Settlement talks between the U.S. Postal Service and the owner of its downtown Milwaukee building failed to produce an agreement over maintenance issues and a pending eviction case will now move forward in federal court.
“We have tried, but settlement talks with USPS have reached an impasse,” Matt Garrison, managing principal of Chicago-based R2 Properties, said in an email. “We fundamentally disagree on the tenant’s obligations under the lease to maintain the building, so we will look back to the courts to resolve this issue.”
The U.S. Department of Justice has previously said it cannot comment on pending litigation. Attorneys representing USPS did not immediately respond to requests for comment on the case.
Garrison and R2 bought the downtown post office building in 2015 for $13.1 million. He later unveiled dramatic redevelopment plans for the site, including office, residential, entertainment and retail projects once the post office’s lease is up. The lease dates back to the 1970s and could potentially allow USPS to stay in the building until 2045.
An R2 affiliated entity, 345 Property Owner LLC, filed a lawsuit last year seeking to evict the U.S. Postal Service, alleging it had not properly maintained the 1.1 million-square-foot building it uses at 341 W. St. Paul Ave.
The issues R2 has pointed to include the need for safety netting to be installed under concrete ceilings, obvious signs of concrete deterioration and water infiltrating concrete slabs and dripping to floors below. The two sides also have differing views on whether a seawall along the Menomonee River is damaged.
The Postal Service has argued in court filings that it is does not have to perform repairs to the building on demand.
USPS filed a motion to dismiss the case in December, but the parties asked for a delay in the case while they engaged in settlement talks. At one point, those talks were delayed by the federal government shutdown, but the R2 affiliate ultimately had a May 1 deadline to respond to the motion to dismiss.
The plaintiff filed an opposition to the motion on Wednesday and also sought to file an amended complaint. In addition to eviction, the amendment also seeks monetary damages for eminent domain because USPS has argued it cannot be evicted even if it broke the contract.
With no settlement in the works, the case will move forward, first with a ruling on the motion to dismiss and potentially a trial at a later date.
