Coralville files counterclaim in River Landing suit

The city of Coralville on Monday filed claims of conspiracy and interference with a contract against a group of businesses and property owners that filed suit to block its deal to bring Von Maur to Iowa River Landing.

The city filed a counterclaim in the original case, brought March 1. The counterclaim argues that the lawsuit caused unspecified contracts between unspecified parties not to be performed, or made the performance of the contracts “more burdensome or expensive.”

City Attorney Kevin Olson declined to specify the contracts to which the counterclaim referred, or their status, citing the ongoing nature of the litigation.

But the contract that would likely cause the biggest concerns for the city - its deal with Von Maur to buy the development site - isn't in jeopardy.

“Von Maur is moving ahead with the store and we're going to be acquiring the real estate in the next few weeks,” said Richard Davidson, the department store chain's Davenport-based attorney, adding that the store pad was being graded “as we speak.”

The counterclaim also argues that the 18 plaintiffs “intentionally and improperly interfered with the contracts” by filing the lawsuit. It asks for punitive damages, arguing that the defendants' conduct was “willful, wanton and malicious and in conscious disregard of counterclaimants' rights.”

The original lawsuit argued that transaction conveying the land, a building and other incentives to Von Maur through OliverMcMillan, the city's private developer, was structured illegally and constituted an illegal gift under Iowa law.

The suit also claimed that OliverMcMillan, as a California-based company, was not qualified to serve as an urban renewal agent for a municipality in Iowa, and that the deal circumvented Iowa's urban renewal laws by selling property for less than market value.

An attorney for the 18 plaintiffs declined to comment on specifics of the counterclaim because he had not discussed it with his clients, but he indicated he found the action disconcerting.

“Any time a city files a lawsuit against its taxpayers, I think it's a concern,” said Matt Adam, who's representing the businesses and business owners.

District Judge Marsha Bergan has already rejected one motion by the city and OliverMcMillan to dismiss the lawsuit. She also has rejected the plaintiffs' request for a temporary injunction to halt the land transfer.

Von Maur has been silent through most of the proceedings.

Davidson, Von Maur's attorney, said Monday that the department store chain is “pretty confident it will be dismissed.”

“If this isn't a legitimate use of urban renewal, I don't know what is,” Davidson said. He said the city of Coralville has done “a fantastic job of turning a blighted area into a beautiful gateway to the city.”

The lawsuit also argued that Coralville violated state economic development grant laws by using more than $9.5 million in incentives to persuade Von Maur to move from adjacent Iowa City.

Davidson called that claim “malarky.”

The city of Coralville has said that Von Maur was already looking for a better store site with highway visibility and access when it was approached to consider Iowa River Landing.

Coralville's agreement with Von Maur calls for the city to reimburse some of the expenses of terminating its lease at Sycamore Mall in Iowa City.