Judge: Developer must pay $1.8M in Gardner Center case

Suit involved Kassab’s Battle Ground Cinema; he will appeal

By Brooks Johnson, Columbian Business Reporter

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Vancouver real estate developer Elie Kassab must pay $1.8 million in legal fees following a protracted dispute involving the Gardner Center in Battle Ground and the Battle Ground Cinema, a tenant of the shopping center, Clark County Superior Court Judge Suzan L. Clark ruled last week.

The dispute centered on a lease agreement between owners of the Gardner Center, a shopping center Kassab sold in 2006, and the Battle Ground Cinema, which is still owned by Kassab. The Gardner Center owners said in legal filings that they’d been led to believe that the shopping center on Southwest Ninth Avenue had a 25-year lease with the cinema, which a judge later agreed with. Kassab had asserted the term of the lease was only 10 years.

“Owners of the cinema and shopping center were forced to take Kassab to court when he tried to defraud investors out of a 25-year lease at the cinema,” according to a press release from Vancouver’s Holland Law Group and Portland’s Zupancic Rathbone Law Group, which represented the Gardner Center’s owners.

Those owners — Samuel and Shelley Walker and their Walker Family Trust; Christopher and Laura Evans-Walker; Joseph Walker and his JTW Trust; Robert and Karen Bernhardt; and Charles Morgan — bought the shopping center from Kassab for $12.7 million in 2006. They alleged in court filings that Kassab “knowingly delivered a false and misleading copy of a commercial lease between Gardner Center as landlord and Battle Ground Cinema as tenant” by omitting parts of the lease.

Kassab, who owns Prestige Development, built the shopping center and the cinema in 2004. His lawyer said Wednesday they had already filed a notice of appeal.

“An attorney fee claim of that size is unheard of in a case like this, so we think the Court of Appeals should take another look,” attorney Montgomery Cobb said. “The other issues will be secondary.”

The 4-year-old lawsuit hinged on a page in the theater’s lease at the Gardner Center that appeared to show the theater’s lease expired in 10 years — and not 25 years, as the new owners were led to believe, court documents state. That page was not presented to the owners until 2012, they wrote in filings, when Kassab was threatening to terminate the lease after attempting to “extract substantial rent concessions.”

According to the lawsuit, the value of the shopping center to the owners was contingent on the 25-year term of the cinema lease. Rent from the theater, which comprises more than 40 percent of the shopping center, can range from $300,000 to $450,000 per year, the lawsuit states. The owners argued that the case was a matter of “breach of contract” and that the terms of the lease were “false and misleading.”

Judge Clark handed down a summary judgment last year that sided with the owners’ assertion the lease extends for 25 years — through 2030 — as originally promised.

“The owners set about the daunting task of proving Kassab laundered the third page of the personal guarantee,” she wrote March 17 when awarding the $1.8 million in attorney’s fees. “If the owners lost these cases, the owners would likely lose the anchor tenant of the Gardner Center … a loss valued conservatively in the many millions of dollars. Accordingly, this litigation required the owners to ‘bet the farm.’ ”

Clark also wrote Kassab’s “relentless” pursuit of the case — maintaining the 10-year lease term — “caused the owners to incur millions of dollars in expense and drag out unnecessary litigation for more than two years.”

Throughout the litigation, which is headed for appeal, Kassab has and will have to continue working with the owners professionally.

“We’re happy with the result, but the owners are still interested in an ongoing relationship with Mr. Kassab,” said Jim Holland, a lawyer for the owners. “This clarifies things, and that’s good and important and will ensure the success of the business.”