Saks Fifth Avenue countersues Bal Harbour Shops for defamation

UPDATED, Sept. 4, 10:25 a.m.: Saks Fifth Avenue is striking back at Bal Harbour Shops for attempting to evict the luxury retailer over alleged missed rent payments.

On Tuesday, the department store chain countersued Bal Harbour Shops and Matthew Whitman Lazenby, president and CEO of Bal Harbour Shops’ owner Whitman Family Development, for defamation, breach of contract and breach of fiduciary duty. The suit was filed in Miami-Dade Circuit Court.

According to the complaint, Saks alleges Bal Harbour Shops and Lazenby disclosed confidential business information to the press as part of an effort to coerce the retail company into making rent payments that were in dispute.

“The defendants initiated a malicious public smear campaign designed for no purpose other than to exact revenge on a tenant who justifiably stood up to the unjustified demands of an unreasonable landlord,” the lawsuit states.

After publication, Lazenby said in an emailed statement that Saks’ lawsuit has no merit.  “We have reviewed Saks Fifth Avenue’s complaint alleging breach of contract and business defamation filed yesterday against Bal Harbour Shops and find it to be without any legal basis,” Lazenby’s statement said. “We intend to vigorously defend this litigation while pursuing all remedies to enforce Saks’ lease obligations and we look forward to these issues being adjudicated by the courts.”

Last month, Bal Harbour Shops sued to evict Saks Fifth Avenue, alleging the luxury shopping center’s anchor tenant since 1974 had failed to pay more than $1.8 million in rent derived from the department store’s net sales. Whitman Family Development is also seeking a partial refund of an $18 million advance the mall provided Saks to renovate the department store amid a $500 million expansion of Bal Harbour Shops, which is at 9700 Collins Avenue in Bal Harbour.

Saks contends its lease agreement contains a clause allowing the company to be excused from its obligations when the store has to close because of an Act of God and government lockdowns. Bal Harbour Shops, including Saks, was forced to close in March along with other non-essential businesses under Miami-Dade and Bal Harbour emergency orders to slow the spread of coronavirus. The shopping center reopened in May.

Ian Putnam, president and CEO of HBC Properties and Investments, the real estate operating entity for Saks’ parent Hudson Bay Company, said in a statement that the department store has been working with its landlords across North America “to amicably and logically share the burden of losses stemming from the ongoing global pandemic.”

“We are disappointed that Mr. Lazenby chose to breach our long-standing agreement and disparage Saks Fifth Avenue, an iconic luxury retailer that has been vital to Bal Harbour’s success for 45 years,” Putnam said. “Unlike others, this landlord has resorted to providing denigrating statements and confidential information to the media for the sole purpose of coercing Saks into settling a disagreement.”

As a result, Saks has been forced to “grapple with the damage to its business and reputation among customers, associates and partners,” Putnam added.

Saks’ lawsuit states the department store’s cash flow stopped when the governmental closures went into effect and many of its employees had to be furloughed. Saks and Bal Harbour Shops disagree over the impact the pandemic had on the department store and the amounts owed under the lease agreement, the complaint states.

Saks accuses Lazenby of sharing confidential information about the department store’s net sales to the press in order to increase pressure on the retail company to resolve the dispute on terms favorable to Bal Harbour Shops.