Aaron v. Target Corp.

• Decision Date: 03 July 2003
• Docket Number: No. 4:03-CV-429 CAS.,4:03-CV-429 CAS.
• Citation: 269 F.Supp.2d 1162
• Parties: Jeffrey S. AARON, as the trustee of the Sylvia H. Aaron Revocable Trust, et al., Plaintiffs, v. TARGET CORPORATION, et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

269 F.Supp.2d 1162

Jeffrey S. AARON, as the trustee of the Sylvia H. Aaron Revocable Trust, et al., Plaintiffs, v. TARGET CORPORATION, et al., Defendants.

No. 4:03-CV-429 CAS.

United States District Court, E.D. Missouri, Eastern Division.

July 3, 2003.

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Edward M. Goldenhersh, William J. Travis, John E. Petite, Greensfelder and Hemker, St. Louis, MO, Richard M. Goldstein, James K. Landau, Proskauer Rose, LLP, New York City, for Jeffrey S. Aaron, Adtar, LLC.

Mary M. Bonacorsi, Pamela J. Meanes, Paul T. Sonderegger, Thompson Coburn, St. Louis, MO, for Hampton Village Associates, L.L.C.

Gerard T. Carmody, Kevin M. Cushing, John E. Hilton, Kelley Field Farrell, Carmody and MacDonald, St. Louis, MO, for Target Corp.

Edward J. Hanlon, Mark Lawson, St. Louis City Counselor, St. Louis, MO, for St. Louis, Mo.

Jay L. Levitch, Henry F. Luepke, III, Stolar Partnership, St Louis, MO, for Land Clearance Redevelopment Corp. of City of St Louis.

MEMORANDUM AND ORDER

SHAW, District Judge.

This matter came before the Court for hearing on June 24, 2003, on a motion for temporary restraining order filed by plaintiffs Jeffrey S. Aaron, as the trustee of the Sylvia H. Aaron Revocable Trust (the "Trust"), ADTAR, L.L.C, ("Adtar") and Hampton Village Associates, L.L.C, successor in interest to the Estate of Louis Feil ("HVA").¹ Defendants Target Corporation ("Target"), the City of St. Louis ("City") and the Land Clearance Redevelopment Authority of the City of St. Louis ("LCRA") opposed the motion. After hearing arguments of counsel, the Court granted plaintiffs' motion and issued a Temporary Restraining Order on June 24, 2003, which restrained defendants and their agents from:

(1) taking ownership, possession or control of the Properties, or any portion or parcel thereof, pursuant to City Ordinance 65741, and/or solely for the private benefit of Defendant Target; and

(2) initiating and/or pursuing any condemnation or other proceeding in the courts of the State of Missouri, seeking to take ownership, possession or control of the Properties, or any portion or parcel thereof, pursuant to City Ordinance 65741, and/or solely for the private benefit of Defendant Target.

Temporary Restraining Order at 3.

This memorandum is being issued to more fully set out the Court's decision in granting the motion for temporary restraining order.

Background.

This case concerns a dispute over the future of the Target retail store located at 4255 Hampton Avenue in the City of St. Louis, Missouri. The plaintiffs are the owners of the real property and building on which the Target store and its attendant parking lots are located. Plaintiffs lease the real property, building and parking lots to Target. Target induced the City of St. Louis to exercise its power of eminent domain and begin condemnation proceedings on the property, in order to turn the property over to Target for redevelopment. Target would become the owner of the property rather than the lessee, and would construct a new Target store on the site. Plaintiffs seek to enjoin the state condemnation proceedings on the basis that their constitutional rights under the Takings Clause of the Fifth Amendment are being violated, as the property is being taken for a private rather than a public use.

Findings of Fact.

For purposes of the plaintiffs' motion for temporary restraining order, the Court finds the following facts:

The Trust and Adtar (collectively the "Trust Plaintiffs") are the owners and landlords of certain real property, completed buildings and improvements thereon located at and commonly known as 4255 Hampton Avenue, St. Louis, Missouri (the "Trust Premises"), which are being used for a Target retail store (the "Hampton Store"). The Trust and Adtar are tenants in common, each with an undivided fifty percent (50%) interest in the Trust Premises. Plaintiff HVA owns two parcels of real property located at and commonly known as 4255 Hampton Avenue, St. Louis, Missouri ("Parcels A and B"), which are used by Target as parking lots for its Hampton Store. The Trust Premises and Parcels A and B are collectively referred to herein as the "Properties."

