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 centerís major tenants can share in the bounty.
The shopping center, located in Cuyahoga Falls, became the target of the appropriation two years ago. Thatís when city officials decided to eliminate blighted portions in that area where the center is located. The centerís 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 wasnít the case, however. A major tenant of the shopping centeróMoran Foods, Inc., doing business at the shopping center as a Save-A-Lot unitódemanded a share of the proceeds from the settlement.
In response, the city contended that none of the centerís 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 centerís 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 cityís construction of the termination provision and found that Save-A-Lotís lease expired when the shopping centerís 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, ďThe 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 centerís 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.Ē
Save-A-Lot does not remain without further options, however. The company has also taken legal action against the centerís 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