National Eminent Domain Blog : Eminent Domain Lawyer & Attorney : Ackerman Ackerman & Dynkowski : Michigan and Washington, DC

Syracuse.com

A judge has struck down an attempt by the Macy's Department Store at the Carousel Center to collect more than $50 million from the mall's owner in a dispute over the building's expansion.

Macy's filed a lawsuit in April 2008 accusing Carousel Center Co. of breaching a series of real estate agreements related to its store at the mall, which opened in 1990. The suit alleged that Carousel broke those contracts by "inducing" the Syracuse Industrial Development Agency to use its eminent domain powers to take away some of Macy's rights as the mall's biggest anchor store.

Macy's also is seeking compensation in a separate valuation proceeding as part of the eminent domain proceeding. But it filed the breach of contract claim after Carousel Center and the development agency took the position that any "consequential" damages arising from an eminent domain action are not recoverable under eminent domain law.

On May 19, Cherundolo granted Carousel's request that the lawsuit be dismissed. He said the store could make no claim against the mall's owner over an eminent domain action by a government institution, even if Carousel Center asked the government body to take the action.

He said the U.S. Supreme Court has repeatedly declared that every contract, whether between the state or an individual or between individuals only, is subordinate to the government's right to appropriate property or property rights.

"Whether enticed to do so or not, that was a decision made by a local government institution, one empowered by eminent domain, and one that has made an independent decision based upon its own needs and adequate public purpose," he wrote.

Without regard to the merits of the claim of inducement to take the tenant's rights, this is a prime example of the importance of a carefully drafted condemnation clause in a lease!

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Daily Herald

The former owners of an Arlington Heights strip mall sued the village in federal court Friday, seeking more than $5 million for losses allegedly due to the village scaring tenants away.

Ron Popp and Victor Valenti bought the Arlin-Golf mall, a short strip of stores off Arlington Heights Road just north of Golf Road in June 2001, said their attorney Joseph M. Williams.

Contrary to reassurances given by the village before the pair bought the property, Williams claims, the village announced six months later in January 2002 it was creating a tax increment financing district to redevelop the mall and the adjacent International Plaza at Golf and Arlington Heights Road.

In the meantime, Popp and Victor had put money into fixing the place up, which increased the occupancy rate to about 74 percent, Williams said. But the suit claims that village representatives repeatedly told prospective clients they were 60 to 90 days from taking the land by eminent domain and leveling the buildings.

In one case, the suit claims, a tenant the pair managed to land was told by the village that the municipality actually owned the land, which was not true, the suit claims.

Meanwhile, the suit claims the village paid one tenant, Bangkok Cafe, $30,000 to relocate, and other tenants fled, fearing the mall was doomed, Williams said.

Even though the pair could not retain tenants, the taxes on the property went from $27,000 when they bought to $60,000 when they sold late last year.

The village eventually paid $1.6 million for the Arlin-Golf mall, which the suit claims was less than its true $2 million value. Williams claimed Popp and Valenti sold only because of financial threats the village made against them and the fact that they were on the verge of financial ruin.

Additionally, the suit seeks over $5 million in lost rentals and other expenses.

The difficulty of obtaining tenants when an owner faces the prospect of condemnation is overwhelming. The eminent domain process is difficult under the best of circumstances. However, when one does seek rental reimbursement the local statutes and laws must be closely followed.

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South Town Star

With negotiations over the Orland Plaza at an apparent standstill, Orland Park has begun condemnation proceedings against the owners of the village's oldest shopping center.

Orland Plaza owners and the mall's tenants were notified Tuesday after the village board approved an ordinance Monday and filed court paperwork to begin eminent domain proceedings Tuesday.

But both village officials and the property owner say they're happy to return to the bargaining table to negotiate a deal for the land the village wants near 143rd and LaGrange Road. Orland Park wants to extend Jefferson Avenue, Ravinia Avenue and a third street into the new Metra parking lot and development as part of its $100 million Main Street Triangle project.

"It's definitely our intention to keep talking to the property owners," Orland Park's assistant manager Ellen Baer said. "That's our intention to keep moving with the property owner. At some point we have to get the (legal) process going. We would certainly prefer to come to an agreed-upon price with the property owner. They have not countered our offer. They rejected our offer. I couldn't even tell you how far apart we are."

Eminent domain is a government power to seize private property for the public good, with the government having to fairly compensate the property owner. To begin the process both the village and the property owner were to get appraisals of the property to begin negotiating a fair price. George Gee, one of the property owners, said his attorney asked the village for a copy of its appraisal, but didn't receive one. As a result the negotiations stalled.

…While the village is offering relocation packages for the businesses it is leaving negotiations over the leases up to the property owners. Some of the leases including options for renewal extend to 2020. She said each tenant's relocation package would be different. The tenants would receive 90 days notice before they had to move.

All too often, tenants are left with little relief when they and their landlords are condemned.  However, many states do have statutes, which at least partially protect tenants.  The Uniform Relocation Act is losing its potency, minor as it was, in many states because a project not utilizing Federal funds does not have to follow the Federal act.

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