The second Fauntleroy Place lawsuit (West Seattle Whole Foods)

March 17, 2009 at 11:33 am | In Development, West Seattle news | 27 Comments

When we first told you last Friday about the lawsuit that developers BlueStar filed against Seattle Capital and its parent company in connection with the stalled Fauntleroy Place development, we also mentioned there was word of another lawsuit. We’ve now learned more about that lawsuit: It’s filed against Seattle Capital and Fauntleroy Place LLC, but for this one, the plaintiff is BAJ Capital, local investor Christopher NeVan‘s firm, which state corporation-information files listed as one of the “governing” parties in FP LLC along with Seattle Financial. It tells the detailed tale of what allegedly happened with the site and its ownership last year – we’ll be reading it a while to distill it, and we’ll link it here as soon as we can. The first 10 pages (which are followed by exhibits including the original 2006 LLC agreement forming Fauntleroy Place) accuse the defendants of breach of fiduciary duty and breach of contract. This suit was actually filed a few days before BlueStar’s suit (which isn’t yet available in the public online court system). ADDED 1:17 PM: Here’s the lawsuit if you’d like to read it for yourself. (The one filed Friday isn’t available online yet.) 2:28 PM: We’ve summarized the complaint, if you’d rather read the toplines than wade through the whole thing:

Here’s the quick summary of the complaint:

NeVan says he had the idea for Fauntleroy Place. After years of working on it, he says, he brought in BlueStar. The project needed money, so Seattle Capital came in. Then, it alleges, Seattle Capital said it was having trouble in early 2008, so the project sought another buyer, and was talking with UDR.

With that deal imminent, the suit alleges, Seattle Capital engaged in maneuvering to take more control, and then to cut BlueStar out of the ownership picture entirely as of June of last year. The suit then alleges that BAJ signed a new financing deal under duress – a loan with “rate of return” raised from 9 percent to 14 percent — because Seattle Capital allegedly would drop all financing otherwise, and alleges that Seattle Capital got a loan-origination fee of nearly $1 million out of the whole thing, among other purported benefits. Then, the suit goes on, Seattle Capital made the terms of the prospective sale to UDR unfavorable enough that the potential buyer walked away.

After that, the complaint goes on, Seattle Capital “refused to renew the development contract with BlueStar, refused to enter into a new development agreement with BlueStar, would not confirm that the contractor, subcontractors and others working on the Project would be paid. Such actions placed the Project in extreme danger of cessation, caused the Project to become hopelessly behind schedule, created the likelihood that the anchor tenant, Whole Foods, would be lost.”

And then, without BAJ’s consent, says the complaint, “SCC attempted to sell the LLC on terms and conditions that would distribute the entire sale proceeds to satisfy” its interests, allegedly acing out BAJ.

The suit seeks compensation and damages in a variety of ways including having that June 2008 construction loan declared void.

(We’ve been trying to reach Seattle Capital since last week for comment on where the project and the latest prospective sale stand; we’ll keep trying, and will see if their lawyers are commenting, too.)

27 Comments

  1. Meanwhile, we get a big hole in the ground. Awesome.

    Comment by OP — 11:35 am March 17, 2009 #

  2. Makes me long for the good old days of the Huling / Gee saga.
    Everyone seems to leave a big hole to fill…

    Comment by Denny — 11:59 am March 17, 2009 #

  3. Not a surprise considering how difficult it is to get credit / capitol these days. I suspect the hole will stay empty until the economy improves and the lawyers have their day in court. Bummer for West Seattle, I was looking forward to the Whole Foods.

    Comment by MB — 12:13 pm March 17, 2009 #

  4. I think anytime this crap happens these developers should be required to give the land to the city and turn it into a park. Developers are getting away with too much due to horrible planning and lack of care for the area they develop in.

    Comment by Mike — 12:15 pm March 17, 2009 #

  5. If NOTHING else the developer should be REQUIRED to refill/grade the land. That should be part of any city permit, a guarantee that if the project quits half way through we don’t get stuck with a dangerous hole (just wondering HOW long it can sit before the 40th Ave side starts to ‘sag’ and push toward that open pit.

    Comment by I had heard — 12:42 pm March 17, 2009 #

  6. I had heard…I totally agree. Or when the side closest to the bowling alley starts to crumble. And…how about the neighborhood that’s been impacted. Parking for the bowling alley, loss if business to the bowling alley, etc, etc, etc. And just the neighborhood in general..views, etc.

