Chesterfield building sale blocked by lawsuit, owner says
A New York Jets linebacker and a former Oakland Raiders quarterback have sued the company that now owns a downtown former cigarette factory, alleging that they’re entitled to a share of the proceeds from the building’s sale.
The lawsuit was brought by former quarterback JaMarcus Russell and linebacker Calvin Page. It was filed in Durham County Superior Court in October just days before a sale of the vacant cigarette factory at 701 W. Main St. was expected to go through for $7.5 million, according to a counter-claim and response filed by the building’s owner. The case was moved to federal district court for North Carolina’s Middle District.
According to the lawsuit, Russell contributed $2 million and Pace invested $1 million in a $10 million loan in 2008 that was made to the company NCF Development LLC.
The company was owned by former Duke University basketball players Christian Laettner and Brian Davis, who were part of the partnership behind the redevelopment of former Liggett Group tobacco buildings into apartments, shops and restaurants known as West Village. At one time, they planned for the cigarette factory, known as the Chesterfield building, to be part of the project.
The $10 million loan was secured by the first mortgage for the factory, according to the suit. After the developers defaulted on the loan, they had to turn over the building.
The suit alleges that Russell’s and Pace’s interest in the property were “surreptitiously” subordinated to the interests of a Minnesota company Taylor Funding, which contributed $6.86 million of the loan, and to Northland Securities, the placement agent for the loan that contributed $140,000, in an agreement negotiated by the borrowers to delay foreclosure.
Also in the lawsuit, they argued that the transfer of the building from the Texas company Select Capital Management, the servicer of the loan, to the shell corporation that now holds the title, was invalid.
In 2011, Select Capital Management was part of an investigation by the U.S. Securities and Exchange Commission. Its assets were frozen and it was put under the control of a receiver. The title to the Chesterfield was transferred to the shell corporation, NSA SP#3, which now holds the title.
In addition to disputing that transfer, Russell’s and Pace’s lawsuit also argued that NSA SP#3 tried to sell the building without their knowledge and with a plan to keep all the proceeds.
The suit claims breach of contract, breach of fiduciary duty and breach of duties of good faith and fair dealing, unfair and deceptive trade practices, civil conspiracy, and unjust enrichment and conversion, among other claims.
And among other requests, they’ve asked for a return of their money or at least 30 percent of the proceeds of the sale of the building.
In their defense and counter-claim, attorneys for NSA SP#3 claim in that they’re not entitled to share in the proceeds, or are in a secondary position for payment. They also deny that they were not aware of NSA’s plan to try to sell the building, among allegations.
They also claim that Pace and Russell falsely claimed title and a right to the building, and that they filed their lawsuit knowing that the sale was going to close, and directly prevented it.
Attempts to reach Laettner, Davis, Russell and Pace and attorneys for them, as well as for NSP #3, were unsuccessful. The director of sales and marketing for Northland Securities declined comment.