Holladay Towne Center LLC - formed by Thomas Fox Properties to develop 1.5 acres in the village center - alleges the city imposed arbitrary and capricious standards, favoring local businesses and kowtowing to public clamor, to keep out the national chain.

"The problem is the city's zoning requirements, by their own acknowledgement, were completely screwed up," Bruce Baird, attorney for Thomas Fox, said Wednesday.

The village-center vision calls for a quaint, walkable gathering place with unique boutiques and eateries built around a reconfigured intersection where 2300 East, Holladay Boulevard and Murray-Holladay Road awkwardly converge.

In February, Thomas Fox - consisting of Holladay natives Tom Hulbert and Brett Fox - submitted a site plan for the 15,000-square-foot Walgreens.

Through March, opposition to the store at that site - where three pharmacies already exist within two blocks - snowballed in the form of petitions and letters representing thousands of Holladay residents.

"People aren't smart enough to figure out that Walgreens and Wal-Mart are two different things," said Baird of the public outcry.

"This is America," he added. "As far as I know, we still have the right for competing business to enter the market."

Neither Holladay City Attorney Craig Hall nor Mayor Dennis Webb had seen or heard of the suit Wednesday afternoon.

Hall said allegations about botched zoning were simply Baird's opinion.

"We respectfully disagree," he said.

In March, Holladay's City Council imposed a moratorium on new construction in the village center, pending results of a road study.

Public opposition to Walgreens has not died down, said Sharron Horsey, former head of Holladay's Chamber of Commerce.

"If anything, it has grown," Horsey said. "Now I think they'd do themselves a disservice by coming into the village center because there's so much hostility against it."

cmckitrick@sltrib.com