    Comment by JanS — 1:59 pm March 17, 2009 #

  7. I live right across the street from the bowling ally and parking has been impacted all over our street from the construction. It’s become so bad, especially on league nights, that my neighbors are considering a petition for permit parking only.

    Comment by JBL — 2:51 pm March 17, 2009 #

  8. I hear you JBL, we are on the other side of the street and feeling the pinch too. I’d gladly pay for permit parking to at least be reasonably close to my house.

    Comment by B — 3:03 pm March 17, 2009 #

  9. JBL – a residential parking zone (RPZ) is currently under consideration for this neighborhood as part of the Junction Parking Study that is currently taking place. Please let Dante Taylor, Associate Transportation Planner
    Policy and Planning Division
    Seattle Department of Transportation
    City of Seattle
    206-684-8186
    know your thoughts. Or, join the walking tour of the junction with him tomorrow from 11am-1pm (meet at Cupcake Royale). In addition, feel free to share your comments with me at http://www.wsjuno.com as this is something our neighborhood organization is working on.

    Comment by ericak — 4:01 pm March 17, 2009 #

  10. I agree that the developers should be held responsible for filling in the site and liable if something happens (sagging, sinkholes, person falling in, etc.). This is just dangerous and you can bet that the developers don’t have to live around this hole!
    Hey maybe the city can require that too–
    if in litigation all parties must live in the hole , tents and port-a-potties for all! That would clear up this mess fast.
    (Yes I’m being facetious…)

    Comment by k — 6:29 pm March 17, 2009 #

  11. It would make a great “roman” style cage match K…not a bad idea. :)

    Comment by B — 7:12 pm March 17, 2009 #

  12. Sure would be nice to have some people’s names
    instead of ‘Seattle Capital’.
    Who are these greedy f..ktards?
    Where do they live?
    Why are they gaming with someone’s neighborhood?

    There’s no doubt that there’s blame a-plenty to go around,
    but some of these guys were in it for the project and an eventual benefit to the community, and some of these guys were in it for themselves, the money, and the community be damned.

    I’d like to know who they are so the next time they show up for a ‘game’, the other players and any affected neighborhood are alerted. After this fiasco, ‘Seattle Capital’ will become a dead shell, but the people behind it will go on in another guise.
    Who are they?

    Comment by old timer — 7:24 pm March 17, 2009 #

  13. There’s a link to their website from the business name above, as we do with almost every story we cover – as many links as possible so you can find out more information if you want. (Any blue text in a WSB story is a link.) But any specific names associated with the case are in the paperwork. The 10-page complaint summarized above includes the business names, not specific people, but the “exhibits” afterward have some signatories – TR

    Comment by WSB — 7:32 pm March 17, 2009 #

  14. The excavation is not going to cave in….it is engineered shoring and it is perfectly safe!

    Comment by Brenda — 8:26 pm March 17, 2009 #

  15. New Idea: we bulldoze all the Huling buildings, fill this hole, and make a huge community garden. That way that intersection doesn’t look like a concrete jungle. Disgusting! Maybe that is what is keeping my rent cheap, I have nothing pretty to look at!
    Also, due to sides being taking in this area among dog-owners and non-dog owners, we can have one side for dogs owners, one side for people with kids. No crossovers allowed!

    Comment by Krystal — 9:19 pm March 17, 2009 #

  16. Don’t worry — Interbay Whole Foods got worked out. This will get worked out too.

    Comment by DW — 9:30 pm March 17, 2009 #

  17. Hey!…. Either way, We get “HOLE FOODS”… so what is there to complain about?!…. Amazing what big business gets away with.

    Comment by Dano Beal — 11:06 pm March 17, 2009 #

  18. Congratulations West Seattle Blog!

    The PI online is quoting WSB as their news source for this article.
    http://blog.seattlepi.com/realestatenews/archives/164438.asp

    Comment by transplantella — 11:59 pm March 17, 2009 #

  19. Thanks :) we got mentioned by Time magazine online today too
    http://www.time.com/time/nation/article/0,8599,1885819,00.html
    .
    But the P-I (and other) links mean the most – we do link to others on occasion as well, but much of what we publish here is original – gathered and reported the same way it’s done in the “old media” – talk to sources, look through records, do research, follow up, ask questions, etc.
    .
    Hoping to have the full text of the other lawsuit within a day or two as well, so we can publish more details here and seek some followup comments on the specifics.

