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untanglingwebs
El Supremo
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http://www.mlive.com/flintjournal/in...opes_to_d.html
Quote:
James Crawley still hopes to develop old Flint drugstore warehouse into Manhattan Place Condominiums
by Ron Fonger | The Flint Journal
Tuesday December 30, 2008, 7:50 AM
FLINT, Michigan -- Fresh off downtown redevelopment deals at the former Durant and Berridge hotels, the Genesee County Land Bank could be closing in on a deal to take over another key downtown property.
James Crawley, who attempted to build luxury condominiums inside the one-time Herrlich's drugstore warehouse at Garland and First streets, said he's talking to the Land Bank about his stalled development and the possibility it could be finished by the county.
Although no deal is certain, Land Bank Chairman Daniel T. Kildee said the timing could be right for a deal on Manhattan Place Condominiums, which is sandwiched between the better-known Berridge and Durant, just north of the Flint River.
"They've helped everybody but me, and I started it all. I'm the guy with the arrows in his chest," Crawley said of his long, still unresolved feud with the city of Flint over the project.
"It's been a real nightmare for me, watching other projects going full steam ahead," he said.
Nothing has seemed to go easily at Manhattan Place, a 95-year-old building that Crawley has spent nearly 20 years trying to convert into housing.
The structure was built for Freeman Dairy Co., which occupied it until 1934. It was used as an auto storage warehouse in 1940 and was later used by the Herrlich's drugstore store chain.
Crawley estimates his renovation is about 70 percent complete but said he hasn't been able to complete it because of difficulty securing credit and his bitter dispute with City Hall.
The local builder finished 11 apartments and rented them for a few years before taking city-backed federal loans and trying to convert the building to 22 condominiums.
The city sued Crawley for failing to pay back loans of more than $2 million, a case that's hung up at the state Court of Appeals.
In court documents, Crawley has claimed the city contributed to delays in Manhattan Place, in part by failing to turn over loans in a timely way.
City Attorney Trachelle Young would not comment on the case Monday.
But Kildee said the sale of the former Durant Hotel and the redevelopment of Berridge Place loft apartments recently makes it a good time to take on Manhattan Place.
So far, however, Crawley and the authority haven't reached a deal on how much the builder should be paid for the property and his work to date.
"We're made a significant investment with the Durant and Berridge. We feel like that area (of Manhattan Place) needs to be filled," Kildee said. "Our preference always is for a private developer to come in and invest private capital.
"If there's a way the Land Bank can make that happen, that's great. If it turns out nobody but the Land Bank can do the project ... We're willing to step in."
The Land Bank Board of Directors recently met in a closed session to consider the purchase of real estate, but Kildee would not say whether Manhattan Place was the subject of those private talks.
Crawley, who lives in one of the units at Manhattan Place, said there's still a market for his building, which sits across the river from the former Hyatt Regency Hotel.
He said he would prefer to finish the project himself but believes the Land Bank also could do a good job bringing the condos to market.
"At least 22 people in Genesee County want to live that way -- even with the economy as bad as it is," he said. |
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Sun Jun 21, 2015 7:07 am |
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untanglingwebs
El Supremo
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Looking at the budget, Flint is still paying off the two disastrous HUD 108 loans that were given to Manhattan Place and OK Industries. This was during the Stanley administration and the head of the DCED admitted he knew little about such programs,
Why anyone would restart Manhattan Place after the long contentious legal battle between the City, Citizens Bank, and James Crawley is beyond comprehension to me. The City lost a lot and then turned around to lose more. Crawley was denied a "bridge loan" from the Flint Area Investment Fund because he had defaulted on a loan from CCDC, who was in charge of the fund at the time.
I remember reading the stories of the multistate crime gang involving Joe Giacalone. Who would expect Flint would have undercover agents shot in the head and surviving, Pennsylvania prosecutors aiding criminal and an attempt on witnesses and local Prosecutor all originating in Flint. The higher courts overturned the conviction in Judge freeman's Court.
