Judge nixes city's request to dismiss developer's suit

The University Estates lawsuit against the city of Athens is proceeding with additional discovery and depositions after UE attorneys scored a legal victory earlier this week. The city had hoped to persuade a federal judge to dismiss the suit.

A U.S. District Court judge, apparently seeing merit in concerns raised following the recent deposition of City Council President Bill Bias, on Monday declined to grant the city’s motion to dismiss the lawsuit, and then denied a related motion for summary judgment.

Attorneys for the city of Athens and Bias had entered their motion to dismiss last October, which UE attorneys last week asked to be converted into a motion for summary judgment and then denied in that form.

On Monday, Judge Gregory Frost did exactly that. This will allow UE attorneys to probe further into the city’s attempt last year to purchase most of the northwest Athens development.

After reviewing the Bias deposition and other documents, Frost concluded that UE’s concerns were “of some merit.” He said that while the parties involved have already at times squandered “considerable time” to develop the case, additional discovery “is appropriate.”

UE filed the lawsuit late last summer after the city signed a memorandum of understanding with Asset Resolution and its affiliate, Silar Associates, agreeing to purchase the mortgage note on more than 600 acres of UE’s 82- acre mixed-use development site off of Ohio Rt. 682 and Armitage Road.

The city’s proposal was to purchase the note for $1.75 million if and when the property was foreclosed upon. City officials said at the time that Silar and Asset Resolution had told them the mortgage on the property was in default. University Estates has continued to deny that the mortgage was ever in default.

This spring, UE re-secured the land in question after Asset Resolution filed for bankruptcy protection. A holding company, Acropolis of Athens, was established in September 2009, and in April bought the UE note for $1 million. Acropolis is managed by UE attorney Bret Adams, and the UE project is still controlled by Dr. Richard Conard.

“Since they chose not to sell to the borrower, a holding company was established,” Conard explained in an e-mail Tuesday. “At present, my company and I are the managers and developers controlling the University Estates project.”

In his motion last week, UE attorney Joel H. Mirman said his client wanted the judge to reject the new motion for summary judgment, in order to give the UE attorneys more time to collect documents and testimony “as a result of the issues raised” by the Bias deposition.

“This case presents an example of smalltown politics at its worst,” Mirman wrote. “It smacks of made-up emergencies, secret agendas, conflicts of interest and back-room deals.”

Mirman pointed to several points in Bias’ deposition where the council president’s attorney instructed him not to respond to various questions, “claiming that his answer would require him to divulge executive session information he was not permitted to disclose” under Ohio law. Mirman said he believes that Bias should have answered the questions, and that the reliance on the statute in the Ohio Revised Code was misplaced because the negotiations are now over.

“The Memorandum of Understanding has been signed,” Mirman wrote to the court in his motion. “It can no longer be said that ‘preserving its confidentiality is necessary to protect the proper conduct of government business.’” He said neither Bias nor Athens should be allowed to hide behind executive session in order to prevent their actions from being scrutinized in public.

Mirman said the testimony Bias did give was literally incredible.

“Athens made no attempt to determine the financial viability of uses to which the University Estates property might be put, should it acquire that property,” Mirman wrote. “According to Mr. Bias, before Athens made this financial commitment, it performed no cost-benefit analysis of the transaction and did no study to determine the impact of lost income-tax revenue if the construction planned by University Estates did not occur.”

Mirman also said Bias testified that Athens had done no appraisal of the land; had made an uninformed commitment with Hocking Valley Bank for a loan to purchase the land; had no ability to repay the loan from Hocking Valley Bank; and had declared an unfounded emergency in the matter.

Mirman also took issue with what he calls Bias’ conflict of interest in the matter. Since October 2008, Bias has worked as an independent contractor functioning as a consultant for nursing home/assistedliving developer Frank Murphy, Mirman wrote. (Murphy is developing a retirement facility on Athens’ north side.) Prior to this, Bias administrated a local nursing home for a number of years. As far back as 2006, Mirman wrote, Bias was aware that UE was interested in developing a nursing facility on its site.

“Mr. Bias had a clear conflict of interest, since the company that had hired him as a consultant was in the nursing home/assisted-living facility business, and (UE Owner) Dr. Conard’s plan for the UE land included nursing home and assisted living facilities,” Mirman wrote.

Mirman also cited Bias’ testimony regarding a competing buyer of the note, local developer Brent Hayes. Hayes had negotiated purchasing the note from Silar for $1.2 million. Mirman pointed to parts of Bias’ testimony where he said city officials had expressed concerns about Hayes clear-cutting land in the city and that Hayes “had less interest in environmental concerns” than members of City Council.

He also took issue with Bias handling much of the negotiations by the city, pointing to the council-passed ordinance designating Service-Safety Director Paula Horan Moseley as negotiator.

“So what then was the purpose of Athens’ actions with respect to the UE land?” Mirman asked. “While further depositions will more fully explore this, it appears that Mr. Bias, with the aid and assistance of Mayor Wiehl and City Council, had a mission to deprive UE of its property under the guise of wellhead protection, which not coincidentally would remove a competitor of Mr. Bias’ boss from the nursing home/assisted living business in Athens County.”

No documents of the city’s response have yet been filed with the court, though in the past Bias has denied any inappropriate conflict of interest, and said the city had legitimate reasons for wanting the UE land.