‘Do-or-die time’ for Northlake Mall after it sued stores that left following shootings

As of this week, Northlake Mall’s website lists American Eagle as “temporarily closed.” But that doesn’t tell the whole story.

The clothing retail chain shuttered its store in the north Charlotte mall back in the spring.

In response, financially struggling Northlake Mall sued the national apparel chain in federal court, claiming the departure led to fewer shoppers, more stores leaving and a decrease in the mall’s value. The mall also is suing four other national retailers who left in recent months, claiming they still owe rent.

But American Eagle countersued Northlake, citing safety concerns and calling the mall a “warzone” that’s a “hotbed for crime” following several high-profile shootings there over the past two years.

Spinoso Real Estate Group of Syracuse, New York, maintains and operates the mall, which is in receivership.

American Eagle said the complex is not operated as a “first-class mall” as promised. The retailer said its lease allowed the store to leave “due to emergency events” beyond the store’s control, including “rampant violence” and a “draconian” mall policy that forbids teens from shopping unattended during certain hours.

Between the lawsuits, the violence and the ongoing financial troubles of the mall, one retail expert at Queens University of Charlotte said the shopping center is in a “death spiral.”

”It’s going to be extremely difficult for Northlake to come out of this,” marketing professor Steven Cox said.

‘It’s do-or-die for (Northlake) mall’

Perhaps the most high-profile of store exits happened on March 1, when Apple store abruptly closed for good in the middle of the day following a spate of three shootings in as many months at Northlake. The same month, men’s, women’s and children’s apparel chain Buckle closed.

Since then, four other stores left the mall — apparel and accessories retailers Michael Kors, Chico’s, Soma and White House Black Market. Spinoso is suing those retailers in Mecklenburg County Superior Court, Observer news partner WSOC-TV reported.

Spinoso has to sue those stores to keep others from leaving, said Cox, at the McColl School of Business at Queens University of Charlotte. “It’s do-or-die for the mall. They need the revenue and no one else is moving in,” he said.

The two-story, 1.1-million-square-foot mall that opened in 2005 has been in receivership since 2021. The lawsuits show how dire the situation is for the mall.

Most civil cases reach resolution outside of the courtroom, said Ronnie Crisco, partner at Arnold & Smith law firm based in Charlotte.

“In my experience, litigation is not the first preference of the landlord in a situation like this. It’s not good business under most circumstances. But these are not normal circumstances,” said Crisco, who has 18 years of experience in civil litigation including commercial-tenant disputes. “I don’t expect to see these fights unless it’s serious.”

Claims in the Northlake Mall lawsuits

Spinoso sued American Eagle Outfitters, claiming the apparel chain broke its lease after renewing it in January then abandoning the premises in the spring.

Since the chain left, the mall has had fewer shoppers, resulting in more store closures, Spinoso said in court documents in July. “The value of the shopping center has decreased,” Spinoso claimed, and is seeking damages in excess of $75,000.

American Eagle closed its 7,000-square-foot store on April 29 after 20 years at the shopping center, according to court documents.

On Sept. 12, American Eagle responded with a 19-page countersuit, claiming “rampant violence” at Northlake Mall jeopardized the safety of its employees and customers, causing a “significant” drop in sales.

Spinoso failed to uphold “the standards of first-class shopping” as promised, instead allowing the mall to become “a known hotbed for violent crime,” American Eagle claimed in its lawsuit. “Spinoso allowed the shopping center — Northlake Mall — to deteriorate into an atmosphere reminiscent of a warzone, replete with violent criminals, multiple shootings, terrorized tenants and customers, and diminished business.”

American Eagle cited two shooting incidents in 2021 — including one that led to attempted murder charges — that caused the store to lose a “significant amount of business and income.”

Also that year, the mall extended its chaperon policy requiring youths 17 and younger to be accompanied by an adult on Fridays and Saturdays starting at 3 p.m. instead of 5 p.m. American Eagle said the mall’s expanded youth supervision policy restricted the store’s customer base from shopping there.

From December 2022 to February of this year there were three more shootings, all involving disputes between people that ended in non-life-threatening or no injuries.

