Lerner settles suit over White Flint overhaul

ROCKVILLE — The redevelopment of White Flint Mall has cleared another legal roadblock.

Lawrence E. Lerner, whose brother was one of the original managing general partners of the mall, has settled the suit he filed against other members of the partnership to stop the proposed overhaul.

The agreement was announced in Montgomery County Circuit Court last Monday, the day the breach of contract trial was scheduled to start. Lawyers for Lerner and Ronald D. and Gary M. Abramson, the other managing general partners of White Flint Mall LLLP, asked for another 45 days to work out the details of the settlement.

An outline of the agreement was given to Judge Anne K. Albright and immediately sealed. Albright scheduled a status conference for Feb. 20.

The resolution of Lerner’s case leaves one last lawsuit challenging the redevelopment plan: a suit by anchor tenant Lord & Taylor. A federal appellate panel ruled in March the redevelopment can continue while the litigation is pending. In July, a U.S. District Court judge ordered restaurant chain Dave & Buster’s out of its location at the mall, ending a dispute over whether the redevelopment plans violated the restaurant’s lease.

Lord & Taylor is the only store still open at White Flint, which closed its mall entrance last week after more than 37 years in business. Redevelopment plans call for the demolition of the enclosed mall and replacing it with more than 5 million square feet of shops, offices, homes and even a hotel in multiple phases over 25 years.

Lawrence Lerner alleged he only learned of the redevelopment plans through news reports in the late 2011. His lawsuit also claimed the Abramsons had spent $13 million in pre-development work and were entering contracts totaling $24 million toward redevelopment plans, which “drastically exceeded the scope” of the partnership agreement.

Lerner moved to dissolve the partnership in September 2012 after being “kept in the dark about the financial details” of the redevelopment project.

Jeremy W. Schulman, a lawyer for Lerner and his family, declined to comment on the settlement. Schulman is a shareholder with Shulman, Rogers, Gandal, Pordy & Ecker, P.A. in Potomac.

Lawyers for the Abramsons, in court documents, countered that the partnership agreement limited their liability to instances of actual fraud, gross negligence or dishonest conduct. They also claimed the money spent on redevelopment was within the “express authority of winding up the business” of the partnership.

John M. “Jack” Quinn, a lawyer for the Abramsons, did not respond to requests for comment. Quinn is with Ethridge, Quinn, Kemp, McAuliffe, Rowan & Hartinger in Rockville.

James M. Brault, a lawyer for White Flint Mall LLLP, also did not respond to requests for comment. Brault is with Brault Graham LLC in Rockville.

White Flint Mall LLLP was formed in 1972 by Theodore N. Lerner and Albert “Sonny” Abramson, according to the lawsuit. Theodore Lerner, who also owns the Washington Nationals, eventually assigned his interest to his real estate company, Lerner Enterprises LLC. He is part of the lawsuit.

Abramson, the founder of Rockville-based The Tower Cos., died in 2012, at which point his sons became general managing partners.

Lawrence Lerner, his wife and three children own a 14 percent limited partner interest in White Flint Mall LLLP, while Lawrence Lerner also owns a 2 percent general partner interest in the partnership. The lawsuit alleges that Ronald and Gary Abramson asked the Lerners to make loans to the partnership totaling $30 million to be used “exclusively as a mechanism for financing the defendants’ unilateral redevelopment plans.”

Lerner claims he only found out about the true scope of the redevelopment when White Flint Mall LLLP filed a counterclaim against Lord & Taylor in August 2013. The federal court filing indicated the partnership would invest $4 billion in the redevelopment plan — “completely contrary to the managing general partners’ repeated, explicit representations,” the Lerner lawsuit states.

The counterclaim also stated the redevelopment would generate $1 billion in profit in 10 years, which Lerner alleges was the first time he saw a profit projection for the project, according to the lawsuit.

The Montgomery County case is Lawrence E. Lerner, et al., v. Ronald D. Abramson, et al., 384006V.