WASHINGTON — Editor's note: The video above first aired on KARE 11 on June 29, 2022.
The U.S. Supreme Court sided with the Mall of America Wednesday in a longstanding case challenging the validity of a lease for the now-empty Sears store.
In a unanimous 9-0 decision, the court ruled that MOAC Holdings can move forward with challenging Transform Holdings LLC over its $10-per-year lease for the Sears location.
Sears' lease was set at $10 per year for 100 years when the Mall of America first opened in Bloomington, Minnesota back in 1991. Sears closed at MOA in 2019 after declaring bankruptcy the year prior.
Sears had sold most of its pre-bankruptcy assets to Transform, including the right to designate to whom a lease between Sears and the mall should be assigned.
"Mall of America isn't challenging the sale of assets, they are challenging the $10 lease," University of St. Thomas law professor Rachel Paulose explained to KARE 11 in June 2022. "The response from Sears is that you can't separate the two: You can't separate the sale from the lease — that they go together — and Supreme Court, you don't have jurisdiction to hear this case, but you can't undo what the bankruptcy court has done here."
Justice Ketanji Brown Jackson delivered the court's opinion in the case, which the court agreed to hear last June.
"Nothing in Transform’s creative arguments in this case persuades us that §363(m) [of the Bankruptcy Code] is jurisdictional under our clear statement precedents. Because the Second Circuit’s judgment rested on the mistaken belief that §363(m) is jurisdictional, we vacate that judgment and remand the case for further proceedings consistent with this opinion," Jackson wrote when concluding the opinion.
The case will now head back to a lower court for further action.
“This is a pivotal moment for Mall of America," said Tony Ghermezian, CEO of Mall of America, in a statement. "For more than 30 years, Mall of America has been a global shopping destination integrating retail, attractions, and dining options to an unparalleled level. In simple terms, Sears improperly assigned the Mall of America lease to Transform, which is a holding company that has never operated as a retailer and never had plans to occupy Mall of America for retail purposes. We are grateful for this decision in our favor as we continue to bring innovative concepts into our tenant spaces, at the same time serving as a leader and advocate within the shopping center industry.”
Transform Holdings has not yet commented publicly about the Supreme Court decision.
Watch more local news:
Watch the latest local news from the Twin Cities and across Minnesota in our YouTube playlist:
WATCH MORE ON KARE 11+
Download the free KARE 11+ app for Roku, Fire TV, and other smart TV platforms to watch more from KARE 11 anytime! The KARE 11+ app includes live streams of all of KARE 11's newscasts. You'll also find on-demand replays of newscasts; the latest from KARE 11 Investigates, Breaking the News and the Land of 10,000 Stories; exclusive programs like Verify and HeartThreads; and Minnesota sports talk from our partners at Locked On Minnesota.
- Add KARE 11+ on Roku here or by searching for KARE 11 in the Roku Channel Store.
- Add KARE 11+ on Fire TV here or by searching for KARE 11 in the Amazon App Store.
- Learn more about KARE 11+ here.