California Apparel News

High-profile boutique Kitson has opened stores in far-flung locales such as Dubai, but the Los Angeles–based retailer ran into problems opening a boutique in West Hollywood, Calif., less than a mile from its headquarters on Robertson Boulevard. Kitson, the famous pop-culture and fashion boutique, intended to open a more-than- 8,000-square-foot emporium to sell men’s and women’s fashions at 8600 Melrose Ave., which is a few blocks west of the exclusive Melrose Place strip of true luxury and designer boutiques.

But recently, lawyers for Kitson filed a suit in Los Angeles Superior Court against property landlord B&B Investment Corp. for infractions including fraud, breach of contract and negligence. The retailer’s lawyers also sued real estate firm CB Richard Ellis for broker malpractice. CB Richard Ellis had represented the property’s landlords. The suit was filed Dec. 17, and the plaintiff demanded more than $1 million in damages.

B&B Investment Corp. filed a suit against Kitson on Jan. 25. It denied the retailer’s charges and alleged that Kitson did not do its homework on the property’s zoning and had not paid its $70,000 rent for December 2007. B&B also is known as BMB Investment Corp. The B&B executive named in Kitson’s suit is Ben Soleimani.

No trial date has been scheduled, but lawyers for both sides might try to arrange a mediation by the end of April, according to Kitson owner Fraser Ross.

Kitson signed a lease March 19, 2007, with intent to open a store in the building. But the retailer balked at the deal after Nov. 29, 2007, when Kitson lawyer Glenn Feldman formally met with planning chiefs of the city of West Hollywood. According to court papers, Susan Healy Keene, the city’s director of community development, told Feldman that 8600 Melrose Ave. had been zoned for wholesale and showroom businesses. Soleimani initially intended the business address to house a showroom for his family’s rug business, according to the suit.

The property owners needed to more than double the building’s parking spaces in order to get the permits to make the space a retail store. It had 12 spaces behind the property.

The lawsuit states that Healy Keene had warned property owner B&B Investment about the parking problem. Kitson’s suit charges that the landlord knew about the parking issues and had not properly disclosed them.

To save the deal, Ross would have to find additional parking spaces, but the retailer thought it could take more than one year to solve the parking and other permitting issues. Ross believed that it was a bad investment to pay $70,000 monthly rent on the building while the issues were solved. “We were not going to pay rent for air,” Feldman said.

A notice posted outside the building solicited public comments for a proposed permit change. The city of West Hollywood did not return calls to California Apparel News for comment by press time. Lawyers for B&B Investment Corp. declined to comment for this article.

B&B Investment has owned the Melrose property for more than 10 years. The current building on the site was built less than two years ago by B&B Investment. Construction barricades currently surround the building. The building, at 8600 Melrose Ave., was going to be subdivided into different retail spaces. Kitson was reportedly going to take one of the spaces—8590 Melrose Ave.

The block was once the site of pioneering fashion boutique Diane Merrick. From 1971 to 2006, Diane Merrick and other small independent retailers did business on the block. Diane Merrick moved when Soleimani tore down the building.

West Hollywood still might be the address for another Kitson boutique. Ross said that he is scouting real estate in the area. However, the sour deal forced Ross to get into the outlet business. On March 7, he opened a temporary outlet store in Newport Beach, Calif., to help get rid of the entire inventory he purchased for the Melrose store. But he claims it’s a good move.

“When you do [Kitson’s] volume, you need an outlet store,” he said. Kitson is forecasted to earn $28 million in 2008.

These sales reflect the earnings of four Kitson stores on Robertson Boulevard and its Internet business, www.shopkitson.com.