BLAINE, Minnesota — The principal owner of Northtown Mall in Blaine is deep in a legal dispute with the food hall's operator.
Felix Reznick wants CloudKitchens out, claiming they're not holding up their end of the lease. Meanwhile, the food hall operator said the legal system has repeatedly sided with them.
Reznick sued CloudKitchens last fall. Earlier this year, an Anoka County judged sided with CloudKitchens. The civil eviction lawsuit was on appeal, however, on Sept. 9, the Minnesota Court of Appeals affirmed the district court's decision.
According to the Court of Appeals opinion, "The district court did not err by determining that Northtown failed to show that Cloud Kitchens materially breached the lease."
Prior to the decision, Reznick said, "The food hall is the core of the mall. It keeps people here. If people leave to eat, their shopping's over."
On Tuesday, Aug. 26 during lunchtime, Reznick took KARE 11 crews around the food hall. Out of the 13 spaces, four had staff visible out front.
WPG Northtown Venture sold the mall in August 2023. Prior to then, in the middle of the pandemic, Reznick said, "They stroked the check of $1.4 million to CloudKitchens to build something that's vibrant and happening that would attract a lot of people. This is the most vibrant I've seen it."
According to an affidavit, CloudKitchens opened in Northtown Mall on Sept. 10, 2021. CloudKitchens then subleases each space to different food vendors.
When Reznick took over last year, he sued the company to get them evicted and claimed CloudKitchens was not holding up its end of the lease.
CloudKitchens' CEO is Travis Kalanick, co-founder of Uber, according to a 2024 Linkedin post from CloudKitchens.
"None of the subleases require — and we found this out through court — any of the tenants here to open at any time, to close at any time, to have food out at any time, to have people at any time. None of them. This is a CloudKitchens' ghost kitchens operation," Reznick said.
According to CloudKitchens' website, "Ghost kitchens, also known as dark kitchens or virtual kitchens, are commercial kitchens built for food delivery. They're located within the delivery radius of a high volume of online customers, rather than high foot traffic areas. With ghost kitchens, there's no physical storefront or dining area, so you only need a few back-of-house staff members to fulfill online orders."
But Reznick is arguing, according to the lease agreement, the tenant shall "occupy and operate (or cause to be used, occupied and operated) substantially all of the premises with fixtures and decor, an inventory of goods and merchandise and a staff of sales personnel adequate, sufficient and appropriate to operate the premises as a first class, high quality and tasteful food hall consistent with food halls or food courts in other comparable regional shopping centers in the metropolitan area."
While pointing to a food vendor that had staff and food out front, Reznick said, "This is the way you should operate. Every place should have the food out and multiple people operating. If you go to Maplewood Mall, you'll see how a typical food court looks."
In a statement to KARE 11, CloudKitchens said, "Northtown Mall has not expressed any concerns to CloudKitchens outside of the concerns it chose to litigate earlier this year. In that litigation, CloudKitchens took the position that Northtown Mall's claims and statements were factually inaccurate and legally without merit." The company went on to say, "...the Judge agreed, finding entirely in CloudKitchens' favor."
CloudKitchens said it looks forward to continuing to serve Northtown Mall customers and restaurant operators for years to come.
Earlier this year, it was announced that Asia Village will be coming to Northtown Mall by the end of 2025/beginning of 2026. Asia Village will take over the Becker Furniture Outlet spot and will own its space at the mall.
"We have Asia Village coming. We have Holy Land coming; it's going to be an Eataly-type concept with halal food. I have a Spanish concept that wants to come in and I'm talking to a Russian concept," Reznick said.
He went on to say, "How am I supposed to rebuild this mall and bring in all these nice concepts for the community... We're spending money to bring people back. What these guys are spending money on... I don't know. They're not bringing people."
Reznick's appeal was argued before the Minnesota Court of Appeals in July and was under consideration. After Monday's decision, CloudKitchens told KARE 11, "On September 9, 2024, Northtown Mall's claims against CloudKitchens were rejected by a court for a third time. The Minnesota Court of Appeals reviewed the trial court's denial of Northtown Mall's claims and affirmed the trial court's decision in its entirety. This is the third court decision that recognizes CloudKitchens' commitment to its restaurant operators and the customers of Northtown Mall by completely rejecting Northtown Mall's claims."
Reznick said he plans to seek additional legal action.
This article has been updated to reflect the latest court decision.