Dillard's Slapped With Countersuit From Texas Mall
24 Aprile 2009 - 11:05PM
Dow Jones News
In response to a lawsuit alleging neglect, a Texas mall has
countersued Dillard's Inc. (DDS) claiming it was subject to a smear
campaign by the retailer which is vying to get out of a lease.
The legal sparring comes at a time when many mall landlords and
their tenants wrangle over rent concessions and lease terms as a
brutal recession forces massive store closures and retailer
bankruptcies.
In late March, Dillard's asked the U.S. District Court, Western
District of Texas, Austin Division, to void a lease in Highland
Mall, which is owned by Simon Property Group (SPG) and bankrupt
General Growth Properties (GGWPQ).
The retailer claimed in the court filing that Highland Mall was
allowed to deteriorate with high vacancies and a poor tenant mix
which impacted its business. Dillard's also said the mall was slack
on maintenance, including not repairing store damage caused by a
leaky roof.
Highland Mall denied the claims and also sought damages from
Dillard's for harming its reputation and turning away new
tenants.
"These statements harmed and continue to harm Highland's
economic interests, including, its reputation in the industry,"
said the complaint filed this week. "Dillard's statements were made
with malice in an effort to prevent Highland from placing potential
tenants in Highland Mall."
A Dillard's spokeswoman declined to comment.
"We do not comment on pending litigation," said Lesley Cheers, a
spokeswoman for General Growth, which manages the property.
Although similar lawsuits have been filed before, they're
uncommon outside of bankruptcy proceedings. But, analysts
anticipate more to come with many cash-strapped mall landlords
having less to spend on maintenance while working harder to attract
and retain desirable tenants.
Some analysts say Dillard's lawsuit could sour the company's
relationship with its landlords.
"To step out and sue is a major issue," said Rich Moore, an
analyst at RBC Capital Markets, adding that Dillard's has many
deals with Simon Property and General Growth.
"You may win one (battle). But, what does it do to your next
negotiation," Moore said.
-By A.D. Pruitt, Dow Jones Newswires, 201-938-2269;
angela.pruitt@dowjones.com
(Karen Talley contributed to this report)