A judge has blocked an effort by the new owner of the Falmouth Shopping Center to evict Ocean State Job Lot from its store on property that is part of a massive redevelopment effort.
The Route 1 shopping center was sold for $21 million in March and the new owners moved quickly to try to evict Ocean State Job Lot, a discount retailer that moved last fall into a spot in the strip mall that had been vacant for more than a decade. Ocean State officials said they invested about $1.5 million in upgrades to their space and sublet a portion of it to a Planet Fitness gym.
The new owners of the mall, a pair of limited-liability companies run by developers Joseph Soley and Jonathan Cohen, argued that Ocean State had failed to provide information on its lease with the former owners in a timely manner and wanted Ocean State out. The retailer said it has a lease that runs through 2028, with renewal options to 2043.
Marc Perlman, the chief executive officer of Ocean State Job Lot, said his company felt “vindicated” by the ruling.
“Throughout 40 years of business, across eight states dealing with dozens and dozens of landlords, we’ve never encountered a situation quite like this,” he said in a statement. Perlman was unavailable for further comment Thursday.
It’s unlikely the ruling will have an impact on a major development project Soley and Cohen have proposed. They indicated in initial discussions with town officials that they don’t plan major changes to the existing retail space until other parts of the project are underway.
The project, which includes about 20 acres of undeveloped land along Route 1, proposes a major redevelopment of the property, by adding nearly 327,000 square feet of building space to the existing 192,000 square feet of retail space. The plan calls for senior housing, offices, a hotel, restaurants, entertainment venue and indoor and outdoor recreation spaces.
Theo Holtwijk, Falmouth’s director of long-range planning and economic development, said town officials have had informal discussions with the shopping center’s owners, who have not made a formal proposal to the town on the project. However, a zoning change needed to construct outdoor fields and an indoor athletic facility was rejected by the town last month.
“It’s a bit of a fluid process,” Holtwijk said, but right now the town is “in a holding pattern” until a plan is formally put forward.
He said the scope of the project, which likely will require zoning changes as well as plan approvals, is expected to require review by the Town Council in addition to the Falmouth Planning Board.
‘REASONABLE REQUESTS’
The eviction of Ocean State was based on the retailer’s supposed failure to complete an estoppel certificate, which essentially acknowledges the terms of a lease, within a 10-day window.
Business and Consumer Court Judge Robert Mulhern said the shopping center’s owners disagreed with several parts of the certificate and wanted additional information from Ocean State. The dispute likely could have been resolved, Mulhern said, but Soley and Cohen insisted on the imposition of the 10-day limit to complete the process and dropped further efforts to resolve the issues before time ran out.
Mulhern said that the shopping center owners sent Ocean State a estoppel certificate to sign that had inaccuracies and they also wanted Ocean State officials to swear to certain provisions beyond what is normally included in the certificates.
For instance, Mulhern said the original lease for Ocean State said there were only four statements that the tenant had to agree to without qualification – certifying the lease was in full force, the date on which rent had been paid last, certifying that the renter wasn’t in default and the end date of the lease.
But, the judge said, the proposal from the new owners ran to “21 paragraphs, begging the question of whether the additional seventeen requested statements are all ‘reasonable requests.’ ”
Phone calls to Cohen were not returned Thursday.
SUBJECT TO HEIGHTENED SCRUTINY
Mulhern also said that the owners’ lawyer was asked to contact Ocean State’s lawyer to go over the proposed certificate two or three days before the deadline, but the Ocean State’s lawyer was never contacted and the shopping center owners instead started the eviction process.
The owners “should not now be permitted to benefit from their inaction and use the resulting delay as a basis to terminate the lease,” Mulhern said.
Ocean State argued that it returned the certificate in 16 days, despite delays it contends were caused by the shopping center’s owners and the failure of their lawyer to contact Ocean State’s lawyer.
In addition to Mulhern’s rejection of the eviction attempt, he also ordered the strip mall owners to pay Ocean State’s attorney’s fees.
Ocean State said store officials were never told why Soley and Cohen wanted Ocean State evicted beyond the timing of the estoppel certificate.
Planet Fitness was never threatened with eviction, even though it’s in space subleased from Ocean State, spokesman Matt Blanchette said.
Holtwijk noted that Route 1 in Falmouth has undergone substantial development in the last 10 to 20 years and has become a downtown for Falmouth, so a proposal for the northern end of that stretch will likely be subject to heightened scrutiny.
“We think there are development opportunities there, the question is how you fulfill that,” he said.
Edward D. Murphy can be contacted at 791-6465 or at:
emurphy@pressherald.com
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