NEW ULM - In the latest chapter of the growing chaos at the Marktplatz Mall, New Ulm Retail and Development, LLC. (NURD) is seeking arbitration proceedings with Brown County and Randy Danielson.
The Reciprocal Easement and Operating Agreement for the mall dictate how its expenses, such as public utilities and insurance, have the cost split up between the owners and declares the agreement enforceable to subsequent owners. It also dictates that disagreements not resolved in 30 days will be settled with binding arbitration. The two sides are to agree upon an arbitrator or have Brown County Court appoint one for them. The arbitrator's decision will be final and legally binding.
NURD sent a letter to Brown County and Danielson on July 14, demanding payment from each for payments it claims it wasn't reimbursed for under the Reciprocal Agreement. NURD will give them 10 days, or until July 24, to pay claims before seeking arbitration.
NURD, the owner of the northern two-thirds of the mall, is claiming that $93,398 is owed by Danielson, the owner of the southern part of the mall. Danielson is also owner of the first mortgage on NURD's portion of the mall and is using the related Assignment of Rents to collect the rental payments from NURD's side. How the rents are applied and accounted for has been the primary source of disagreement and litigation between the two sides for more than a year.
The $93,398 NURD claims is owed by Danielson is from October 2008 to July 2012. The claims list the costs for each month of the mall's utilities, parking, insurance, fire alarm, shared community space and occasional maintenance, which is divided into one-third to determine the claim.
However, the claims are incompatible with NURD's prior litigation and claims. First, it claims Danielson owes NURD for the months businessman Ty Kirkpatrick controlled the mall. Sometime between May and June of 2010, NURD's current ownership sold control of NURD to Kirkpatrick. Later, the current ownership bought back control of NURD in May 2011. During that time, the current ownership was supposedly not responsible for NURD's expense and not in control of mall operations. The current ownership has previously claimed Kirkpatrick absconded with Danielson's payment portion, implying he made the payment.
Second, the claims also cover the period from October 2011 to March 2012 when NURD had filed its Chapter 11 bankruptcy. From November and December of 2011, NURD was temporarily placed in charge of all the rents on its side and the mall's operations. From January to March of 2012, a Chapter 11 trustee was placed in charge of the NURD side rents and mall operations. The trustee stated in court documents that Danielson submitted his required payments during this time.
Finally, NURD also claims it is owed $10,000 of the approximately $20,000 used to repair the entrance ramp to the mall. Danielson paid for the ramp repairs, which NURD has never disputed, and the repair occurred during the time Kirkpatrick was running NURD.
Mike Strand, one of NURD's three managing members, said the arbitration request will only address their claims, not the disagreement over rents that has generated litigation. He said he feels arbitration gives them a favorable method to pursue their claims.
However, Danielson will have the right to present counter-claims if he files a response to NURD's claims.
Danielson's Minneapolis attorney Matthew Burton said they haven't officially received the letter yet, but he called the it another pointless exercise sought by NURD instead of running its business.
Danielson said he feels he would come out ahead in arbitration. He said the counterclaims he will file if he agrees to the arbitration will put NURD in a difficult position.
NURD's other letter claims Brown County owes $3,900 for June and July's Reciprocal Easement payments. Brown County has been in temporary ownership of Danielson's portion of the mall for those two months after filing tax forfeiture proceedings for unpaid property taxes going back to 2008. Brown County began immediately returning the property after determining it was not entirely sure it had filed the forfeiture at the correct time. Danielson also immediately paid his debt after the filing. The property is expected to be completely returned to Danielson in the next few weeks.
Brown County Assistant Auditor-Treasure Jean Prochniak said Brown County will not engage NURD because it believes Danielson is responsible for the payment.
"Brown County doesn't consider itself the owner of Lot 1. We have filed the cancellation with the Department of Revenue and Danielson had paid the taxes. He's still running his side and collecting rents. We consider it his responsibility," said Prochniak.
She said the Minnesota Department of Revenue has also concurred with Brown County's assessment of the situation.
It should be noted that NURD had made its June and July claims against both Danielson and Brown County.
(Josh Moniz can be e-mailed at jmoniz@nujournal.com)