DULUTH - A $4.5 million sale of the West Duluth Spirit Valley Mall, which includes the long-vacant Kmart, is tied up in court over an alleged contract breach.
Sale of former West Duluth Kmart tied up in court
The Minneapolis-based buyer has a vision that includes pickleball courts inside the former big-box store.
October 27, 2023 at 12:00PM
Minneapolis-based developer First & First sought to buy the 158,000-square-foot property from Chadco of Duluth in part for pickleball courts, according to court records.
The loss of the Kmart in 2018 left a retail hole in West Duluth, with other stores of its kind nearly a 20-minute drive from the neighborhood. The blighted building has since sat empty. Finding the right buyer is a top priority for the city, Mayor Emily Larson said in her State of the City address last spring.
It's a site that "desperately" needs to be redeveloped in a way that connects rather than divides the business district, she said.
Chadco had previously attempted to turn it into a storage facility, which the city Planning Commission denied partly because of its proximity to housing.
A closing date of Jan. 30 passed without a sale to First & First, and both companies blamed the other for varying reasons.
Chadco, owned by longtime area real estate developer Kent Oliver, canceled the purchase agreement in March. First & First sued Chadco alleging a contract breach, and asked the court for a temporary restraining order to stop the cancellation of the sale; a request denied by St. Louis County District Judge Eric Hylden. First & First appealed the District Court's decision, and a hearing was held this week.
Ryan Dreyer, an attorney for First & First, declined to comment on the case. Court records show the company says it needed Chadco to provide certain documents before closing, which it didn't receive.
From Chadco's perspective, the deal fell through because First & First couldn't obtain financing, said James Magnuson, an attorney for Chadco.
Chadco considers the deal dead, Magnuson said this week.
While the company could sell the property to someone else, potential buyers are notified that a lawsuit is pending and that makes it difficult, he said. A decision from the Minnesota Court of Appeals in First & First's favor likely wouldn't affect the behavior of either side, he said, as the contract breach lawsuit continues.
The proposal suggests removing the 20-year protection on the Superior National Forest that President Joe Biden’s administration had ordered in 2023.
