor’s original construction agreement by planning a massive redevelopment of the North Bethesda mall.
White Flint has argued in counterclaims that the New York-based retailer waited until millions had been spent on the project before bringing the lawsuit.
“It basically leaves Lord & Taylor with a damages remedy, not an injunction remedy, which means the development is going to go ahead full speed,” said White Flint’s attorney S. Scott Morrison, of Katten Muchin Rosenman LLP in Washington, D.C. “We don’t believe Lord & Taylor will be able to prove any damages because reports indicate the redevelopment will probably double their annual gross sales.”
White Flint says Lord & Taylor has known of its plans since 2009 and waited until the last minute in order to collect a bigger payment from White Flint, which it hoped would pay more rather than risk construction delays.
Lord & Taylor’s attorney, David G. Barger of Greenberg Traurig LLP in McLean, Va., did not respond to a request for comment.
The appellate court on Friday upheld a ruling by U.S. District Judge Roger W. Titus, who dismissed the request for injunctive relief in December.
Lord & Taylor quickly took its quest for an injunction to the 4th Circuit, and a week later filed a motion to halt proceedings in the federal court until the pending the appellate court’s decision.
Titus issued an opinion in early February explaining that he would not delay the litigation, saying the store was seeking to maintain a status quo that no longer exists.
“When there is a degree of delay, the extraordinary remedy of injunctive relief is granted only with great care and caution…,” Titus wrote. “The project is well into the advanced stages, such that it is no longer a practical option to maintain the mall in its current state.”
Then and now
Lord & Taylor was one of the original tenants when White Flint opened just off Rockville Pike in the late 1970s. Developers now plan to replace the enclosed mall with more than 5 million square feet of shops, offices, homes and even a hotel in multiple phases over the next 25 years.
However, the retailer’s lawsuit claims the development plan required its approval under the terms of its 1975 contract with the mall.
The Construction, Operation and Reciprocal Easement agreement bars White Flint from making changes regarding design, appearance, size, location of buildings, number of floors, pedestrian vehicle traffic, or increasing office space to more than 100,000 square feet, without the department store’s blessing, the complaint alleges.
Lord & Taylor claims the redevelopment plan runs afoul of that agreement by changing the vehicle and pedestrian flow and architecture and exceeding the 100,000-square-foot limit on office space.
White Flint, however, contends the department store knew of its plans since early 2009, collaborated with the mall on the changes and never objected during approval hearings before the Montgomery County Planning Board and County Council.
“They know, the county knows this is going to be a great project for all tenants in the mall and for the county so they should be behind it not fighting it,” Morrison said.
The mall has already spent $6 million to get the plans approved and $7 million in pre-development work and has signed $24 million worth of contracts with architects and contractors.
In its countersuit claiming breach of contract and tortious interference with prospective economic advantage, the mall says Lord & Taylor’s lawsuit will stall its construction plan and put its negotiations with potential tenants for the mall at risk. The mall asked for $1 billion in compensatory damages for each count.
The White Flint Sector Plan was approved by the Montgomery County Council in March 2010. Demolition of the mall began early this year.
The case is Lord & Taylor, LLC v. White Flint, L.P., f/k/a White Flint Mall LLP, US 4th No. 13-2548; U.S. District Court No. 8:13-cv-01912-RWT.