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Jury rules White Flint Mall owners breached contract with Lord & Taylor

A sign directs shoppers to Lord &Taylor, the last store open at the former White Flint Mall. (Jonathan O’Connell/WP)

A federal jury ruled Friday that the owners of the White Flint Mall breached their contract with Lord & Taylor after attempting to close the shopping center in favor of building a town center.

The mall’s owners, Lerner Enterprises, led by founder and Washington Nationals owner Theodore N. Lerner, were ordered to pay $31 million in damages, about half of what Lord & Taylor sought at trial.

Jury members deliberated on the case for three days and deadlocked at 6-1, but court rules allow agreement among just six jurors for a verdict.

“We are very disappointed. It’s going to badly hinder White Flint’s efforts to redevelop the White Flint Mall,” said Scott Morrison, an attorney for the mall.

Morrison said demolition on the mall is still expected to be complete by January or February but that he wasn’t sure what would happen after that. The damage award, Morrison said, “affects the entire profit profile” of the town center project.

Morrison said Lerner expects to appeal. Lord & Taylor will continue operating at White Flint.

Held at the U.S. District Court in Greenbelt, the trial hinged on whether White Flint’s owners breached a 1975 contract with Lord & Taylor that set the terms for the store’s opening and required that the owners operate an “enclosed mall” around it.

In initial court filings, attorneys for Lord & Taylor asserted the department store was owed hundreds of millions of dollars in damages.

At trial, following a preliminary ruling by U.S. District Judge Roger W. Titus, the store’s damage requests were reduced to closer to $60 million. That included $35.4 million, their estimated cost of upgrading the Lord & Taylor building to fit its new surroundings, and $31 million in damages for lost business associated with the closure and demolition of the mall.

“We are gratified that the defendant, White Flint/Lerner, is starting to be held accountable for not honoring its word and intentionally breaching it contract with Lord & Taylor, and that all of its defenses were rejected,” said Lord & Taylor attorney, Michelle D. Gambino, attorney for Greenberg Traurig, following the verdict.

“We want to express our appreciation to our thousands of employees and millions of customers who have supported this store through thick and then.”

The mall’s owners argued they hadn’t violated the contract because they did everything they could to save the mall before deciding to redevelop it instead.

Rather than harm Lord & Taylor’s business, Lerner attorneys asserted that building a town center was the best way to move on from a failing mall that they had done their best to save but which they said was past the point of no return once Bloomingdale’s – which occupied about one-third of the mall – closed in 2012.

The damages could potentially have been higher had jurors not have been mostly barred from seeing the mall property as it exists today. They did not visit the site and a number of images of the mall’s demolition – some showing what one Lord & Taylor attorney termed “football fields of rubble” – were not permitted as evidence.

Instead, the department store’s attorneys repeatedly asked expert witnesses how their store was supposed to continue operating in the face of pressure from changing shopping habits and the nearby Westfield Montgomery mall, which has a Nordstrom’s

By the time Bloomindale’s closed in 2012, it was clear Lerner had moved on. That year Montgomery County initially approved the developer’s plans to demolish all but Lord & Taylor and replace it with a series of new shops, apartments, hotels and office buildings.

Stores with remaining leases were asked to accept buy-outs or to add termination clauses to their leases. Though at its peak the mall had some 160 stores, once Bloomingdale’s left, the mall’s longtime manager, Desharri Bell, testified that the hallways were so empty some days that staff joked about it resembling a bowling alley.

Attorneys for the mall owners argued that Lord & Taylor representatives participated willingly in planning the redevelopment of the mall and had indicated early on in the planning process that their store would do well in the town center project that White Flint’s owners envisioned.

Follow Jonathan O’Connell on Twitter: @oconnellpostbiz