Faneuil Hall merchants drop suit against Rouse Firm claims vindication

tenants admit no evidence that rentals were inflated

Commercial real estate

November 19, 1997|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Rouse Co. won a decisive victory in the battle for its reputation yesterday, when disgruntled merchants in its Faneuil Hall Marketplace dropped a lawsuit against the company.

The demise of the lawsuit, brought more than two years ago by roughly 90 percent of the Boston project's tenants, claiming the developer inflated rental rates, paves the way for Rouse to begin a $13 million renovation of the three-building festival marketplace.

In ending the court case, the Faneuil Hall Marketplace Merchants Association members "have not discovered any systematic overcharging of current or former merchants," the tenants said in a statement.

Paul I. Latta Jr., a Rouse senior vice president and director of retail operations, said, "Since the day the suit was filed, we have stated that there was no factual basis for the allegations of overcharges, and we are very pleased that we have resolved this in a manner that clears our reputation."

As part of the settlement, Rouse did not pay the merchants or their association "anything," said David L. Tripp, a Rouse vice president and its director of investor relations.

The merchants association sued Rouse in Massachusetts Superior Court in September 1995, claiming the Columbia-based real estate concern had for years "secretly and improperly" inflated maintenance charges at the 21-year-old marketplace "with an intent to deceive and defraud."

The tenants claimed that Rouse had overcharged them by "millions of dollars" dating back to 1989, and inflated common area cleaning and other charges by more than $1 million in 1993 alone.

But after reviewing financial documents related to Faneuil Hall that a judge forced Rouse to produce and an audit by Arthur Andersen LLP, the merchants association said in court that it did not "discover any evidence of inflation of costs or specific services."

Robert Hohler, clerk of the merchants association, said, "This process has resulted in an enhanced level of understanding on both sides and we feel confident that we will be able to work together in the future."

For Rouse, the lawsuit removes one of the chief obstacles to a comprehensive renovation of the 215,000-square-foot project.

But, perhaps more importantly, the end of the lawsuit provides Rouse with a psychological barrier against future court action from merchants. In the wake of the Faneuil Hall suit, for instance, tenants in Rouse centers across the country -- including Harborplace -- began threatening litigation over similar claims.

Pub Date: 11/19/97

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