In March, after Apple’s departure, Northlake announced new security measures, including more officer patrols, gun-sniffing dogs and vehicle recognition technology. American Eagle, in its lawsuit, said they were security moves “one might expect at a prison, not at a ‘first-class’ shopping center.’ ”

American Eagle is seeking damages in excess of $75,000.

Spinoso did not respond to repeated requests for comment from The Charlotte Observer about claims in the lawsuits or its own legal action against former tenants.

What the litigation signals

Litigation over lease disputes is not uncommon. But American Eagle’s case has special circumstances, including documented crimes associated with the mall and bad publicity, attorney Crisco said.

“This is a little bit different because you’ve got a lot of different tenants all deciding to leave,” Crisco said, referring to Northlake Mall’s tenant lawsuits.

For Spinoso, it’s not just about lease payments but each store’s obligation to operate at the mall, too. “That’s part of how the mall will continue to be viable,” Crisco said.

A mall can fix lighting and parking lot problems, Queens professor Cox said, but it can’t stop people from coming to the complex with guns. “The lawsuit is not the problem. It’s the perception of people that they’re unsafe if they go to that mall,” Cox said, “and they’ll stop coming.”

A judge will have to determine whether the landlord effectively held up its responsibility under the lease agreement to run a commercially viable mall, Crisco said.

It’s been two years since the mall went into receivership. Meanwhile, plans to sell the mall have been delayed. In June, A Spinoso attorney told North Carolina Business Court that Northlake won’t be listed for sale until next year, in part, over security incidents that have impacted the “market perception” and the mall’s stability.

The impact of crimes at the mall could be a legal defense excusing tenants from their obligations to pay rent or continue operating at the mall, Crisco said. ”I don’t think anyone would argue it’s not going to have an effect on the foot traffic to the mall,” Crisco said. “That makes it a very interesting fight.”

Northlake Mall isn’t the only shopping center America Eagle is suing. On Sept. 12, American Eagle also filed a lawsuit against Westfield Mall in San Francisco to get out of its lease over “rampant criminal activity,” including “physical attacks and assaults” on employees from May 2022 to this past May.

Legal analyst Steven Clark told ABC7 Bay Area news “If American Eagle is allowed out of its lease based on the crime, the violence, the shoplifting and the other problems at the mall, I think you’ll see a lot of other retailers looking at this as a tool to say ‘we want out as well.’”

That could happen in Charlotte, too.

If American Eagle wins its countersuit against Northlake, other tenants will have a way out, Cox said, “so you’ll see a rush to the door.”

Northlake Mall ‘death spiral’ or ‘right direction’?

Back in March after Apple closed, retail industry expert Greg Buzek told the Observer that losing such a big name would create an “avalanche” of closings.

What’s next for Northlake Mall after Apple store’s hasty exit and trio of shootings

Northlake also has lost other national retailers, including anchor store Dick’s Sporting Goods in 2021, and Starbucks the same year. Other national chains this year announced plans to close stores, too, including Bath & Body Works and Footlocker. Neither retailer responded for comment about plans at Northlake.

Still, not all tenants want to leave the mall, which is anchored by department stores Belk, Dillard’s and Macy’s. “We have a base of customers and we have new customers coming in,” said Paul Self, assistant manager at Vilanto Fine Men’s Wear, which has sold suits and men’s accessories at Northlake for eight years.

The mall’s website directory also lists several stores that are opening, including Custom Place, a customized T-shirt, hoodies and hats shop, and D. Williams Suits.

“They’ve really upped security with police officers and the gun-sniffing dogs,” Self said. “It seems like it’s headed in the right direction.”

In August, Northlake was 85% occupied, Spinoso said in a status update in North Carolina Business Court. But that includes temporary stores like Spirit Halloween and small stores. That’s below the national mall occupancy average rate of 89%, according to Moody’s Analytics REIS data.

With fewer national stores, Northlake won’t have the revenue to afford or maintain additional safety measures, and it will be harder for the smaller stores to operate successfully, Cox said.

“It’s in a death spiral,” Cox said. “It is going to be extremely difficult for Northlake to come out of this.”

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