As the end nears for the trial involving lawsuits over who gets paid what/when in relation to “The Hole” (June 2009 photo at right) – the project once known as Fauntleroy Place, once slated for Whole Foods, Hancock Fabrics and apartments, now a massive excavation idle for 2 years – we’re covering what happens in King County Superior Court Judge Susan Craighead‘s courtroom. WSB contributor Katie Meyer sat in on the trial again Tuesday, and reported that closing statements are expected today after one last round of witness testimony. Right now, we’re in court, where the witness on the stand was with Chicago Title when it evaluated title insurance for a sale of the project in summer 2008. Yesterday, Seattle Capital’s Robert Story, Jr., was among the witnesses, and said on the stand, “The day before the transaction fell apart [to sell to another lender], everyone felt it would close. It was a quite shocking and horrible day when we found out the deal wouldn’t close.” He was questioned about signing the “Owner’s Affidavit” document that was required (by Chicago Title) to receive title insurance, saying he signed it in the capacity of Seattle Capital Company, “acting on behalf of the lender,” on June 18, 2008. He testified that to his knowledge, there had been no real “work” done at the site prior to June 18th (in the key trial issue of whose lien/s take precedence for payment, that is a major question – what work was done, by whom, and when). Read on for other highlights from yesterday – including testimony from the developer who hopes to take over the site:
Story was asked what he knew about why the prospective buyer UDR pulled out of the deal; he thought “a number of people (were) responsible,” including then-developers BlueStar. Asked if he had an alternate buyer in place in case the sale didn’t close: “Probably the biggest mistake of my life – no.” Asked why construction company Ledcor hadn’t been paid, Story was first walked through how much money his company took in during 2007, and spent, and eventually said, “There’s no money to pay Ledcor.” Told a ledger showed there was money as of September 2008, he said he couldn’t answer why that money wasn’t used to pay Ledcor then. Asked by the judge about a disconnect with the prospective buyer in the final days before the deal fell apart, Story testified, “… we didn’t have good enough communication to negotiate,” saying BlueStar boss Steve Hartley was handling much of the communication long-distance, and claiming the final talks were “only a million apart” but it fell apart before they realized it: “It was a disaster, a horrible day.”
The next witness was Thomas Lee of Madison Development LLC, which has a related entity now involved in the site’s potential future (as 3922 SW Alaska LLC). Lee was approached as a buyer after the UDR deal collapsed, according to testimony, which noted that another potential buyer, Alamo Manhattan, had fallen through (here’s a WSB report on that from July 2009). Lee said, “… after spending 10 days of sifting through thousands of pages, volumes of documents, I was only interested in purchasing the deed of trust. Because several liens were against the property, it was a mess. The entity Fauntleroy Place LLC was in default of the loan, the permits were laying fallow, the contractor hadn’t been paid, there was ‘a whole bunch of hair on that,’ as they say, but there was a construction loan in place that had valid title insurance policy on it, and that’s what we decided to purchase.”
Lee testified about what Madison Development Group’s plans are for the property, should things
eventually clear up: “It was originally intended to be a grocery store, some ancillary retail, and some apartments, I’m sure it will be similar to that when we’re finished. We’ve had someone out there daily. Someone making sure erosion doesn’t take place and erode shoring wall. We’ve taken steps to make it safer than when we purchased it – put up Jersey barriers, new fencing, cleaned it up to look less ragged, keeping integrity of that hole staying the way it is. We monitor it twice a week, we have to give that info to the City; so far, its
The day’s last witness on Tuesday was from Chicago Title (another rep of which is on the stand right now). More later, once this gets to closing statements.