Fraud dismissed: But Halsey Minor wins refiling right
"The truth is out there," said the lawyer fighting for a right to re-file the high-profile hotel collusion lawsuit by internet millionaire Halsey Minor against developer Lee Danielson.
"Well, whatever the truth is," responded Judge Edward Hogshire, "right now it's just a broad brush of allegations."
"We need more time to flesh all this out," explained Minor's lawyer, Ryan C. Berry. "Give us leave to amend."
And so the judge did. But in the case of the former colleagues now dueling over development of a posh hotel for the Charlottesville Downtown Mall, this would be Minor's only victory on Friday, November 20.
Judge Hogshire dismissed most of Minor's claims including his allegation that Danielson breached a fiduciary duty and fraudulently induced Minor's participation in the now-stalled Landmark. The judge also denied Minor's effort to pierce the corporate shield to sue Danielson personally in addition to suing his company, Hotel Charlottesville LLC.
Both feuding businessmen live in greater Los Angeles, but only Danielson made the trip to the Charlottesville Circuit Courthouse, whose vast interior drew just three spectators, all reporters.
"This is an important case for me," Danielson explained afterward. "I have a wife and kids and mouths to feed."
Danielson's contract called for him to receive $900,000 in fees plus profit participation in the 101-room luxury lodging enterprise which stands today as a mere concrete skeleton, incomplete and open to the elements. Such unfinished business is the basis of Danielson's counter-suit for $5.8 million.
For Minor, a Charlottesville hometowner who amassed an internet fortune–- and still holds it, as he tends to assert via pleading and email–- this is a case about fraud. Or it was until Friday with Judge Hogshire's ruling.
"This litigation is incredibly costly, and costly to the city," said the judge. "It's a lawyer's dream. It's a nightmare for the rest of us."
Hogshire also demanded that both parties come up with an arbitration plan, something the contract between the litigants appears to demand. Minor has been fighting arbitration, but now left with a lone surviving tort claim for breach of contract, it appears the judge is going to insist.
"If the case looks, feels, and smells like a contract," said Hogshire, "then it ought to be taken up in arbitration."
Alleging that Danielson deceived him with a bogus construction budget and overstated his own credentials, Minor filed the case February 11 and then amended it nine days later to add the lender–- which separately claims Minor defaulted on the $23.7 million loan–- as a defendant.
"I'm taking you at face value that new things have come up," Hogshire said to Minor's side while granting 21 days to file an amended bill of complaint and setting a hearing date in February.
After the ruling, a reporter hoped to clarify Minor's position toward the stalled Landmark. On one hand, Minor asserts in a recent interview that he'll finish the hotel. Yet his suit seeks extrication from all project obligations. So which is it?
Minor's lawyer Berry, an associate in the Northern Virginia office of DLA Piper, referred questions to the case's L.A.-based partner, Betty Shumener, who says that fraud claims and claims against Danielson as an individual will surely be part of the amended complaint she plans to file by December 11.
"We will not the drop the tort claims," says Shumener. "They're all coming back, and they're coming back against Mr. Danielson."
Shumener also disagrees with any notion that Minor's request to be absolved of the project's debts and leases conflicts with his stated desire to finish the hotel. "Those are two entirely different things," she says.
Whoever takes charge of the unfinished Landmark, the judge didn't seem thrilled with what's been accomplished after nine months of litigation.
"You've got a big empty shell down there on the Mall, a big eyesore," said the judge.
"I think that's a good place for the arbitration," replied Danielson's lawyer, C. Connor Crook. "Right there on the first floor."
–updated 4:20pm with information from previously unreachable Shumener