The Sunnyvale Sun

News

Lawsuit delays bulding at mall

By Emilie Crofton

Plans to transform Cupertino Square into a thriving shopping mall have been put on hold following the filing of a lawsuit.

Orbit Resources, owners of Cupertino Square, allege in a lawsuit filed April 2 that Gramercy Warehouse Lending has refused to pay out millions of dollars for construction work. The shopping center's owners claim their refusal has jeopardized pending leases with major retailers Steve and Barry's, the Hoffbrau House and 24-Hour Fitness.

The lawsuit claims the loss of rental income, the reduced value of the shopping center due to the lending company's interference with Orbit's efforts to increase occupancy rates, and the inability of the owners to attract other high quality tenants.

In August 2006, Gramercy and United Commercial Bank promised to loan Cupertino Square $195 million under a construction loan agreement. Cupertino Square owners claim the lending company has refused to release the funds.

Disputes over the lease also arose between Cupertino Square and AMC Theaters, one of the mall's most successful tenants, which has claimed damages due to the center's delay in delivering them the leased space.

According to the lawsuit, Gramercy "unreasonably, and in breach of its obligation under the Construction Loan Agreement, withheld its consent to the compromise agreement between plaintiff and AMC Theaters.