This was followed by years of rumored phony bankruptcies and less than honest window and remodeling companies. The 108 plan to purchase the former OK Industries Plumbing site for a Flint window company using a company in bankruptcy was a true DCED snafu. Flint took second and even third place in the properties that were to be collateral. The window company never left Lennon, never stared remodeling and money was spent on a partner's child support. Flint paid legal costs on at lest two lawsuits and ended up with worthless monetary penalties.
Yet Flint gets to pay back to HUD the 108 loan amounts! |
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Sun Jun 21, 2015 7:31 am |
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untanglingwebs
El Supremo
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Sun Jun 21, 2015 7:35 am |
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untanglingwebs
El Supremo
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Sun Jul 05, 2015 4:46 pm |
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untanglingwebs
El Supremo
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CITY OF FLINT v. CHRISDOM PROPERTIES, LTD.
Docket No. 283245.
770 N.W.2d 888 (2009)
283 Mich. App. 494
CITY OF FLINT v. CHRISDOM PROPERTIES, LTD.
Court of Appeals of Michigan.
Decided April 21, 2009, at 9:10 a.m.
Mantese & Rossman, P.C. (by Gerard V. Mantese and Ian M. Williamson), Troy, for the city of Flint.
Harris, Goyette, Winterfield, Penskar & Farrehi (by Alan D. Penskar), Flint, for Chrisdom Properties, Ltd., and James Crawley.
Before: CAVANAGH, P.J., and FORT HOOD and DAVIS, JJ.
DAVIS, J.
Plaintiff/counter-defendant city of Flint (Flint) appeals as of right the trial court's judgment in favor of defendants/counter-plaintiffs Chrisdom Properties, Ltd, and James Crawley (Chrisdom and Crawley).1 We affirm.
This case arises out of a downtown housing development in the city of Flint. Trial testimony was lengthy and detailed, but, in a nutshell, Flint and Chrisdom entered into a loan agreement under which Flint extended $1.8 million from the federal Department of Housing and Urban Development to Chrisdom for the purpose of converting two buildings into condominiums. One of those buildings was already owned by Crawley and 100 percent renter-occupied as a high-end apartment building and the other was an immediately adjacent dilapidated structure that Crawley had to purchase.
The loan agreement was poorly structured from the outset. However, Flint — indeed, the same department of the city that had been responsible for the loan — then inexplicably held up the issuance of a building permit to Chrisdom for 13 months after the Building Code Board of Appeals found that Chrisdom was entirely in compliance. Flint offered no justification for this; however, as a result, construction work could not be performed efficiently. Any possibility that the work could be performed within the timetable of the construction loan was abrogated by Flint.2
[770 N.W.2d 890]
It is worth noting that Crawley testified without contradiction that he had been involved in contracting in Flint for over 40 years and had been issued hundreds of permits. The normal amount of time to obtain a permit never exceeded two weeks. Also, the State Construction Code requires the issuance of a permit within 15 days after an application. MCL 125.1511. Flint argues that this deadline applies only when the application conforms to the code, but the year-long delay here was after the board of appeals determined that the Manhattan Place project was in compliance.
Additionally, Flint refused to allow any individual condominium units — some of which, having originally been apartments, were ready for sale — to be released from the general mortgage for sale to potential buyers. The construction loan agreement contained no provision governing such releases, but such releases are common in condominium construction projects, and the documents did imply that they should be granted. Further, the contract between the parties provided that Flint was to receive 100 percent of the condominium sale proceeds until such time as the loan made to the contractor was paid in full, which was an unusually good deal for the lender. Moreover, Flint was repeatedly advised that the only way its loan could be repaid was by selling the individual condominium units. Crawley testified that if he could have sold the existing units, he would have paid off the loan and have enough left over to finish the entire project.
Flint did not at any time attempt to provide any sort of justification for withholding the building permit or individual condominium releases short of asserting that it was not technically required to do so. Ultimately, Crawley and Chrisdom ran out of money, by which time Crawley had spent some $200,000 of his own money on the project and had gone without rental income from the now-empty apartment building for several years.3 Flint agreed to, and did, loan Chrisdom an additional $359,465, but it had still not issued a building permit, and Crawley explained that it would still be insufficient to complete the project unless individual condominium units were released from the general lien, which release was again denied.
