The Law

Blight Fight by Ron Davis Payment of $10.2 million will go to the owners of a city-appropriated Ohio shopping center. But so far none of the center’s major tenants can share in the bounty. The shopping center, located in Cuyahoga Falls, became the target of the appropriation two years ago. That’s when city officials decided to eliminate blighted portions in that area where the center is located. The center’s owners fought the takeover, but they finally agreed to the $10.2-million settlement. In agreeing to pay that settlement, the city apparently believed that the matter was resolved. That wasn’t the case, however. A major tenant of the shopping center—Moran Foods, Inc., doing business at the shopping center as a Save-A-Lot unit—demanded a share of the proceeds from the settlement. In response, the city contended that none of the center’s tenants had any further right to challenge the necessity of the appropriation. City officials explained that the Save-A-Lot lease with the center automatically terminated when they reached the settlement agreement with the center’s owners. Save-A-Lot replied that as a leaseholder, it shared, under Ohio law, an ownership interest in the property. Moreover, Save-A-Lot pointed out that when it first leased space at the shopping center, it spent large sums of money on trade fixtures, facility improvements, plus business interruption and relocation expenses related to the move to that shopping center. An Ohio court accepted the city’s construction of the termination provision and found that Save-A-Lot’s lease expired when the shopping center’s owners accepted the terms of the appropriation settlement. That meant that Save-A-Lot no longer had any interest in the shopping center property and had no right to challenge the appropriation or to receive any compensation from the city. Save-A-Lot appealed that decision. An appellate court agreed with the lower-court ruling, explaining, “The city had agreed to pay compensation for the whole property, and Save-A-Lot did not contend that it was entitled to anything more, just that it was entitled to share in the compensation award that the city paid. Because the city had settled with the shopping center’s owners for the total compensation that it would pay for the property, Save-A-Lot had no separate claim against it for compensation in the appropriation action.” Save-A-Lot does not remain without further options, however. The company has also taken legal action against the center’s owners, seeking compensation from their settlement with the city. (State Road Associates v. Moran Foods, Inc., dba Save-A-Lot Ltd., 2009 WL 1682122 [Ohio App. 9 Dist.]) Decision: June 2009 Published: June 2009