Litigation » High Court Says Giant Brick and Mortar Relic Can Contest Weird Lease

High Court Says Giant Brick and Mortar Relic Can Contest Weird Lease

Washington, D.C., USA - July 11, 2014: American Bar Association in the Union Trust Building, opened 1906, architect George A. Fuller, Neoclassical style, 740 15th Street, sunny day, no people

May 15, 2023

When the Mall of America opened in Bloomington, Mn. in 1992 it was hailed as the ninth wonder of the world, a 5.6 million sq. foot indoor shopping mall with more than 300 retail stores, including anchor tenants Macy’s, Bloomingdale’s, Nordstrom, and Sears Roebuck and Co. Three decades later the anchors are artifacts, and the MOA is more often in the news as a crime scene than a global shopping destination, but the U.S. Supreme Court recently handed it a victory of sorts. The Sears lease, signed in 1991, was for a base rent of $10 per year, and ran for 99 years. When Sears declared bankruptcy it didn’t have many liquid assets, but it treated the lease as one of them and tried to assign it to a third party. The United States Bankruptcy Court approved the assignment over MOA’s objection. The dispute was resolved in favor of Sears, when the Second Circuit Court of Appeals decided it lacked jurisdiction in the matter. MOA asked for cert to the Supreme Court. It was granted, and the Court recently decided that federal statutes should only be interpreted as limiting courts’ jurisdiction when there is a “clear statement” that Congress intended such an interpretation, which is lacking in this case. The issue on remand will be whether the assignee is able to provide “adequate assurance of future performance” under the lease — in other words, do what an anchor tenant is supposed to do, draw throngs of shoppers to a mall.

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