A grocery store, a pharmacy and contract law are currently at the center of a lawsuit filed by the city of South Bend against developer Dave Matthews potentially worth $7.5 million.
In January, South Bend sued Matthews through his company Commerce Center LLC because his high-rise apartment building at 300 East LaSalle Avenue did not have a grocery store and a pharmacy installed by Dec. 31.
Much has been made of Matthews’ attempt to set up a haphazard handful of food items as the deadline approached, though whether or not that constituted a grocery store has not been a main issue in the lawsuit thus far.
Instead, lawyers representing Matthews on Tuesday argued the clause in the contract the city is using to try and reclaim the funds is not enforceable. They say the provision should be legally construed as a penalty and not commensurate with the actual amount of damage the city has suffered.
Meanwhile city attorneys said the $7.5 million falls under the legal umbrella of "liquidated damages" and that the suit should continue since the city has suffered a loss from the lack of a pharmacy and grocery store. St. Joseph County judge Mark Telloyan is expected to issue a ruling in the near future after hearing both sides argue their case on Tuesday.
The contract between Matthews and South Bend's Redevelopment Commission spans back to 2017 when the city agreed to give Matthews $5 million for a mixed-use residential apartment building on LaSalle Avenue in downtown. The city maintains it has a keen interest in bringing a grocery store and pharmacy to downtown and would not have given Matthews the money without promises for those two items.
After a series of delays that pushed back the deadline, the city held firm to the Dec. 31 deadline and when Matthews didn't deliver, in their eyes, the city moved to sue to claw back its funding.
If Telloyan does dismiss the suit, it's unclear if the city can file a separate lawsuit on other grounds to get a lesser amount of funds. If the suit is allowed to proceed, a lengthy legal process likely remains.
