Spa spat judgment costs pair $958,000

On April 22, Hennepin County Judge David Duffy ordered Uptown spa moguls Tom Schmidt and Jeff Lillemoe to pay $958,272 plus attorney's fees to Brooklyn 55 LLC.

Schmidt owns Schmidt's Urban Retreat, 1608 W. Lake St.; Schmidty's, 1422 W. Lake St.; and a second Schimdty's location in downtown Minneapolis' Marshall Field's. Lillemoe, Schmidt's partner, serves as Schimdty's president and ran PAGODA, a luxury day spa whose brief existence spawned the lawsuit.

Schmidt and Lillemoe spent a reported $4 million renovating the former Walker Library building at 2901 Hennepin Ave. S. into the lavish spa.

Building owner John Johannson, also invested in the business. The spa was open for six months before closing abruptly last June. The judgment is to repay salon's equipment loan assumed by Brooklyn 55 LLC from US Bank, Johannson said.

After the large adverse judgment, Lillemoe said, "We're hanging in here."

He said his side is still trying to work out a settlement. According to court documents, Lillemoe and Schimdt asked the judge to reconsider his ruling, but were denied.

Lillemoe said an appeal is not an option. "We would appeal it, but because of the size [of the judgment] we'd need a million-dollar bond," he said, adding that that was unattainable.

When asked about the future of the Urban Retreat and Schimdty salon/spas in the wake of the large financial hit, Lillemoe said he couldn't comment yet.

Johannson is a senior vice president of the Welsh Co. but came to the Uptown project as a private investor. He purchased the historic building in 2002 from the Metropolitan Council.

Since PAGODA closed last June, another salon/spa called Athenaeum opened in the space last October. For this spa venture, Johannson said he served solely as a landlord. Like PAGODA, however, Athenaeum closed abruptly in mid-February of this year. The space has been vacant since.

"This guy's got a track record," said Lillemoe of the dj vu-like spa closings.

Johannson said the situation with the Uptown property has been tough. He said his lease claims against Schimdt and Lillemoe are still pending in the courts but nevertheless, he hopes that the pair keep their business.

"I hope they make it," Johannson said.