Flint commenced the instant suit against defendants on November 3, 2004, generally alleging breach of contract and seeking foreclosure of the mortgage. Defendants counterclaimed on March 8, 2005, alleging breach of contract and slander. Midway through the trial, the trial court permitted defendants to amend their defenses and affirmative defenses to include frustration of purpose and impossibility, noting that the addition of those theories would not be prejudicial to Flint.4 The trial court ultimately agreed with Chrisdom and Crawley that Flint had frustrated the purpose of the contract and breached the contract. The trial court then released Chrisdom and Crawley from any obligations under the loans or mortgages to Flint and awarded an additional cash amount, albeit with
[770 N.W.2d 891]
the expectation that it would be used to pay at least two known outstanding subcontractor liens. This appeal followed.
"We review the trial court's findings of fact in a bench trial for clear error and conduct a review de novo of the court's conclusions of law." Chapdelaine v. Sochocki, 247 Mich.App. 167, 169, 635 N.W.2d 339 (2001). "When reviewing a grant of equitable relief, an appellate court will set aside a trial court's factual findings only if they are clearly erroneous, but whether equitable relief is proper under those facts is a question of law that an appellate court reviews de novo." McDonald v. Farm Bureau Ins. Co., 480 Mich. 191, 197, 747 N.W.2d 811 (2008). This Court reviews de novo as a question of law the proper interpretation of a contract, including a trial court's determination whether contractual language is ambiguous. Klapp v. United Ins. Group Agency, Inc., 468 Mich. 459, 463, 663 N.W.2d 447 (2003).
Little published caselaw exists in Michigan on the doctrine of "frustration of purpose." The parties agree that the only real leading case on point is Liggett Restaurant Group, Inc. v. City of Pontiac, 260 Mich.App. 127, 676 N.W.2d 633 (2003). There, this Court explained that "[f]rustration of purpose is generally asserted where `a change in circumstances makes one party's performance virtually worthless to the other, frustrating his purpose in making the contract.'" Liggett Restaurant Group, supra at 133-134, 676 N.W.2d 633, quoting Restatement Contracts, 2d, § 265, comment a, p. 335. Furthermore, "`[t]he frustration must be so severe that it is not fairly to be regarded as within the risks that he assumed under the contract'" and "`the non-occurrence of the frustrating event must have been a basic assumption on which the contract was made.'" Id. at 135, 676 N.W.2d 633, quoting Restatement, § 265, comment a, p. 335. It is undisputed that Flint did two things: (1) delayed the issuance of a building permit by more than a year after the Board of Appeals determined that the buildings were actually in compliance, which prevented Chrisdom from proceeding in a timely fashion to meet the contract's time requirements; and (2) refused to release individual ready-to-sell condominium units from the general lien despite being repeatedly advised that there was no other way to pay off the mortgage or to complete the project.
Flint primarily argues that Chrisdom assumed the risk that no building permit would be issued because such delays are predictable and Chrisdom represented in the loan agreement that it had already obtained the proper permits. Without considering the unrebutted testimony that such averments are standard boilerplate, we are unimpressed given the actual knowledge by not only Flint, but by the same department, that Chrisdom did not actually have those permits and, moreover, the actual knowledge and explicit agreement in the contract that Chrisdom had not yet actually prepared architectural plans, which the unrebutted evidence explained was a prerequisite to obtaining a building permit. While we agree that there is always some risk of a delay in any permitting process, the unchallenged evidence was that Flint never even conducted an inspection, repeatedly insisted that Chrisdom needed to modify plans that the board of appeals ruled were compliant, and generally gave Chrisdom a runaround for more than a year.
Further, at the same time Flint was inexplicably holding up the necessary building permit, it was paying out construction loan monies to Chrisdom. Indeed, by the time the permit was actually issued, the entire contract amount had been paid out, less sums arbitrarily deducted
[770 N.W.2d 892]
by the city for interest in advance of loan disbursement and attorney fees, neither of which was provided for in the loan agreement. This dichotomy, by itself, is powerful evidence that while the permit delay was wreaking havoc with Chrisdom's orderly progression of construction, there was no ultimate intent on the part of Flint to deny a permit if it wanted its money back. In short, the evidence does not show that Chrisdom encountered a known, if perhaps unlikely risk; rather, the evidence suggests that Flint actually interfered with Chrisdom's acquisition of the building permit, whether through incompetence or through actual malice.
