A jury awarded nearly $20.6 million in compensatory damages to Canyon Ridge developers Thursday, concluding the longest civil trial in Hamilton County history with one of the largest jury awards.
Filed in 2011, the case stems from a dispute over the building of the 430-acre Canyon Ridge Resort on Lookout Mountain in Walker County, Ga.
Chattanooga Village developer Duane Horton discusses plans for the project at a public meeting at the Hixson Community Center in December 2012. A jury awarded nearly $20.6 million in compensatory damages to Canyon Ridge developers on Thursday.The project came in two parts. Work on the project first began in 1998 and was designed to include 67 homes in a gated community, a 3,000-square-foot pavilion with swimming pool, tennis courts and a 160-acre, 18-hole golf course.
The second project, a 150-room Starwood luxury hotel, spa and conference center, was projected to cost $100 million. But despite an influx of money from tax-exempt bonds, it never got off the ground.
Court documents allege one of the project's co-founders, Randy Baker, along with financial advisers Sterne Agee and Leach Inc., and a bond underwriter named Edmund J. Wall, conspired to develop a more lucrative project in direct competition with Canyon Ridge, effectively tanking both the new project and the old.
The plaintiffs, including Baker's co-founder Duane Horton, claimed Baker, Sterne and Wall recruited commercial real estate group Grove Street to help them build a different hotel on the same site where Canyon Ridge's Starwood hotel would have stood, even going so far as to attempt to hire the same architectural firm.
"Wall, Sterne, and Grove Street also adopted and/or misappropriated the financing structure that Canyon Ridge, Wall, and Sterne had created for Starwood hotel and conference center, including items recommended by Canyon Ridge's previous investment banker," the complaint states.
The trial began after jury selection April 21. Though the resort would have been located in Walker County, attorneys argued for a Hamilton County trial because the parties involved had Chattanooga offices and conducted transactions in Tennessee.
Randy Baker talks about the future of the Canyon Ridge Hotel and Conference Center from the club's pro shop in 2010.A jury heard evidence over 24 days, the longest-running case in Hamilton County history, and Thursday awarded the more than $20 million in damages to Canyon Ridge LLC, Horton's Scenic Land Company LLC, and Singing Sisters, LLC, which was created to hold land around Canyon Ridge.
Walker County initially supported the Canyon Ridge project, throwing the weight of its credit rating behind the work and attracting $15 million in Recovery Zone Bonds from the state to help prop up the project. But as the building dragged on, the county withdrew its support.
Commissioner Bebe Heiskell told the Times Free Press in 2011 the failing project drove down property values in the county, and she wouldn't back another hotel project. She did not return calls for comment Friday.
Horton, too, declined to comment before the jury hears evidence Monday for and against punitive damages atop the $20 million compensatory judgment.
Baker, who withdrew from the project in 2011 and filed for bankruptcy, said Friday he "didn't have a dog in the fight" and had merely served as a witness.
"All I can tell you is that Mr. Wall was dedicated to getting that project done," Baker said. He added that either project would have benefited the county, and his own efforts were well-documented and transparent.
The complaint alleges after Baker's withdrawal, but at his urging, Wall and Sterne worked as Canyon Ridge managers while also working for the competing Grove Street project. It alleges Wall reduced the amount of Recovery Zone bonds the project received from the state, without telling Canyon Ridge, in order to use them for the competing project. Wall and Sterne also tried to oust Horton as president of Canyon Ridge, according to the complaint.
At the same time, the complaint alleges, Wall and Sterne began working as Walker County's "financial advisor."
That means they would simultaneously have worked as Canyon Ridge's financial adviser and bond underwriter or manager, Walker County's financial adviser and also in promoting the Grove Street project.
"Wall and Sterne repeatedly used their influence in all three positions to thwart Canyon Ridge's efforts," the complaint states.
It's possible after Monday's jury decision, the case will hit well over the mark for the biggest jury award in county history.
Contact staff writer at Claire Wiseman at cwise man@timesfreepress.com or 423-757-6347. Follow her on Twitter @clairelwiseman.