Legal Battle Over Turtle Creek Ends in Settlement

A window into the operations of a Jonesboro mall closed last week when developer Bruce Burrow settled the lawsuit he’d filed against his business partner.

Burrow, who’d sued David Hocker of Owensboro, Ky., over the management of The Mall at Turtle Creek, said “everything is fine” now, comparing the battle to a family squabble.

“We’re like any family member: Once in a while people look at things a little different,” Burrow told Arkansas Business last week. “We’re back to where we were.”

Burrow, Hocker and Marty Belz of Memphis co-owned the mall through their membership in Turtle Creek Partners LLC. Belz wasn’t named as a defendant in the lawsuit. Hocker had countersued Burrow and was attempting to have him removed as a partner, just before the lawsuit was settled Tuesday.

Scott D. Hornaday, president of David Hocker & Associates Inc., first declined to comment on the case. After the case was settled, Hornaday issued a statement on behalf of the partners.

The Turtle Creek Partners LLC “looks forward to continued outstanding tenant performance at The Mall at Turtle Creek and also to attracting and announcing new and exciting merchants to the region’s premier shopping destination in the near future,” the statement said.

Under the terms of the settlement, David Hocker & Associates will continue to manage and serve as the leasing agent for the mall while Belz, Burrow and Hocker will continue their roles as co-managers of the LLC.

“I’m happy,” Burrow told Arkansas Business. “And I was the one who brought the suit, so I think everybody is happy now.”

But Burrow wasn’t so happy on Oct. 3, when he filed the lawsuit in Craighead County Circuit Court. In the lawsuit, Burrow accused Hocker and his company of misleading him about the financial condition of the mall.

Burrow told Arkansas Business last week that the dispute involved “misunderstandings … and we’ve worked through those now.” Burrow declined to say exactly what the misunderstandings were.

Still, the lawsuit Burrow filed on behalf of Turtle Creek Partners offered a rare peek inside the development of the mall and the business relationship between Burrow and Hocker.

‘Self-Dealing’ Alleged

In 2004, developers broke ground on the 73-acre site at Highland Drive and Stadium Boulevard in Jonesboro that would become The Mall at Turtle Creek.

“This is the culmination of about a 20-year effort on my part, so we’re happy to see it happen,” Burrow told Arkansas Business in September 2004.

Burrow wanted the mall to become a regional retail center that would lure back shoppers who had left the area for the big city of Memphis.

Hocker was in charge of the construction of the mall and its management.

In the lawsuit, Burrow accused Hocker of mismanagement and “self-dealing” during the development of the mall.

The construction cost of the mall was projected at $68.1 million. But overruns raised the construction costs to nearly $85 million, Burrow said in the lawsuit.

Hocker and his company, though, ended up with more than $4 million in fees, Burrow said.

What would later prove a problem was the management arrangement between the partnership and Hocker, Burrow said in the lawsuit.

Hocker’s management pay wasn’t tied to the financial success of the mall; instead it was based partly on how much space was leased. Hocker received $5.50 for each SF of space his firm leased at the mall, regardless of whether the tenant lease was profitable or “financially reasonable for the mall,” Burrow said in the lawsuit.

While the arrangement generated “millions of dollars in leasing commissions” for Hocker’s firm, it wasn’t financially beneficial for the mall. The fees were paid to Hocker’s firm “regardless of the amount of the rent or other financial incentive provided to the tenant,” Burrow said.

Burrow also said Hocker “purposefully and intentionally misrepresented the financial condition of the mall and financial data regarding leases” to hide Hocker’s alleged breach of fiduciary duty.

Burrow was suing on several grounds, including breach of the management agreement and breach of fiduciary duty. Burrow also wanted a judge to cancel Hocker’s management agreement and appoint a receiver.

Hocker Fires Back

Hocker denied Burrow’s allegations and filed a counterclaim against Burrow.

He said in court filings that Burrow didn’t have authority to bring the lawsuit on behalf of Turtle Creek Partners LLC in the first place because a majority of the members hadn’t voted for litigation.

Marty Belz, a longtime business partner of Burrow, signed an affidavit that said he didn’t authorize the suit to be filed.

Hocker also said in the lawsuit that Turtle Creek Partners owed him more than $350,000 in fees. And he accused Burrow of keeping money from leases for other projects that Turtle Creek Partners owned.

To further strain the relationship, Hocker began making moves in December to vote Burrow out of the partnership. On Jan. 3, Burrow filed an emergency motion for a temporary restraining order to prevent the vote, which was scheduled for Jan. 4.

Burrow said in an affidavit filed with the motion that being removed from the partnership might trigger a default on the $80 million loan that was used to build the mall. “Such an action would have devastating consequences for all involved from which none of the parties may survive,” Burrow wrote.

On Jan. 4, Hocker agreed not to hold the meeting to remove Burrow.

In the meantime, Burrow and Hocker worked out their disagreements and settled the case, Burrow said last week.

“We’ve been friends and partners for 20 years, and we’re back at that point,” Burrow said.

‘It’s Going Up Now’

These days, the mall is doing “very well,” Burrow said.

He said the mall attracts between 25,000 and 33,000 cars a day from 16 counties in northeast Arkansas and southern Missouri. Burrow said that in 2011, the mall had about 10 million visitors.

Belz told Arkansas Business last week that the mall was about 93 percent occupied. The occupancy rate has been a little higher or lower in years past, he said. “It’s been up and down, but it’s going up now,” Belz said.

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