In a 79-page legal brief filed Monday in federal appeals court, a lawyer representing the owners of White Flint Mall contends that a lower court failed to follow the law when it denied a jury the opportunity to consider whether Lord & Taylor would benefit financially from the estimated $800 million redevelopment of the Rockville Pike mall site.
The brief is the first step in the appeal process after a jury awarded Lord & Taylor $31 million in damages following a trial that concluded in August in U.S. District Court in Greenbelt.
“By excluding the bulk of White Flint’s defense, the District Court effectively handed Lord & Taylor an enormous damage award,” Scott Morrison, an attorney representing mall owners Lerner Enterprises and The Tower Cos., wrote in the brief.
The appeal, filed in the U.S. Court of Appeals for the Fourth Circuit in Richmond, Virginia, is the latest volley in the ongoing legal battle between the two sides that began in 2013. The disagreement rests on whether the mall’s owners violated a 1975 easement agreement with the retailer to maintain the mall as a “first-class” enclosed shopping center and how much in monetary damages Lord & Taylor should receive as a result of the alleged violation of the agreement.
The brief argues that District Court Judge Roger Titus made a mistake when he instructed the jury not to consider the potential positive effects of redeveloping the mall site into a mixed-use town center. Morrison writes that White Flint had presented five days of testimony showing the financial benefits of the redevelopment for the Lord & Taylor store. The mall, which is being demolished, shares a wall with the store.
The jury award in the case matched the high end of the store’s estimated lost profits—which an expert witness for Lord & Taylor cited at between $23.3 million to $31.1 million over a 10- to 13-year construction period. But the brief argues that had the jury been able to consider estimates of what the store might earn as part of the redevelopment, it may have arrived at a lower figure when awarding damages because Lord & Taylor’s easement agreement lasts until 2042—giving the store ample time to recoup profits it may lose during demolition and construction.
Morrison also noted that Lerner’s executives testified that the construction period for the first phase of the redevelopment, which would include the construction of a central piazza and new mixed-use commercial and retail buildings surrounding the Lord & Taylor building, could be completed as early as January 2019.
Lord & Taylor’s attorneys argued during the District Court trial that the store’s potential earnings as part of the future development are too speculative and therefore should not be considered.
The appeals brief also argues:
- That the District Court erred in allowing a Lord & Taylor construction executive to estimate that a new store would cost $36 million to construct without providing evidence supporting that cost.
- That Lord & Taylor should have been required to provide financial information about the performance of all its stores, rather than just its Washington, D.C.-area stores.
Now that White Flint’s brief is filed, the next step in the appeals process is for Lord & Taylor to file a brief stating its opposition to the appeal. The court then would rule on the briefs or call for oral arguments in the case, according to a clerk at the Fourth Circuit. It’s also possible that mediation could result in a mutually acceptable resolution for both sides.
The legal battle has stalled the redevelopment of the mall site. In 2012, Montgomery County approved a sketch plan for the location that calls for 5.22 million square feet of residential, retail, office and hotel development with building heights as high as 250 feet and a site for a future elementary school.
Morrison said in an interview with Bethesda Beat shortly after the jury verdict was announced that the redevelopment won’t occur if the jury’s judgment in the case is not reversed on appeal. However, an attorney for Lord & Taylor called that statement “legal posturing and scare tactics.”
