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LAKEWOOD, CO-The May Department Stores Co., parent of the Foley’s department store, and World Savings Bank have sued the developer of Villa Italia, a former regional mall that will be redeveloped into the west side city’s Downtown. Officials from the city and Continuum Partners LLC say the suits filed in Denver District Court are groundless.

The May Co., in its suit, says it seeks to recover damages from Continuum’s ”willful and bad faith conduct” as owner, and the ”manipulation of an urban renewal authority’s condemnation power to accomplish an improper goal.”

It goes on to say that common areas of Villa Italia ”have been allowed to fall into a state of disrepair,” and that ”Continuum…did not continuously use and operate the mall as a shopping center with a reasonable mix of retail-oriented tenants,” and has ”disturbed the May Co.’s peaceable and quiet of enjoyment of its demised premises and associated rights, easements, appurtenances and privileges.”

Tom Gougeon, a principal with Continuum, notes his company only took over the 100-acre property last spring. It’s not Continuum’s fault that more that 80% of the tenants had left as the mall is scheduled to be razed.

Gougeon says the suits are part of the May Co.’s and World Savings Bank’s attempt to cut better deals when they serve as anchors in the new development.

The attorney for May, Thomas J. Dougherty of the Denver law firm Rothgerber, Johnson & Lyons LLP, says his client instructed him to make no public comment.

But Wayne B. Schroeder, the attorney for the bank, says one must put the federal lawsuits in context with claims filed at the state court level. The state suits, he says, claim that Continuum and the Lakewood Reinvestment Authority are working together to condemn the property. That will, he says, take the improvements away from sublessors such as the bank (as well as the May Co.) to their financial detriment, while benefiting the master developer, Continuum. Schroeder is an attorney with Grimshaw & Harring PC.

Developers and government authorities working together to use the government’s power of eminent domain increasingly is a national issue that courts increasingly are looking at unfavorably.

But Gougeon says the LRA could still pick another developer for Villa Italia, despite the great deal of time and money it has invested in the project.

”In that regard, we are clearly at risk,” Gougeon tells GlobeSt.com.

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