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Benderson Development bought the 7.5 acre property housing the 96,000-square-feet former Dillard’s for $10 million in 2014.
Sarasota Thursday, Jun. 2, 2016 5 years ago

Westfield, Benderson and Dillard’s settle lawsuit

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Following a lengthy legal clash, L.A. Fitness is slated to open in the former Dillard’s department store at Westfield Southgate Mall.

An agreement between Westfield Southgate Mall, Benderson Development Co. and Dillard’s will allow Westfield to purchase a key piece of the Southgate property from Benderson by 2017 and bring in new anchor tenants.

It also ends a nearly two-year lawsuit in which the Sydney, Australia-based Westfield accused Dillard’s and Benderson — which also owns rival Mall at University Town Center — of conspiring to damage the Southgate mall.

The three companies settled the suit May 27, according to court documents. They also stipulate the suit cannot be refiled. Full terms of the settlement were not disclosed.

Benderson Director of Development Todd Mathes said his firm has already lined up one new tenant for former Dillard’s space it owns at Southgate: An L.A. Fitness will occupy just less than half of the 96,000-square-foot space and is scheduled to open in spring 2017. The firm has applied for a $60,000 building permit for interior renovations, according to city records.

Westfield will still redevelop and rebrand the mall as Westfield Siesta Key, according to an agreement Benderson and Westfield signed May 26, but its plan is less ambitious than the 243,000 square feet of new retail space and 1,200-space parking garage it originally proposed in 2007 — in which the participation of Dillard’s was key.

“We are working on the remainder of the space,” Mathes wrote in an email to the Sarasota Observer, though he declined to comment on the litigation.

Westfield Executive Vice President of Corporate Communications Katy Dickey declined to comment on the litigation, citing company policy. Although she had no updates on the mall’s timeline for redevelopment, announcements could come soon, she said.

Legal counsel for Dillard’s, Carlton Fields attorney Steven C. Dupré, did not respond to phone calls seeking comment Tuesday and Wednesday.

Litigation history

In 1992, Dillard’s signed an operating agreement with Westfield that included a stipulation that required it to remain a “first-class department store,” Westfield’s suit alleges.

From 2007 to 2012, the two parties worked in concert to plan a redevelopment that included adding a second story to Dillard’s, a pedestrian walkway to the department store from a parking garage and a roundabout at Siesta Drive near the east side of the mall, according to development applications filed with the city.

However, Westfield alleges Dillard’s stopped responding to inquiries about the redevelopment plan beginning in 2013.

The suit states that Dillard’s and Benderson likely started collaborating some time around 2011, as the department store planned to open in the Mall at UTC.

In April 2014, Dillard’s Vice President Chris Johnson sent an email to Sarasota Senior Planner Courtney Mendez rebuking its endorsement of four development applications for the project.

Wrote Westfield’s lawyer, Christopher Torres, in the initial complaint:

“It is clear now that Dillard’s drawn out dealings regarding the expansion were a pretext to mislead Southgate so that (Dillard’s) could complete its plan to relocate to UTC. UTC will be a direct competitor of Southgate and, therefore, (Dillard’s) and Benderson did not — and still do not — want Southgate to be able to complete the expansion, despite Dillard’s longstanding support.”

Benderson purchased the Dillard’s property at Southgate for $10 million in October 2014, according to property records; Dillard’s opened in the Mall at UTC that same month.

The suit claims the chain planned to operate a clearance store or leave the anchor space vacant, a violation of the 1992 agreement.

Dillard’s closed its Westfield location Dec. 29, 2014, and the store cleared out its inventory.

“The building has been vacant and dark ever since,” Torres wrote in a third amended complaint filed Sept. 4, 2015.

In December 2015, 12th Judicial Circuit Court Magistrate Deborah Bailey recommended dismissal of six of the eight claims against Benderson and Dillard’s but left open allegations of breach of contract and breach of covenant of good faith and fair dealing.

A new agreement

An operating agreement filed with the Sarasota Clerk of the Court states that Benderson, which owns the former Dillard’s building under subsidiary Siesta Retail LLC, must have certain tenants in place or Westfield will be allowed to buy the anchor building from Benderson in 2017.

Specifically, L.A. Fitness has to be open by next summer. Benderson must also sign a lease with Clive Daniel Homes, a luxury home furnishing and design store, or a substitute “reasonably compatible” tenant. Further, the tenants’ combined footprint in the space must exceed 70,000 square feet.

If Westfield were to move forward with a larger-scale redevelopment, it would need to accommodate increased parking demands, said Gretchen Schneider, general manager of Sarasota’s planning and development department, in a previous interview with the Sarasota Observer.

“Once they hit a certain threshold of that new development, they would have to build a parking deck,” Schneider said.

The developer spent nearly $3 million on interior renovations in 2014. And while the center has lost some high-profile tenants, including Coach and Starbucks, it has attracted a new CinéBistro. 

Another new tenant includes CycleBar, which is working on a $90,000 buildout for the indoor cycling franchise.

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