Since 1974, Target has operated a retail store on the Trust Premises pursuant to long-term leases with the Trust Plaintiffs (the "Trust/Target Lease"). Pursuant to the Trust/Target Lease, Target leased the Trust Premises for the period of twenty-five (25) years with five (5) renewal options of five (5) years each. In 1999, Target exercised the first of its five-year renewal options under the Trust/Target Lease, and extended the term of the lease until at least 2004. Under the terms of the Trust/Target Lease, Target agreed to (1) take the Trust Premises in their "as is" condition at the time of commencement of the lease term, and (2) make and pay for all maintenance, replacement and repair necessary to keep the Trust Premises in a good state of repair and tenantable condition and to pay for all work required to put the Trust Premises in readiness for operation. The Trust/Target Lease provides that Target could at its own expense make alterations, additions or changes to the building, structural or otherwise, as it deemed necessary or suitable. The Trust/Target Lease further provides that Target must obtain the Trust Plaintiffs' prior written consent to drawings and specifications for structural alterations, but consent cannot be withheld if the building's structural integrity would not be compromised by the proposed work. The Trust/Target Lease gives the Trust Plaintiffs the right to terminate the lease, expel Target and reenter the Trust Premises upon any default by Target that remains uncured for a period of thirty (30) days.

From October 1974 until the present, Target has occupied the Trust Premises and successfully operated its Hampton Store. Neither Target nor the City ever complained to the Trust Plaintiffs about the condition of the Trust Premises. The Hampton Store contains approximately 105,000 square feet and 80,000 feet of retail space. The Hampton Store is Target's fourth-best performing store in the St. Louis region, and reportedly generates $32 million dollars in annual sales for Target.

On approximately September 16, 1974, HVA's predecessor in interest leased Parcel B to Jeanus Realty for twenty-five (25) years, with five (5) renewal options of five (5) years each (the "HVA Main Lease"). On approximately September 30, 1974, Jeanus Realty and Target entered into a sublease (the HVA/Target Sublease), under which Target leased Parcel B for a period of thirty (30) years, with five (5) renewal options of five (5) years each. The HVA/Target Sublease expressly incorporated the terms of the HVA Main Lease. On or about May 1, 1978, Jeanus Realty assigned the HVA/Target Sublease to HVA's predecessor in interest. HVA became the landlord under the HVA Main Lease when it purchased Parcel B. On or about November 12, 1998, Target exercised the first of its five-year renewal options which extended its current lease of Parcel B to January 31, 2005.

On approximately July 13, 2001, HVA's predecessor in interest entered into a parking lease with Target for Parcel A, for a period of ten (10) years (the "HVA/Target Parking Lease"). HVA became the landlord under the HVA/Target Parking Lease when it purchased Parcel A.

Target leased both Parcels A and B for use as a parking lot in connection with its Hampton Store. As part of its obligations under the HVA Main Lease, HVA/Target Sublease and HVA/Target Parking Lease, Target must maintain Parcels A and B in good, clean condition and make repairs and replacements which are required for its business purpose or use.

In March 2002, Target sent a letter to the Trust Plaintiffs in New York with a proposal that would allow Target to convert the Trust/Target Lease into a long-term ground lease and give Target the right to demolish the existing Hampton Store and erect a new building. This letter, dated March 25, 2002, included a proposed annual rent amount. The Trust Plaintiffs responded by letter dated May 7, 2002, agreeing to allow Target to demolish the existing store and construct a new one, but proposed that the rent amount be higher and based in part on Target's sales. Target never responded to the Trust Plaintiffs' counterproposal.

Instead, during the late spring or summer of 2002, Target apparently approached Alderman James Shrewsbury, in whose ward the Properties are located, and threatened to abandon the Hampton Store unless Alderman Shrewsbury induced the City to give Target full fee-simple ownership of the Properties through the use of the City's condemnation power. Alderman Shrewsbury was later quoted in the St. Louis Post-Dispatch newspaper as stating:

The New York owners gave Target some unreasonable demands in rent increases, and Target decided to abandon the store .... The decision I had was to allow Target to leave or be a bit proactive and give Target some options with the city helping them ....

A subsequent memorandum to LCRA from a member of the City's Development Corporation states:

[Target] has determined that terms demanded by the owners of [the Trust Premises and Parcels A and B] to renegotiate a long-term lease would impede the viability of its commercial operation in the Area. To date, [Target] and the owners of these parcels have been unable to come to an agreement regarding a sale price. [Target] may require the use of eminent domain in order to facilitate acquisition and to proceed with the proposed redevelopment.

In fact, the Trust Plaintiffs had never demanded any increase in rent, and Target could have continued under its existing lease for years to come. Target's expressed desire to renegotiate the lease led to the discussion about a new rent and the Trust Plaintiffs' counterproposal for a rent based in part on Target's future sales. Target never offered to purchase the Properties from the plaintiffs,...