In re: Sears Holdings Corporation v. MOAC Mall Holdings LLC

Background

The SRZ Liquidating Trustee, joined by Transform Holdco LLC, moved under the federal discovery rules to compel MOAC Mall Holdings LLC to produce information relevant to damages allegedly caused by the stay that was in place during MOAC’s appeal. Before granting the stay, the court had required MOAC to post a $2.5 million supersedeas bond as security for possible damages, including the Trustee’s inability to enter into new subleases during the appeal. The opinion states that the Court of Appeals affirmed the underlying ruling concerning control of the MOAC Lease.

The parties had conducted discovery about the amount of damages, either within or beyond the bond amount. The Trustee and Transform said they had produced more than 1,200 documents while MOAC had produced none. MOAC argued that the motion to compel was untimely. MOAC also cross-moved to modify the scheduling order so the parties could address whether the Trustee had suffered any damages, given an agreement under which Transform would ultimately pay or advance certain costs associated with the lease.

Court’s Analysis

The court rejected MOAC’s timeliness objection. The Trustee’s discovery requests had been served on time, the court had not formally set a deadline for the close of discovery, and MOAC acknowledged that at least five depositions, including expert discovery, remained.

The court held that MOAC had opened the door to reciprocal third-party discovery by subpoenaing or relying on information from third parties concerning their dealings with the Trustee and Transform. The court therefore granted the request for discovery about communications between MOAC and the Retail Center Subtenant, identified in the opinion as Primark US Corporation. The discovery could include communications that may have contributed to termination of the subtenant’s lease with the Trustee.

The court also granted the request for discovery about communications between MOAC and the Entertainment Center Subtenant concerning property subject to the MOAC Lease or other space in the Mall of America. MOAC had relied on declarations from people connected with the Entertainment Center’s lease negotiations, so the court found that fairness supported reciprocal discovery.

The court denied the specific request for discovery about communications between MOAC and the Potential Acquiror during the period from May 3, 2024, through April 28, 2025, based on MOAC’s representation that it had no such communications during that period. The court also denied the request for economic terms from proposed transactions involving the former Sears location. Even assuming that information could be relevant, MOAC represented that its preliminary discussions with potential tenants never reached an exchange or negotiation of economic terms, leaving no responsive economic terms to produce.

Ruling and Case Status

The court granted the Trustee’s motion to compel, Docket Nos. 129 and 131, in part, and denied MOAC’s cross-motion to modify the scheduling order, Docket No. 135. The court ordered MOAC to produce discovery responsive to the Trustee’s first request and to the portion of the second request concerning communications between MOAC and the Entertainment Center. MOAC’s production was due November 3, 2025. The Trustee could submit additional or amended discovery requests by November 14, 2025; MOAC’s responses and objections were due two weeks later; and all discovery was to be completed by January 9, 2026.

The court did not decide whether the Trustee had actually suffered damages. It stated that the damages issue would be addressed after the parties completed briefing on the motion concerning enforcement of the supersedeas bond. Judge Colleen McMahon warned that the court could impose sanctions if a party failed to comply with its discovery obligations or the court’s directives.