Smith's Food & Drug Centers asked the Court of Appeals Wednesday to reverse a $200,000 verdict against the grocery chain stemming from Smith's 1990 decision to pull out of Olympus Hills shopping mall.

Smith's did not break its contract with Olympus Hills when it moved its store out of the shopping center into a nearby vacant Alpha Beta store, Smith's attorney James Jardine told the court.Smith's 30-year lease with Olympus Hills allowed Smith's to use its store space to sell groceries or "any other lawful retail selling business," Jardine said, quoting from the lease. When Smith's pulled its full-service grocery store out of Olympus Hills, and replaced it with a warehouse box store, Smith's was honoring that lease, Jardine said.

Olympus Hills attorney disagreed. Smith's had an implied contractual obligation to be the anchor tenant of the shopping complex. When Smith's put in a warehouse box store, Smith violated that obligation, said Robert Campbell, attorney for Olympus Hills.

If Smith's had subleased the space to another grocery store, a major sports store like Gart's or a general goods store like Fred Meyer, Smith's would have honored the lease. "But they took a warehouse box store - a use no one had ever heard of and one that Smith's knew nothing about - and put it in the middle of one of the strongest suburban neighborhoods in the state. They did it to drive traffic away," Campbell said.

"Smith's wanted to force all the traffic in that entire area of the county to shop at Smith's 33rd South store," Campbell said.

Smith's didn't want a grocery store in the Olympus Hills mall, Jardine acknowledged. But the warehouse box store was an honest effort to honor the lease. "The warehouse box store carried $500,000 worth of inventory. It was open 12 hours a day, six days a week and drew 900 cars into the shopping center a day," he said. "It clearly wasn't an anchor store. But it wasn't a sham either."

Jardine wanted a 1990 jury verdict reversed because Smith's can't be found guilty of violating an implied covenant, if that implied covenant is contrary to the black-and-white language of the lease, he said.

Olympus Hills owners sued Smith's for more than $2 million, claiming traffic in the shopping center dropped 70 percent after the grocery store left.

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As part of the suit, the owners sought a court order mandating that Smith's pull its warehouse box store out of the mall so they could find a new anchor tenant.

After a jury found Smith's guilty of violating its lease, 3rd District Judge Michael Murphy ordered Smith's to pay $146,000 in damages and vacate the Olympus Hills building immediately.

Murphy also ordered Smith's to pay two months of back rent, calculated at $801 a day.

A year after Smith's pulled its grocery store out of the mall, Dan's Food signed a 25-year lease for the same space.

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