Sears to Palm Beach Gardens: Pay our $2.1 million legal bill

Sears is seeking $2.1 million in legal fees from the city of Palm Beach Gardens after the department store defeated the city and The Gardens Mall’s owner in court and prevailed in its efforts to sublease its mall space to Dick’s Sporting Goods.

The amount, which an attorney for Palm Beach Gardens called “shocking,” is not covered by the city’s insurance policy. That means taxpayers will have to pay the fees and costs, but not before the city wages a court fight to have the expenses cut. Drastically.

“It’s ludicrous. They’re not going to get $2.1 million. That number is laughable,” said R. Max Lohman, a Jupiter lawyer who represents the city of Palm Beach Gardens.

Lohman said he billed Palm Beach Gardens for 389.3 hours at an hourly rate of between $195 to $232.50, for a total cost to the city of $79,064.

By contrast, the Denton law firm in Chicago billed Hoffman Estates, Ill.-based Sears hourly rates ranging from $160 to $630 for a total of 3,010.8 hours. Attorney Steve Merouse of Dentons personally billed for 1,619.8 hours, at a rate ranging from $525 to $595 an hour, according to an April 6 filing by Sears in Palm Beach County Circuit Court.

Local counsel, the Richman Greer law firm in West Palm Beach, billed Sears from $120 to $700 an hour for 1,325.3 hours. Gerald Richman, name partner in the law firm, billed Sears 561.7 hours at $700 an hour, the court filing said.

Altogether, Dentons billed Sears $1.5 million and Richman Greer billed $600,866 in attorneys’ fees, for 4,336.1 hours worth of work. Another $27,000 was billed for costs, including depositions, travel fees and subpoenas.

Sears Holdings spokesman Howard Riefs on Monday said the court will decided on the “appropriate” fee.

But Riefs noted that the litigation involved significant pre-trial discovery, a trial and an appeal.

The sizable legal fee request is another blow to the city of Palm Beach Gardens, which still is paying the price for a 2012 resolution arising out of a conflict between Forbes/Cohen Florida Properties LP, owner of The Gardens Mall, and Sears.

In 2011, Sears told Forbes it was working on plans to sublease its second floor mall space to Dick’s, according to court records.

In 2012, Forbes sought a resolution from the city of Palm Beach Gardens. The resolution said mall anchor tenants could not subdivide their space without the approval of both Forbes and the city. The resolution did not name Sears, but the mall later used the resolution as the basis to fight off efforts by Sears to sublease to Dick’s, which Forbes did not want at the mall.

Sears sued Forbes in 2014 for the right to bring in Dick’s, then Sears added the city of Palm Beach Gardens to the lawsuit the next year.

Sears tried to exit the lawsuit but failed in January 2016. By June, it seemed not to matter when a Palm Beach County Circuit Court judge found in favor of both Forbes and the city.

“(The city) didn’t do anything wrong and got sued for it,” Lohman said at the time.

But in June 2017, the 4th District Court of Appeal reversed the lower court’s ruling, finding that the city, indeed, did something wrong. In an 18-page opinion, the appellate court found that the city resolution was unconstitutional because it impaired Sears’ contract rights.

As part of its decision, the 4th DCA not only granted Sears a right to subdivide its mall space. The court also ruled that Sears was owed attorneys’ fees because the city resolution “deprived Sears of substantive due process.”

Lohman said Sears is trying to bill the city for time it spent on the case against Forbes before the city was added to the lawsuit. “They only get their fees and costs related to them proving their case against the city,” he said.

Lohman said the city plans to seek detailed bills from the law firms and hire experts to scour the timesheets. This, of course, also will cost money, he said.

Meanwhile, efforts continue to bring Dick’s to the mall. The sporting goods retailer recently told the city it does not plan to sell guns or ammunition at the proposed mall location, as it does at other stores. In February, in the aftermath of the Valentine’s Day shooting at Marjory Stoneman Douglas High School that killed 17 students and faculty, Dick’s said it would no longer sell assault-style weapons or high-capacity magazines. It also said it would stop selling guns to customers younger than 21 years of age.

Last November, there were two incidents involving guns in The Gardens Mall parking lot. According to police, one was a shooting, while the other was a gun sale gone bad.

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