A Chattanooga developer who proposed building a hotel and conference center on Lookout Mountain next to the Canyon Ridge golf course wasn't able to get the project off the drawing board, but he and his investors will still walk away with millions of dollars for their efforts.
Developer Duane Horton, president of Scenic Land investors, is being paid by a Birmingham, Ala.-based financial service company after a Hamilton County jury said the financiers thwarted Horton's plans and tried to work with a rival developer for the Walker County, Ga., development. Final terms of the settlement, which were approved by a mediator last week, were not disclosed.
Horton sued Sterne, Agee & Leach Inc., and its investment advisor, Edward Wall, in 2011 for breach of contract and for undermining his plans for a $100 million county-backed convention and hotel complex through "fraudulent, malicious and reckless conduct" by pursuing another hotel for Canyon Ridge.
Last month, following the longest civil trial ever in Chattanooga, a jury awarded Horton nearly $20.6 million in compensatory damages and $11.5 million in punitive damages. Hamilton County Circuit Court Judge J.B. Bennett accepted a mediated settlement of the penalties, while also awarding an extra $4.5 million in pre-judgment interest to Horton.
The total jury and judge's awards against Sterne Agee and Wall totaled more than $36.5 million, but the two sides negotiated a private settlement of the dispute in lieu of more appeals and extended legal action.
Court records show that mediator John Blankenship approved a settlement of the case in June 30, but neither side disclosed the exact amount that Sterne Agee will pay Horton.
The original claim was filed in September 2011. The trial began on April 21 of this year and continued into early June, making it the longest civil trial in Hamilton County's history.
"The jury spent over six weeks actively listening to a very complicated and detailed case," Horton said in a statement released Tuesday. "We are all very pleased with the outcome of this case and hope it will prevent others from engaging in such unfair business practices."
Horton declined Tuesday to discuss the final settlement. But in his statement, Horton said he will focus now on the continued development of Brow Wood on Lookout Mountain, as well as the proposed Hillocks Farm project in Hixson.
There are no plans by anyone at this time to pursue a hotel or convention complex at Canyon Ridge, which once enjoyed both the backing of Walker County and the prospect of $21 million of tax-exempt Recovery Zone Facility and Build America bonds.
Horton, president of Scenic Land investors, began more than five years ago to try to develop the hotel and convention center next to the 430-acre Canyon Ridge golf course and residential development in Walker County, Ga. But he claims the plan was thwarted by Wall and Sterne and Agree who worked for another rival development, which included Canyon Ridge's former developer Randy Baker in a group known as the Grove Street project. Neither hotel plan was ever developed at Canyon Ridge and Baker
Horton worked with Walker County officials to propose a convention and hotel complex on Lookout Mountain in 2009. The Great Recession undermined the demand for such projects despite the availability of tax-exempt financing for such deals.
Baker, who took over the former Tauqueta Falls in 2000, developed an 18-hole golf course and the initial residential phases of the renamed Canyon Ridge. In 2011, Wells Fargo Bank took over most of the undeveloped lots in Canyon Ridge, in lieu of a foreclosure, and Baker sold the 18-hole golf course to developer Daryl Mims before filing for personal bankruptcy over the debts associated with Canyon Ridge and other real estate projects.
Baker, the president of RCB Management Group who owned half of Canyon Ridge Resorts at the time the lawsuit was filed, said Horton's lawsuit "was without merit and I wanted no part of it.
"Neither Mr. Wall nor Sterne Agee had any influence in the failure to build a hotel," Baker said. "It was solely a lack of money and that is why the hotel hasn't been built in the last four years."
Baker noted that Horton said on the witness stand that if he won, he'd donate the money to charity.
"I guess some good can come out of the ordeal," Baker said.
Contact Dave Flessner at firstname.lastname@example.org or at 757-6340.