Landmark Hotel update: Georgia court rules against Minor in $10.5M suit

In a decision that Landmark Hotel owner Halsey Minor calls "a travesty of justice" and promises to appeal, a Georgia judge ruled in favor of Specialty Finance Group (SFG) in a lawsuit filed by the Atlanta-based real estate financing company that loaned Minor $10.5 million. The Federal Deposit Insurance Corporation (FDIC), which seized SFG parent company Silverton Bank in 2009, tells C-VILLE that the group was not awarded ownership of the Landmark Hotel, as has been reported elsewhere.

SFG, a subsidiary of Silverton Bank, which loaned Minor $23.6 million for construction of the Landmark Hotel in 2008, charged that Minor defaulted on the loan. In 2009, SFG filed suit against Minor to reclaim $10.5 million of the loan; the same year, the FDIC seized Silverton Bank.

C. Connor Crook, local attorney for former Landmark developer Lee Danielson, tells C-VILLE that Minor and his lawyers raised "some fraud defenses against the bank, saying that they were fraudulently induced into the loan agreement."

Last September, Minor filed for Chapter 11 bankruptcy protection. At the time, Minor called the filing a move "to more quickly resolve the burdensome lawsuits that have prevented [the Landmark] from completing construction and putting people back to work." Minor’s publicist Aaron Curtiss said there were eight lawsuits in both Virginia and Georgia that dealt with the Landmark Hotel, and the bankruptcy filing allowed Minor to "consolidate litigation in a single venue." Minor lost an appeal to have the case heard in Virginia.

"The FDIC spent one million dollars to switch this case from Virginia to an Atlanta courtroom 500 miles from Charlottesville," alleges Minor in an e-mail. "It got what it paid for."

In a July arbitration between Minor’s company, Minor Family Hotels LLC, and Danielson’s Hotel Charlottesville LLC, the latter was ordered to pay $4.2 million in damages and $2.2 million in legal fees for misrepresenting the costs of the construction of the hotel.

Minor tells C-VILLE that the arbitration ruling includes an indemnification clause, which allows the Landmark’s lender to go after Danielson. Crook counters that nothing in the arbitration decision states that SFG can collect money from Danielson.

Aside from Minor’s intention to appeal the decision, Crook (who was not present at the hearing but got word from counsel in Atlanta) says it’s close to impossible to know what will happen to the hotel.

"There is another pending action by the general contractor and various subcontractors. They have all put mechanics’ liens on the property," says Crook. "If they have a trial on that, then there will be more creditors on the property." Calls to Minor’s lawyer, Betty Shumener, and the FDIC were not immediately returned.

To read the history of the Landmark debate, click here.

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