The developer of the Village at Riverstone, in Coeur d'Alene, is appealing to the 9th U.S. Circuit Court of Appeals a recent ruling by a federal judge here in favor of a big bookseller that canceled its lease and decided not to occupy a building that Riverstone built for it.

William D. Symmes, an attorney with Spokane-based Witherspoon Kelley PS, asserts that U.S. District Court Judge Edward Shea erred when he ruled on July 16 in Spokane that Riverstone hadn't met its performance requirements in the lease contract.

"It's a matter of interpretation of the lease," Symmes says.

The law firm represents the developer, Riverstone Center West LLC, a subsidiary of Spokane-based SRM Development LLC, which filed suit against Barnes & Noble Inc., in December 2008, alleging breach of contract after the New York-based bookseller refused to accept the building and terminated its lease. Barnes & Noble had previously announced plans to lease 28,000 square feet of space on the ground floor of a $9 million structure that was under construction at 2129 N. Main, in Coeur d'Alene.

At that time, Barnes & Noble was to be the largest retail anchor in the Village at Riverstone, the 25-acre centerpiece of the 160acre Riverstone development along the Spokane River, northwest of downtown Coeur d'Alene.

Riverstone had sought a jury trial when it filed the original suit. The suit also asked the court to enforce the terms of the multiyear agreement. Shea ruled in his summary judgment, however, that the lease contract between the developer and the bookseller was unambiguous and, as such, questions of law must be resolved by the court rather than a jury.

C. Matthew Andersen, an attorney with Winston & Cashatt Lawyers PS, of Spokane, which represents Barnes & Noble in the case, says that company believes the judge's decision was consistent with Idaho Law.

"The developer had obligations to meet that it didn't meet and breached its agreement with Barnes & Noble," Andersen says.

In addition to dismissing the case, Shea ruled that Barnes & Noble is entitled to costs and attorney fees it incurred in the case, although he hasn't ordered Riverstone to pay a specific dollar amount yet. Barnes & Noble has filed a motion to recover $1.3 million in fees and costs, and Riverstone is seeking to reduce that amount to under $1 million.

Riverstone filed a notice of appeal of Shea's summary judgment to the 9th Circuit on July 29. Symmes says Riverstone's brief in support of the appeal is due in November, and Barnes & Noble's response brief is due in December.

No hearing dates are scheduled before the 9th Circuit yet, he says.

Symmes says the central issue in the appeal is whether Riverstone's plans to build a 5,400-square-foot structure that was to house a Utah-based Hapa Fish Co. restaurant had proceeded far enough by Nov. 15, 2008, when Riverstone was scheduled to turn a completed building shell over to Barnes & Noble.

Among performance requirements in the contract, Riverstone was to have four full-service restaurants built to a comparable state of construction as the Barnes & Noble shell by that date, Shea wrote in his judgment.

The Hapa Fish Co. outlet was to be the fourth restaurant, and was to be located just south of the building intended for Barnes & Noble, Symmes says. Although Riverstone had obtained a building permit for the planned Hapa Fish Co. outlet on Nov. 14, 2008, "the vacant lot, on the drop-dead date of Nov. 15, 2008, is clearly not physically comparable to a completed shell," Shea says in his ruling.

Symmes contends the building construction didn't have to be as far along as the Barnes & Noble shell, but only had to be leased, built, and open by Barnes & Noble's planned opening date of April 1, 2009. He says the building would have been constructed in time for Hapa Fish Co. to open there before the scheduled April 2009 opening.

Hapa Fish Co. shelved its plans for the restaurant at Riverstone shortly after Barnes & Noble canceled its lease.

Andersen noted that there still is no restaurant at that site.

"The lease doesn't speak in terms of intentions; it speaks in terms of benchmarks," he says. "That's fairly typical for this type of lifestyle shopping center."

Riverstone's Web site lists 31 commercial tenants, most of which are located within the Village at Riverstone. The Village has 210,000 square feet of retail space, 133 condominiums, a 14-screen cinema, and a parking garage. Some of the condominium units were offered at auction last spring due to slow sales.