Flint next presents what can best be described as a confused argument to the effect that Chrisdom brought its troubles on itself by performing work out of sequence and inefficiently without the permit. The evidence actually showed that Chrisdom essentially did what it could to keep the project running in the absence of the permit and that its only other alternative would have been to do nothing. The evidence further showed that Chrisdom tried to obtain additional third-party funding, but it could not do so because Flint refused to subordinate its loan position. Interestingly, the type of loan involved here — a HUD "Section 108 loan" — is, according to defendants' financial underwriter expert, specifically intended to be used to attract additional funding from other lenders and to be subordinated to those lenders. The expert also explained that it appeared to him that at some point, Flint inappropriately started treating the loan as its own money.
Finally, Flint refused to allow individual condominium units to be released from the general lien so that they could be sold. Flint's project manager testified that she did not recall being asked about individual lien releases; however, numerous other witnesses testified that Crawley did ask for those releases, that the project manager and other officials were indifferent and unresponsive to any attempts at communication, or both. We defer to the superior position of the trial court to evaluate witness credibility. Given the other testimony of incompetence or even active hostility toward the project on the part of Flint and the relevant department, we find overwhelming evidence that Flint intentionally or incompetently prevented its mortgagor from being able to repay the mortgage. The trial court did not commit clear error by ruling that Flint frustrated the purpose of the contract.
We also conclude that the trial court correctly found that Flint breached the contract. Flint raises a number of arguments, none of which we find have any merit. Ultimately, we conclude that Flint breached the contract on the basis of the same evidence that shows Flint frustrated the purpose of the contract: Flint's unjustified refusal to issue a building permit and unjustified refusal to release completed condominium units from the general lien guaranteed the failure of the project. We have not been presented with any evidence or argument to the contrary.
We agree with the trial court that computing the damages in this case is difficult and not easily subject to fine-tuning. We are persuaded to affirm the trial court's award for several reasons. First, the trial court clearly wrestled with the issue and it was in a better position to assess the nuances of this case. Second, at no time did Flint challenge Crawley's testimony on damages or attempt to offer its own proofs on damages. Third, Flint concedes that the total value of the trial court's award is approximately the same as Crawley's estimate. Fourth, damages need not be mathematically precise, and after careful consideration, we are of the view that the trial
[770 N.W.2d 893]
court's award is as close to precision as possible on these facts.
We briefly address Flint's assertion that Chrisdom and Crawley have reaped a double windfall as a result of the outcome of this matter. Specifically, Flint points out that the cash award is roughly the amount of profit Crawley expected to make from the project, but in addition, not only has he been discharged from the mortgage, he has also received the Manhattan Place properties in an improved, albeit unfinished, state. This argument is only superficially appealing, however. The cash award was for the counterclaim for breach of contract, and although it amounts to the expected profits had the project gone as it should have, it does not account for Crawley's personal contributions to the project and must be used to pay off any other liens or to complete the project.5 The discharge of the mortgage was an independent equitable award, and Flint concedes that discharging all parties' obligations is proper under the frustration-of-purpose doctrine; moreover, we find no fault in the award given Flint's inequitable behavior.
For the above reasons, we disagree that the trial court erred by denying Flint's posttrial motions. We conclude that the trial court did an admirable job handling and resolving a long, difficult case, and we find no fault with its analysis of what transpired or the resultant remedy.
Affirmed.
FootNotes
1. For purposes of this appeal, Chrisdom is effectively the corporate alter ego of Crawley. We therefore treat them somewhat interchangeably.
2. Crawley explained that building construction was similar to assembly-line construction of an automobile, in that a great many activities had to be coordinated and performed in a controlled sequence, but the lack of a building permit prevented that process from functioning. Crawley described an ongoing pattern of indifference after Mayor Woodrow Stanley was recalled in 2002, after which a succession of department heads and other officials either did not respond to him or treated the project as irrelevant. Glenda Dunlap, who testified that she "was the staff person assigned to to [sic] the project," impliedly supported Crawley's opinion by testifying that, among other things, the "City did not want this project." Michael Anthony Freeman, a financial underwriter specialist later asked by the Genesee County Land Bank and paid by the Mott Foundation to get the project back online, testified that when he submitted various proposals to Mayor Don Williamson, Mayor Williamson's response was an explicit directive to "bust his balls," referring to Crawley.