    Comment by WSB — 12:11 am March 18, 2009 #

  20. With the business and construction climate in the dumps right now, I wonder whether Safeway will be shelving its proposal to demolish the Admiral store and stay closed for two years so it can build a much larger grocery store and mixed-use development on the site.

    Comment by Forest — 5:21 am March 18, 2009 #

  21. Commenter Krystal has the right idea. Fill up the hole, tell anti-union Whole Foods to take a long hike off a short pier, and put the Farmers’ Market and community gardens there.
    -
    Using SPIN farming techniques, West Seattle could go a long way toward making itself food self-reliant in those spaces.

    Comment by ivan — 7:30 am March 18, 2009 #

  22. “The excavation is not going to cave in….it is engineered shoring and it is perfectly safe!”

    Uh…really? You’re saying that’s engineered to be permanent (say 5+ years)? It’s not designed with the idea of a structure filling the ‘hole’ and providing the cross structure support? That’s a pretty straight up wall. I’m sure it was built with ONLY the highest standards that come from the lowest bidder in a boom economy (at the time) but still…

    Comment by I had heard — 7:36 am March 18, 2009 #

  23. Please, let’s have some balance.
    It is safe to say that no developer expected to be here now (big hole/stalled project).
    This delay is costing everyone involved bundles of money.
    $10,577.11 – that is just 1/2 of this years property tax on this parcel. How would you like to be facing that at the end of next month?
    No, it is not just an open hole and someone is renting the fence that surrounds the site.
    Someone is paying expensive liability insurance.
    Someone is paying the mortgage on this site.
    Someone is paying or has paid for this hole in the ground and shoring.
    Someone has spent a small fortune on designs, engineering and permits.
    Hundreds of white and blue-collar people doing the work so far, have cashed many paychecks from this project.
    Every developer involved is paying attorneys, without any choice.
    Many people involved are affected and losing money and work.
    Obviously, if the developer had the money to return the dirt, fill the hole back up and turn this into a park as suggested, the developer would not have stopped the project.
    If the developer gave the hole to the city, Seattle Parks could not afford to refill it, develop it into a park or even maintain it.
    Everyone, everyone involved loses.

    Comment by Greedy Nulu — 9:17 am March 18, 2009 #

  24. While the hole in the ground may be a bummer, the numerous posts calling the “developers” greedy and blaming everyone are over the top. 99% (ok 90%) of the so called “developers” in the world do not get very rich and are not Donald Trump types, but so many people seem to think that they are these greedy, rich a-holes. That is not always the case. Sometimes the economy, the requirements of the City of Seattle, the input of the community, the demands of the retail tenant, the demands of the seller (Hancock Fabrics) all collide and projects get stuck and under capitalized and we are left with holes in the ground. It is not always the developers fault, although they do make poor decisions sometimes. I guess they are an easy scapegoat, but I can assure you that had Whole Foods not required 5 parking stalls per 1000Sf of area, the community not demanded so many design modifications, the City of Seattle not taken 2 years to approve the project and Hancock Fabrics not required a huge store be built for free as part of the sale — this deal might have happened. It is a bummer, but it will get built eventually.

    Comment by Tom — 10:35 am March 18, 2009 #

  25. Thanks to Tom for the even handed comments – we all need to remember that we are part of the process.

    Comment by homesweethome — 1:18 pm March 18, 2009 #

  26. You said “Uh…really? You’re saying that’s engineered to be permanent (say 5+ years)? It’s not designed with the idea of a structure filling the ‘hole’ and providing the cross structure support?”

    Uh yes….shoring does not require the load from the structure to hold the earth up. It is probably soil nailing, a technique in which soil slopes, excavations or retaining walls are reinforced by the insertion of steel reinforcing bars. They are usually installed untensioned at a slight downward inclination. A facing (often sprayed concrete) is used at the surface.

    Comment by Brenda — 2:36 pm March 18, 2009 #

  27. good lord ya all need to tell mayor 5 pennies to quit building crap and maybe i dont know make parking a requirement again cause ya all know his fat butt dont walk and he doesnt need parking cause he gets drivin everywere ., ITs a shame that nothing can be built faster and that the seattle skyline looks like concret used to be so pretty .. now its full of holes and concrete what a shame

    Comment by k — 4:12 pm March 18, 2009 #

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