A group of bondholders is suing the owners of American Dream and officials in East Rutherford, alleging a coordinated effort to slash the property’s assessed value at the expense of investors.

The lawsuit, filed Feb. 6, 2026, in Bergen County Chancery Court, was brought by U.S. Bank Trust Company on behalf of bondholders led by Nuveen, which holds nearly 90% of the bonds tied to the megamall. The complaint names East Rutherford and mall ownership entities affiliated with Triple Five Group as defendants.

At the center of the dispute is approximately $800 million in municipal bonds backed by Payments in Lieu of Taxes, or PILOTs. Unlike traditional property taxes, PILOT payments are contractually structured and, in this case, are directly tied to the mall’s assessed value — meaning a lower valuation results in lower payments to bondholders.

Court records show the mall’s assessed value has fallen sharply in recent years. Through 2024, the property was valued between approximately $3.1 billion and $3.3 billion. In March 2025, that figure dropped to $2.5 billion. In July of the same year, a court ruling reduced the valuation further to $1.65 billion. The combined reduction represents a loss of nearly half the mall’s assessed value in less than two years.

The valuation reductions followed ongoing tax appeals and litigation over the mall’s financial performance. American Dream, which opened in phases beginning in 2019 and faced pandemic-related shutdowns and financing challenges, has argued in court that its original assessments overstated the property’s market value.

The bondholders’ complaint alleges that borough officials and the mall’s ownership worked together to artificially lower that value. Specific claims include:

• Appraiser: The borough replaced its longtime appraiser, Robert McNerney, with Theodore Lamicella, whom the lawsuit describes as “less experienced and less qualified,” following pressure from mall developers.

• Omitted features: The new appraisal allegedly failed to include the mall’s Ferris wheel and other major attractions in its valuation.

• Predetermined outcome: Bondholders argue the reduced valuation was not the result of an independent review but was instead coordinated in advance.

The lower valuation has directly reduced the PILOT payments that service the bonds. According to the complaint, those payments now cover less than half the annual interest owed to bondholders — a shortfall of approximately $24 million per year.

The lawsuit also highlights the financial structure of the deal. East Rutherford receives its share of PILOT payments before bondholders, meaning the borough faces no direct financial loss if the mall’s valuation drops. Any shortfall falls entirely on investors.

“Under that structure, the Borough has no financial incentive to preserve, let alone increase, American Dream’s assessed valuation,” the complaint states. “On the contrary, that structure provides fertile ground for collusion.”

American Dream dismissed the lawsuit as without merit. In a statement, the mall’s owner called the legal action “a deceptive attempt to pressure public institutions through litigation and to overturn a lawful, judicial tax appeal decision after a trial.”

The statement continued: “It is a direct insult to the integrity of the municipality, the court and the judicial process.” The company said it intends to “vigorously defend itself.”

East Rutherford Mayor Jeffrey Lahullier also denied the allegations.

“There was no collusion on the part of the borough,” Lahullier said. “The final determination of the new appraisal value was made by a judge and not the borough, nor the appraisal company.”

The ongoing dispute has already affected investor confidence. PILOT bonds with a 7% coupon due in 2050 recently traded at 78 cents on the dollar — down from 95 cents in June 2025. It marks the lowest large-trade price since the bonds were issued in 2017.

The mall has been involved in multiple legal disputes in recent years, including:

• A separate property tax case in which American Dream argues it overpaid East Rutherford by $183 million and is seeking a refund

• A March 2025 ruling that the mall is “fully open,” making it liable for $13 million in tax payments

• Ongoing litigation related to Bergen County blue laws and Sunday retail closures

Sources

Nuveen LLC and U.S. Bank Trust Company v. Triple Five Group and Borough of East Rutherford. Bergen County Chancery Court. Filed February 6, 2026.

SQUID News. "Investors sue East Rutherford, American Dream mall owners over valuation." February 20, 2026.

Daily Overview. "Investors Sue American Dream Mall." February 20, 2026.

ROI-NJ. "Bondholders Sue East Rutherford, American Dream Over Valuation." February 19, 2026.

North Jersey Media Group. Various reports on American Dream bond performance and tax disputes. 2025–2026.

Pensions & Investments. "Nuveen leads bondholder lawsuit against American Dream mall." February 19, 2026.