Dillard’s v. Highland Mall: Lease Agreement Battle Continues

Austin’s Federal District Court remains the battleground for a bitter contractual dispute between Dillard’s department store and the Highland Mall.

Dillard’s filed suit about a year-and-a-half ago in an effort to end its contractual relationship with the mall. Although Dillard’s signed a leasing agreement with Highland in 2007 to remain in the Austin mall until 2017, the store is now seeking a legal avenue that would let it leave the shopping center.

The Root of the Problem

Dillard’s efforts to end the business relationship stem from a significant decrease in Highland Mall shoppers and tenants; presumably resulting in lower amounts of sales income than Dillard’s envisioned when it signed the lease. The department store claims that Highland’s climbing vacancy rate is a breach of its guarantee to remain a “first-class mall”.

Highland Mall counters by pointing out that its vacancy rate was increasing before Dillard’s ever signed the lease in 2007. Highland contends that Dillard’s had or should have been aware of the mall’s dwindling occupancy rate – the current vacancy rate of 50 percent should not be a surprise to the department store. The mall has stated that it cannot survive without Dillard’s as its tenant.

The Lawsuit’s Status

The contractual litigation is likely to end only with the District Court’s decision, but Highland seems to be doing everything in its power to delay the progress of the lawsuit. For now, Dillard’s remains a tenant in the mall and Highland hopes it stays that way for as long as possible, ideally until 2017. In contrast, Dillard’s is pushing for a rapid resolution – one that allows it to close its Highland location.

The court has not yet set dates for hearings, but it appears that the parties will have a courtroom face-off in the near future.

Source: Austin Business Journal