NEW ULM - The Marktplatz Mall's legal dispute is heating up again ahead of trial dates with New Ulm Retail and Development, LLC (NURD), the owner of the northern two-thirds of the mall, taking action against Randy Danielson and his business SEK Financial, LLC, who owns the rest of the mall.
NURD is owned by California father-son duo Cliff and Mike Strand and Ohio businessman Lance Warner. NURD's lawsuit in Brown County District Court alleges that since Danielson took over the defaulting first mortgage on NURD's side of the mall, he has failed to give proper accounting of the balance due and misused the rents he collects. Danielson, who denies the allegations, purchased the mortgage in 2011 to prevent a sheriff's sale of NURD's portion.
On Tuesday, May 21, both sides will submit their suggested schedule for trial dates in NURD's lawsuit to Judge Robert Docherty, with the start aimed for June or July.
But, NURD has taken two actions antagonizing Danielson ahead of the court dates. First, NURD sent letters Thursday directing tenants on its side of the mall to send their rents to Brown County District Court Administration for retention until the case is resolved. This directive was sent without action or consent from the court.
A representative with Court Administration said it is very rare that rents are sent to a court and those instances require both conditions and paperwork. The representative said the department would seek Docherty's advisement if any rents are received.
Danielson said the letter and previous NURD actions are part of an effort to force him into settling the mortgage for less than the amount owed. Danielson said he has been paying his and NURD's utilities with the rent income to prevent the mall's utilities from being shut down by the City. NURD has refused to pay its utilities since Danielson started collecting rents, stating he is obligated to pay them if he collects rents.
"We don't care what pressure this puts on Danielson. [He] has created his own problems," said NURD member Mike Strand, "He has to give us proper accounting. The courts are fully able to keep the rents in an account until this is resolved."
Strand also confirmed NURD has been working closely with the plaintiff of an unrelated personal injury lawsuit against Danielson over an individual slipping on ice under his mall portion. Strand said he does not consider the situation intimidation because they were approached first and NURD will do anything it can to help the plaintiff.
NURD has created friction with Danielson in the past with unusual actions during their dispute. NURD previously sent a letter directing its tenants to send their rent payments to NURD member Cliff Strand. Several tenants confirmed they sent several months of rents to NURD until Danielson informed them of his rights to the rents.
In June of 2012, a series of Youtube videos critical of Danielson using NURD's exact argument and documents began appearing. NURD denied creating the videos despite e-mailing them to entities around town, simply claiming they had "found" the videos. Because some of Danielson's personal information was displayed in the videos, Docherty ordered the videos pulled. The videos then disappeared.
Another situation involved NURD constructing a wall in early 2012 through the middle of the shared lobby area dividing the sides of the mall. NURD alleged Danielson was improperly heating his side and wasting their money. The wall became a major source of dispute between the sides for nearly half a year before being torn down.
City officials are hopeful the trial for the lawsuit will lead to some kind of resolution, particularly because several businesses cited the conflict when moving out of the largely empty mall.
Both mall owners said they are confident they will be vindicated in court.
"Danielson's days are numbered," said Mike Strand, "He will be forced to give accounting."
Danielson said he will be proved right, leading to either NURD being forced to reach a settlement with him or him being able to foreclose on their mortgage.
(Josh Moniz can be e-mailed at firstname.lastname@example.org)