Pennsylvania Supreme Court Upholds $18.5 Million Verdict For Newman Development Group

WEST CHESTER >> Most landlord-tenant disputes get resolved in your local District Court, with, at most, a few thousand dollars exchanging hands. Not so the case of Newman Development Group of Pottstown v. Genuardi’s Family Markets.

Last week, the state Supreme Court denied the request of the defendants — the Genurardi and Safeway supermarket chains — to hear their appeal of a lower court’s ruling that would have shrunk the size of the $18.5 million verdict handed down by a Chester County Common Pleas Court judge five years ago.

The decision means that the tenants now owe their former landlords on order of about $22 million, with interest and attorney’s fees, the largest verdict in a commercial lawsuit in the history of the county, according to the developer’s lead attorney, Buck Riley.

“This litigation has been incredibly intense and complex and a true roller coaster of ups and downs from beginning to end over the last 12 years,” said Riley, founding partner of the Exton firm of Riley, Riper Hollin & Collagreco. ”There are no cases of this magnitude of which I’m aware which have travelled through as many various courts as this one has — including two trips to the Pennsylvania Supreme Court.”

Riley called the matter, which pitted Newman Developers, the owner of a strip shopping center on Route 100 in North Coventry, against one of the nation’s largest supermarket chains, “a true David and Goliath case.

“I don’t think that Safeway — a financial giant — ever believed that tiny Newman Development Co would have the staying power to see this litigation through to the finish,” Riley said on Friday. “But our guys never stopped believing in their cause and they never gave up even on the darkest days .

Riley noted that in addition to the various courts which have ruled on this case since it was filed in 2002, Newman had been opposed by three major Philadelphia law firms in succession.

Representatives of the firm now handling the case, Schnader Harrison Segal & Lewis, could not be reached for comment.

By refusing to hear Safeway’s appeal from a state Superior Court decision upholding Mahon’s verdict and damage amount, the Supreme Court essentially put its stamp of approval on Mahon’s ruling.

“The only offer of settlement our clients had ever received from Safeway was $60,000 on the first day of trial and nothing since,” Rile said. “Needless to say, our clients are very happy they fought this long fight and very grateful to the court system which brought them justice. They are wonderful people and they surely deserve this result.

Newman, with operations in four states, developed the Town Square Plaza shopping center off Route 100 in North Coventry after a long series of contentious zoning and planning hearings. The developer said Safeway had breached a contract made between it and Genuardi’s Supermarkets in 1998 to build a 50,000-square-foot anchor store at the center.

After a non-jury trial in 2006, Mahon found in favor of Newman and against Safeway but awarded only $316,889 in damages, the amount of lost rent that the developer suffered from the time the center opened until it was sold to a property management firm six months later.

The developers and Safeway both appealed the verdict to the state Superior Court, with Newman arguing it should be owed the full 20 years of rent on the lease it signed with Genuardi’s, and Safeway contending that Newman, and not the chain, had broken the contract because it did not build the center on time.

The appeals court found in favor of Newman and sent the case back to Mahon to work out the proper damages.

After a set of hearings in January 2010, Mahon awarded the developers $10 million in back rent as well as counsel fees and back interest for a total of more than $18 million.

The history of the case goes back almost two decades.

In 1996, Newman identified North Coventry as a good site for a shopping center, to be known as Town Square Plaza. Two years later, Genuardi’s Family Markets signed a letter of intent with Newman to build a 50,000-square-foot anchor store at the proposed plaza.

Riley said both parties understood that the center could not be built as soon as Genuardi’s had hoped because of a long battle in the township over the shopping center’s plans. Instead, the company signed a lease and put it in escrow, he said.

In February 2001, Safeway bought Genuardi’s.

“Thereafter, Safeway, as a result of marketing and other changes it was attempting to make at the highly popular and successful Genuardi’s stores, met a firestorm of consumer opposition,” according to Riley. In February 2002, Safeway sent Newman a termination letter alleging default on Newman’s part for failure to start construction on the Genuardi’s store.

Riley said other supermarket chains previously made Newman offers to locate a store at Town Square Plaza, but those companies made other plans by the time Safeway had backed out of the lease. Newman was unable to find a new supermarket anchor, and to this day Town Square has no such business.

Newman contended in its suit that Safeway should pay damages for the lost rent for the 20-year term of the lease.

Safeway, on the other hand, argued that the developer had failed to live up to its end of the lease by not having the store built on time, and further that it should have to pay back rent only for the time between when the store was finished and when Newman sold the property.

Riley was assisted in the case by attorneys Jeannette Simone and Edward Green Jr.

It is not the first time that Riley’s firm had won a high profile case in the county. Riley, whose father and cousin have served as judges on the county Common Pleas court, was successful in obtaining the first verdict ever in the county in excess of $1 million, on behalf of Valley Forge Music Fair in a tax claim case involving Tredyffrin-Easttown School District.

In addition, his for also successfully defended world renowned Longwood Gardens in the state Supreme Court when its tax exempt status was challenged by the Unionville Chadds Ford School district.

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