Effingham County commissioners voted last Tuesday to approve a settlement in a nearly five-year-old lawsuit.
Commissioners approved a payment of $325,000 to Benjamin Roach. Roach is the bankruptcy trustee for Darrell Morgan and initially filed a suit against Effingham County in December 2010.
The county also will cede 1.993 acres off Old Augusta Road that had been bought as a remnant of the Old Augusta Road work. The county no longer has a need for the land and does not believe it will be needed in the future. The land was offered for sale by sealed bid, but no bids were received. It was declared surplus May 19.
In the suit, Roach claimed Morgan wanted to buy 74.53 acres known as Billy Exley’s Mill Creek property out of a larger parcel to be called Grandview subdivision.
His interest in the property was predicated on the county’s assurances that they could provide water and sewer service to facilitate Grandview. He planned to improve the property by building roads, water and sewer infrastructure, and other necessary improvements.
He intended to sell the property to an interested purchaser who would build homes. He approached the Bank of Newington for financing. They required proof of a sale contract once the infrastructure was completed. They also required written proof of the county’s commitment to provide water and sewer service to the property within a reasonable amount of time.
The county provided a letter in March 2005 with a commitment to provide water and sewer service, with a completion date of July 2006, according to the suit. The next month, Morgan entered into a sales agreement with N&J Land Corp. The Bank of Newington loaned Morgan $1.5 million, and he closed on the transaction in July 2005.
The county was looking to obtain low interest loans from GEFA to finance construction. As a condition, GEFA required letters of credit from developers equal to the total loan amounts requested.
“Defendants knew the Bank of Newington was relying upon the assurances of water and sewer availability in making its decision to extend a loan to Mr. Morgan for the purchase of the property,” the plaintiffs charged in their filing against the county.
According to the lawsuit, In October 2005, the Bank of Newington issued a letter of credit, and in May 2006, the county entered into a water and sewer service agreement with Morgan. Using the letters of credit, county obtained the GEFA loans.
But “as a result of the defendants’ failure to perform and make good on the representations, N&J Land Corp. was left with no alternative other than to walk away from the sales contract,” Roach alleged in the suit.
Morgan rezoned the land in 2008 as industrial in an effort to salvage its value and marketability. Defendants continued to assure that water and sewer infrastructure would be provided.
“However, despite these continued assurances, construction never commenced,” the lawsuit continued.
Morgan filed for Chapter 11 bankruptcy in June 2009.
Roach eventually dropped claim for promissory estoppels, leaving only the claim for breach of contract and attorney’s fees in February 2013.
Judge John Turner dismissed a second petition for summary judgment in January 2014, since the court ruled it is a valid and enforceable contract and the issue of sovereign immunity was rendered moot.
Jury selection for the Old Augusta Road Development suit is set for Aug. 17 and a trial will be held from Aug. 18-25.