Real Estate & Property Law

Syracuse Macy's Condemnation

By Alan Ackerman

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!

Full post as published by National Eminent Domain Blog on May 29, 2009 (boomark / email).