Arguments made in JCPenney-Towne Mall injunction case

Attorneys for Penney Property Sub Holdings LLC, which owns the Elizabethtown JCPenney, and for Linnick Investments LLC, which owns the Towne Mall, were back in Hardin Circuit Court Thursday afternoon for a hearing on Penney Property’s motion for an injunction to halt renovations at the Towne Mall facility.

Zachary VanVactor with Stites and Harbison PLLC called Bill DeMuth as his first witness. DeMuth retired recently from his position as JCPenney’s real estate director, in which position he oversaw development at shopping mall properties. DeMuth said during testimony that he was not part of the recent lease negotiations between Penney Properties and Linnick Investments but he did respond to communication from Linnick owner Tim Aulbach on a proposal for a loading dock to be shared between JCPenney and Bealls. DeMuth said the company denied the proposal for security reasons, and he said Aulbach did not say anything to him about the installation of the wall that was built over the store’s interior entrance to the mall, which was covered as part of plans to renovate Towne Mall into an outdoor shopping space and to move Bealls into the space next door. 

When asked by Linnick’s attorney Shawn Williamson with Wyatt, Tarrant, and Combs LLP about the floorplan for the renovated mall being sent to DeMuth with the loading dock request, DeMuth said no specific request was made regarding the new layout for the mall.

Aulbach was then called as a witness by the plaintiffs. When VanVactor said Aulbach never sent any official plans on the renovations to the addresses listed in the lease agreement between the companies, Aulbach said nobody from Penney Properties said the information needed to be sent to those addresses when discussing the loading dock. Aulbach later said the renovations only became an issue when JCPenney asked to renegotiate its lease agreement. Aulbach said the company’s lease is due to increase to $4 per square foot beginning in 2026, but the company asked to stay at the current rate of $1.90 per square foot. Aulbach said that rate is well below market value and doesn’t offset the $700,000 he has put into roof and HVAC upgrades along with improvements to the building’s exterior. 

When defense attorney Corky Coryell asked Aulbach what impact an injunction would have on the property, Aulbach said “Staggering. It might even ruin us.” Aulbach said stalling the work jeopardizes the $10 million commitment from Malibu Jacks and a $3.5 million lease extension from Belk’s currently in place, as well as about $10 million in potential tenant commitments.

The hearing was adjourned after about five hours with at least one more witness due to be called. The plaintiffs, defense, and court will set the next court date after consulting schedules.