U.S. Supreme Court Sides With Mall Of America In Case Vs. Sears

WASHINGTON, D.C. — The United States Supreme Court unanimously sided with the Mall of America in its contractual dispute with Sears Roebuck, the former department chain behemoth.

The 9-0 ruling announced Wednesday means the MOA can challenge the $10-a-year lease it offered Sears in the early 90s. The opinion, written by Justice Ketanji Brown Jackson, reverses rulings made at the district and appellate courts.

"This is a pivotal moment for Mall of America," said Tony Ghermezian, MOA's CEO, in a statement.

"For more than 30 years, Mall of America has been a global shopping destination integrating retail, attractions, and dining options to an unparalleled level. In simple terms, Sears improperly assigned the Mall of America lease to Transform, which is a holding company that has never operated as a retailer and never had plans to occupy Mall of America for retail purposes. We are grateful for this decision in our favor as we continue to bring innovative concepts into our tenant spaces, at the same time serving as a leader and advocate within the shopping center industry."

In 1991, Sears signed a lease at the MOA which allowed the retail giant to pay just $10 a year in rent. The lease wasn't set to expire for 100 years, in the year 2091, the Supreme Court notes.

However, Sears went bankrupt in 2018, and the company was acquired by Transform Holdco LLC.

The Sears store at the MOA closed in March 2019.

Transform Holdco wants the same $10 per year lease at the MOA that Sears had. But the MOA intervened and tried to stop the transfer of the lease to the new company.

The Supreme Court was asked to decide which party's claim is more consistent with the current bankruptcy code.

"We are thrilled for our client that the Supreme Court recognized its right to pursue its appeal on the merits," said Douglas Hallward-Driemeier, who argued the case for MOA.

"This decision restores integrity to the appellate process and precludes the type of gamesmanship that Transform engaged in, providing important protections for mall owners and all other types of landlords following bankruptcy of tenants."