Jury rules in Caruso’s favor

LOS ANGELES — A jury on Thursday found that owners of the Glendale Galleria tried to block leading restaurant chain the Cheesecake Factory from signing a lease at the Americana at Brand, and awarded Americana developer Caruso Affiliated Holdings $74 million in damages.

The jury also determined that Galleria owner General Growth Properties acted with malice, oppression or fraud, a legal standard that triggers additional punitive damages. The trial will resume Tuesday to assess the amount of the penalty.

After signing a July 2003 letter of intent to negotiate a lease at the Americana, the Cheesecake Factory didn’t ink a deal until February 2007. The restaurant hesitated, Caruso attorneys argued, because General Growth — a Chicago-based real estate investment trust that owns and manages more than 200 malls nationwide and is the restaurant’s biggest landlord — threatened to block Cheesecake Factory deals at other General Growth malls.

The 43-month delay in signing a lease stalled design plans at the Americana, marred lease negotiations with other prospective tenants that tend to follow the Cheesecake Factory and disrupted the developer’s attempt to secure a crucial loan, Caruso attorneys said.

The $74 million in damages awarded by the jury — the full amount requested by Caruso — accounts for lost income and increased construction costs accrued during the Cheesecake Factory lease lapse, Caruso attorney John Gordon said.

The smoking gun, Caruso attorney Kenneth Chiate said Monday, was a 2003 voice mail left by Cheesecake Factory real estate brokers Robert Schnur and Marc Guth for the Americana’s former lease manager, James Ashton. The message was in response to Ashton’s repeated requests in the months following the July letter of intent to begin lease negotiations.

Schnur and Guth warned in the message that General Growth, which was allegedly courting the restaurant for the Galleria, was slowing deals at other locations and reminded Ashton that their communication should remain secret.

General Growth attorneys argued that the company never knew of the letter of intent and that Schnur and Guth were crafting a semblance competition between the Galleria and the Americana to get a better deal for the Cheesecake Factory.

The restaurant’s delay in negotiating a lease was not caused by General Growth, but by a host of other construction-related and legal hurdles, General Growth attorney David Battaglia said.