3. The apartment building was emptied at Flint's request; because Flint did not want to pay for relocation expenses, Crawley agreed to stop renewing his tenants' leases when the loan was originally discussed.
4. Counsel for Flint argued that amendment was untimely and improper under the court rules, but did not claim that amendment would be prejudicial to Flint.
5. There was some testimony that an incomplete condominium is worthless. Moreover, Crawley's construction business and credit were apparently destroyed, making completion of the project significantly more difficult. Finally, a completed luxury condominium in the present housing market will not be worth as much as it could have at the time the project was commenced. |
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Sun Jul 05, 2015 4:49 pm |
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untanglingwebs
El Supremo
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James Crawley still hopes to develop old Flint drugstore warehouse into Manhattan Place Condominiums
by Ron Fonger | The Flint Journal
Tuesday December 30, 2008, 8:04 AM
Flint Journal file photo (May, 2004)Financial troubles and lawsuits have held up the conversion of a drugstore warehouse in Flint into Manhattan Place Condominiums.
James Crawley
FLINT, Michigan -- Fresh off downtown redevelopment deals at the former Durant and Berridge hotels, the Genesee County Land Bank could be closing in on a deal to take over another key downtown property.
James Crawley, who attempted to build luxury condominiums inside the one-time Herrlich's drugstore warehouse at Garland and First streets, said he's talking to the Land Bank about his stalled development and the possibility it could be finished by the county.
Although no deal is certain, Land Bank Chairman Daniel T. Kildee said the timing could be right for a deal on Manhattan Place Condominiums, which is sandwiched between the better-known Berridge and Durant, just north of the Flint River.
"They've helped everybody but me, and I started it all. I'm the guy with the arrows in his chest," Crawley said of his long, still unresolved feud with the city of Flint over the project.
"It's been a real nightmare for me, watching other projects going full steam ahead," he said.
• Oct. 2, 2007: Court of public opinion: Lawsuit costs become election issue
Nothing has seemed to go easily at Manhattan Place, a 95-year-old building that Crawley has spent nearly 20 years trying to convert into housing.
The structure was built for Freeman Dairy Co., which occupied it until 1934. It was used as an auto storage warehouse in 1940 and was later used by the Herrlich's drugstore store chain.
Crawley estimates his renovation is about 70 percent complete but said he hasn't been able to complete it because of difficulty securing credit and his bitter dispute with City Hall.
The local builder finished 11 apartments and rented them for a few years before taking city-backed federal loans and trying to convert the building to 22 condominiums.
The city sued Crawley for failing to pay back loans of more than $2 million, a case that's hung up at the state Court of Appeals.
In court documents, Crawley has claimed the city contributed to delays in Manhattan Place, in part by failing to turn over loans in a timely way.
City Attorney Trachelle Young would not comment on the case Monday.
But Kildee said the sale of the former Durant Hotel and the redevelopment of Berridge Place loft apartments recently makes it a good time to take on Manhattan Place.
So far, however, Crawley and the authority haven't reached a deal on how much the builder should be paid for the property and his work to date.
"We're made a significant investment with the Durant and Berridge. We feel like that area (of Manhattan Place) needs to be filled," Kildee said. "Our preference always is for a private developer to come in and invest private capital.
"If there's a way the Land Bank can make that happen, that's great. If it turns out nobody but the Land Bank can do the project ... We're willing to step in."
The Land Bank Board of Directors recently met in a closed session to consider the purchase of real estate, but Kildee would not say whether Manhattan Place was the subject of those private talks.
Crawley, who lives in one of the units at Manhattan Place, said there's still a market for his building, which sits across the river from the former Hyatt Regency Hotel.
He said he would prefer to finish the project himself but believes the Land Bank also could do a good job bringing the condos to market.
"At least 22 people in Genesee County want to live that way -- even with the economy as bad as it is," he said. |
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Sun Jul 05, 2015 5:00 pm |
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