Described by a judge as having “overtones of a divorce case,” a business relationship further soured Tuesday when the owners of The W Gallery were told they could not recover the store’s merchandise seized right before Valentine’s Day by a local bank.
Hamilton County Chancellor Frank Brown converted a temporary restraining order against Chad and Lindsay Wolford to a temporary injunction, meaning the couple cannot reopen the gallery for now and will remain in financial limbo as the case against them is litigated.
Mr. Wolford is the son of prominent Chattanooga developer Bucky Wolford. He and his wife, Lindsay, opened The W Gallery at 412 Georgia Ave. last May and billed it as “Chattanooga’s finest and most elegant jewelry store, art gallery and gift boutique.”
But when local Cornerstone Community Bank sued the young couple and then raided the business on Feb. 13, with Hamilton County sheriff’s deputies in tow, it was revealed that the Wolfords allegedly had defaulted on a $2 million loan that helped start the gallery.
The bank said it sought to raid the gallery that day — which, Mr. Wolford points out, prevented them from selling merchandise during one of the most profitable times of year for the jewelry business — because it was afraid the Wolfords were in the process of secretly selling off the bank’s diamonds and crystal, which were collateral for the loan.
“We would never have resorted to such conduct,” Mr. Wolford said in a written statement last week after indicating that he and his wife were “blindsided” by the raid and actually met with bank officials less than 24 hours beforehand to renegotiate the terms of their loan.
Now evicted from their space and stripped of more than $2 million in jewelry, crystal, fine art and china, the Wolfords said through their attorneys during Tuesday’s court hearing that they indeed have defaulted on the loan.
The admission did not prevent Wolford attorney Lloyd Stanley, however, from hammering the contention several times that Cornerstone has done the couple wrong in its “unlawful” efforts to get its money back.
“They sneaked in early on (Feb. 13),” Mr. Stanley said. “It was a sneak attack.”
Mr. Stanley said the bank’s lawyers did not give the Wolfords a 10-day notice of the impending raid as required by law.
Mr. Stanley also harshly criticized a vice president of Cornerstone Community Bank, essentially getting the executive to admit he had no direct proof that the Wolfords were trying to dodge their financial obligations.
“Did they ever threaten to leave, hide or sell merchandise through the back door?” Mr. Stanley asked Cornerstone Vice President Gilbert Lusk during Tuesday’s hearing.
“No,” Mr. Lusk said.
Mr. Lusk testified, however, that the bank’s actions were based on a representation that the Wolfords possibly were planning on filing for bankruptcy and on the belief that the gallery was losing money.
Cornerstone attorney Jeffrey Norwood has said he does not comment on pending litigation.
Whatever the outcome may be in the coming months, Chancellor Brown referenced the nation’s “perilous” economic crisis that he indicated might have contributed to the bank’s extreme measures with the Wolfords.
“If you work together,” Chancellor Brown advised, “it’s going to be cheaper in the long run.”