Judge green-lights developer's federal lawsuit against Athens

A federal judge ruled last week that a lawsuit filed by the owner of a major local development against the city of Athens and Silar Advisors will go forward despite a bankruptcy filing by the Silar subsidiary Asset Resolution.

Asset Resolution is the arm of Silar Advisors purported to hold the University Estates mortgage note, and was named as a co-defendant in the case. An order from the court states that the action against Asset Resolution is stayed in regard to that defendant only, pending action by the bankruptcy court that lifts the automatic stay or concludes the bankruptcy case.

Last summer, Athens City Council held a special session to adopt an ordinance to negotiate the possible purchase of 600 acres of the University Estates mixed-use development off Ohio Rt. 682 and Armitage Road in northwest Athens.

The session came after Mayor Paul Wiehl received a call from Silar Advisors, which identified itself as the owner of a note on a major portion of the development. City officials said Silar claimed the note to be in default, and Wiehl tapped City Council President Bill Bias to handle talks with Silar.

Bias later announced that Athens had negotiated a $1.75 million memorandum of understanding for the purchase of the property if and when the property was foreclosed upon. Bias said at the time that he expected that this wouldn't be for a long time, perhaps a year or more.

Subsequently, University Estates filed a lawsuit in federal court against the city, accusing fraud, defamation and conspiracy to deprive the development of property interests. Both Silar and Bias have been named as defendants in the lawsuit, as was Asset Resolution, the subsidiary of Silar that actually holds the UE note according to the suit. The suit maintains that UE and company President Richard Conard were advised that Silar "did not consider the note to be in default, and no notice of default has been served upon UE."

University Estates attorney Bret Adams said that Silar must have been aware of the financial difficulty of Asset Resolution when they began dealings with both Conard and the city of Athens.

"The judge kept the parent company in the litigation," Adams said. "And we are aggressively pursuing the parent company. We are aggressively trying to connect the dots between Asset Resolution and Silar."

He said that he's pleased with the court's decision because it allows University Estates to move forward with the litigation against Silar and the city of Athens.

Defendants in the case have filed a motion to dismiss the case with the courts, and a non-oral hearing for that motion has been set for Dec. 18.

"This is normal procedure in litigation this size," Adams said of the motion. "I wouldn't respect defense counsel if they didn't attempt to file a motion to dismiss. The unfortunate part is that, as taxpayers, we all pay the price for filing such motions."

He warned that while the defense, using insurance monies, has an essentially unlimited budget, they will not wear out or outspend Conard.

UE's lawsuit states that UE entered into negotiations with Silar/Asset Resolution, called Asset Resources in the suit, to purchase the note in 2008.

In 2009, the suit alleges, Silar and the city of Athens "improperly entered into discussions to undermine the negotiations between UE and Silar/Asset Resources."

"The actions of the city of Athens and Bias are motivated by its ill will toward Dr. Conard and UE, are not in the financial best interests of the financially troubled city of Athens, and the actions of all defendants constitute a conspiracy to deprive UE of the property," the lawsuit charges.

Bias has previously explained how the issue of purchasing part of the property arose. "After multiple and extensive discussions with this organization, I was informed that there was another local bidder on this real estate, and that if we were to wish to become the owner of our own (water) well field, we needed to submit an offer immediately," Bias said. "After a discussion with senior members of council and two executive sessions with all members of council, I continued my discussions with Silar." These discussions eventually led to the announcement of a $1.75 million memorandum of understanding for the purchase of the property (if and when it was foreclosed upon).

At the time, Bias said that City Council had four main goals with relation to the property, if the deal went through. The first, Bias said, is protection of the city's water well fields. The second is to protect the "view shed" so that all the trees are not cut down and the view lost. The third is to possibly increase the city's recreational area and facilities, Bias said. And the fourth goal, and possibly most important to residents and property owners in the area, he said, is to complete and repair the main road going through the property.