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Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2014
Commitments And Contingencies Disclosure [Abstract] |
Commitments and Contingencies |
8. | COMMITMENTS AND CONTINGENCIES
Legal Matters Coventry II The Company is a party to various joint ventures with the Coventry II Fund, through which 10 existing or proposed retail properties, along with a portfolio of former Service Merchandise locations, were acquired at various times from 2003 through 2006. The Company was generally responsible for day-to-day management of the properties through December 2011. On November 4, 2009, Coventry Real Estate Advisors L.L.C., Coventry Real Estate Fund II, L.L.C. and Coventry Fund II Parallel Fund, L.L.C. (collectively, “Coventry”) filed suit against the Company and certain of its affiliates and officers in the Supreme Court of the State of New York, County of New York. The complaint contained allegations including breach of contract, breach of fiduciary duty, fraudulent inducement, misrepresentation, and economic duress. The complaint sought compensatory, consequential and punitive damages. In response to this action, the Company filed a motion to dismiss the complaint. In June 2010, the court granted the motion in part (which was affirmed on appeal), dismissing Coventry’s claim that the Company breached a fiduciary duty owed to Coventry. The Company also filed an answer to the complaint, and asserted various counterclaims against Coventry. On October 10, 2011, the Company filed a motion for summary judgment, seeking dismissal of all of Coventry’s remaining claims. On April 18, 2013, the court issued an order dismissing most of Coventry’s remaining claims against the Company. The court’s decision denied the Company’s motion solely with respect to several claims for breach of contract under the Company’s prior management agreements in connection with certain assets. Coventry appealed the court’s ruling dismissing its claims. On June 14, 2014, the appellate court issued an opinion affirming the dismissal of most of Coventry’s remaining claims. On October 10, 2014, the Company and Coventry entered into a settlement agreement. The agreement, which is subject to various contingencies, provides for mutual releases of all claims and for the dismissal of the pending litigation. The Company does not expect the settlement to have a material adverse effect on the Company’s financial condition, results of operations or cash flows. Contract Termination In January 2008, the Company entered into a Services Agreement (the “Agreement”) with Oxford Building Services, Inc. (“Oxford”), whose obligations were guaranteed by certain affiliates of Oxford. The Agreement required that Oxford identify and contract directly with various service providers (“Vendors”) to provide maintenance, repairs, supplies and a variety of on-site services to certain properties in the Company’s portfolio, in exchange for which Oxford would pay such Vendors for the services. Under the Agreement, the Company remitted funds to Oxford to pay the Vendors under the Vendors’ contracts with Oxford. On or about January 23, 2013, Oxford advised the Company that Oxford had misapplied approximately $11 million paid by the Company to Oxford and, as a result, Oxford had insufficient funds to pay the Vendors in accordance with the Agreement. On January 28, 2013, the Company terminated the Agreement based upon Oxford’s violations of the Agreement, principally due to its insolvency. Oxford and several affiliates subsequently filed bankruptcy petitions in the United States Bankruptcy Court for the District of New Jersey and are in liquidation under Chapter 7 of the United States Bankruptcy Code. In its initial filings in the bankruptcy case, Oxford had threatened litigation alleging certain claims against the Company which the Company vigorously denied; however, to date, no such claims have been asserted by Oxford against the Company. On March 18, 2013, the Company filed suit in the Court of Common Pleas, Cuyahoga County, Ohio, which was subsequently removed to the federal district court in Cleveland, Ohio, against certain affiliates and the individual principals of Oxford asserting claims for, among other things, breach of guaranty, fraud, conversion and civil conspiracy. In July 2014, the Company and the defendants in the Ohio litigation reached an agreement to settle all claims asserted in the Ohio litigation. Other In addition to the litigation discussed above, the Company and its subsidiaries are subject to various legal proceedings, which, taken together, are not expected to have a material adverse effect on the Company. The Company is also subject to a variety of legal actions for personal injury or property damage arising in the ordinary course of its business, most of which are covered by insurance. While the resolution of all matters cannot be predicted with certainty, management believes that the final outcome of such legal proceedings and claims will not have a material adverse effect on the Company’s liquidity, financial position or results of operations.

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