By Hugh G. Willett
One of the original partners in the upscale Rarity Pointe subdivision in Loudon County, Tenn., has filed suit against developer Mike Ross, citing broken agreements, and is seeking dissolution of the partnership, equitable relief and damages.
Robert Stooksbury Jr., a partner in Tellico Landing LLC, has filed the suit against Ross-owned LTR Properties Inc. in Blount County Chancery Court. The suit seeks to put Tellico Landing into receivership based on violations of a 2001 memorandum of understanding on which the partnership was based.
“These are serious issues that need the court’s intervention,” said Wayne Ritchie, attorney for Stooksbury.
Mr. Ross also is involved in developing the Rarity Club at Nickajack in Marion County and Rarity Rivers in Meigs County. They are not mentioned in the lawsuit. Mr. Ross could not be reached Friday for comment.
The suit includes allegations of the filing of false documents by Ross-owned Assurance Title LLC. The allegations are similar to those being investigated by the Tennessee Bureau of Investigation regarding properties that Mr. Ross sold at his Rarity Bay development along Tellico Lake in Vonore.
“LTR Properties Inc. has just been served with a lawsuit by Rob Stooksbury. LTR is generally familiar with the allegations made by Mr. Stooksbury. LTR strongly denies the assertions made by Mr. Stooksbury and believes firmly that the only disputes between the parties are simply matters of accounting with Mr. Stooksbury saying that money is owed to him and LTR asserting that Mr. Stooksbury owes money. We believe that the majority of the members of Tellico Landing LLC disagree with the action taken by Mr. Stooksbury and that at the trial, LTR Properties Inc. will prevail on these issues,” Mr. Ross said Wednesday in a statement.
According to the lawsuit, Mr. Ross owned 50 percent of Tellico Landing LLC and Stooksbury and another investor, Ward Whelchel, were each 25 percent partners. Whelchel is not a party to the lawsuit at this time.
Mr. Ross was responsible for building the golf course and lodge facilities. The partnership was responsible for marketing fees, including sharing costs with the Rarity Pointe development. As the majority investor, Mr. Ross had management control of the partnership, according to the suit.
“Tellico Landing LLC has been managed by an entity controlled by Mike Ross. Mr. Stooksbury has been a minority partner,” Ritchie said.
A revolving credit account from SunTrust Bank is in dispute. Funds from the sale of lots in Rarity Pointe were to have been used to pay down the credit account. The suit alleges that the funds may never have been deposited and seeks an appropriate accounting.
The suit also claims that Mr. Ross, under the auspices of Assurance Title Co. LLC of Vonore, may have filed false documents with the department of Housing and Urban Development regarding the sales and closings of property in Rarity Pointe.
The suit alleges that Assurance Title routinely prepared two sets of settlement statements with differing entries, one that showed actual, true figures to be given the seller and one with false and misleading figures to be given to the purchasers.
The discrepancies alleged in the suit mirror those discovered last year related to properties at Mr. Ross’ Rarity Bay development in Vonore, Tenn. The value of Ross-owned lots had been reduced without explanation by former Loudon County Assessor Doyle Arp, who now is county mayor.
In the subsequent investigation by Loudon County District Attorney General Russell Johnson, a number of the deeds to Rarity Bay properties prepared by Assurance Title came under scrutiny. In some cases the deeds reflected prices double what the buyers said they actually paid for the land.
Mr. Johnson turned the investigation over to the Tennessee Bureau of Investigation in October. A spokesman for TBI confirmed that an investigation is ongoing.
The suit alleges that values of such transactions, which included Mr. Ross selling lots to his associates and sales managers below market value, were not properly recorded by Assurance Title, depriving the partnership of up to $7 million.
“The suit asks the court to make a fair and equitable distribution of the partnership assets, which will allow the court to consider how this development has been managed by Mike Ross,” Ritchie said.
The suit also asks for the plaintiff to be awarded costs including accounting, investigation and attorney’s fees.
Contact Hugh G. Willett at email@example.com