February 16, 2009
A Mount Airy developer has filed suit against Wachovia Bank, alleging extortion, fraud and unfair and deceptive trade practices.
Granite Development LLC filed the suit in Guilford County Superior Court in relation to construction loans the company says it had to build retail centers in Greensboro and Harrisburg, northeast of Charlotte, according to an announcement from the developer.
The suit says Wachovia used threats of foreclosure and other predatory practices to try to force Granite to accept unreasonable loan demands on an extension the developer wanted on the construction loans. The Greensboro shopping center involved is at the corner of Battleground Avenue and Horse Pen Creek Road and is anchored by a Harris Teeter grocery store.
Wachovia Corporate Communications Manager Christine Shaw said she could not comment on any specifics of the suit, but she said Wachovia “strongly disagrees” with the allegations it contains.
“Wachovia continues to lend to customers and is committed to helping them work through the current economic environment, while managing risk appropriately,” she said in an e-mailed statement.
The suit alleges that Wachovia inserted onerous terms into the loan extension agreements at the last minute, and gave Granite officials only one day to agree. After the company objected to the terms, the suit says Wachovia initiated foreclosure proceedings against both shopping centers and sent tenants letters directing that rent payments be mailed directly to the bank.
Granite principal Richard Vaughn Jr. said his company has been a Wachovia customer for 20 years and he is “shocked” by the banks actions. He said Wachovia’s actions were motivated by its own financial distress, not by Granite’s creditworthiness.
“We have not failed to make a payment on any project with any lender,” he said. “We are not a litigious company, but we refuse to allow Wachovia to tarnish our good name.”
The Shoppes at Battleground Oaks center opened in 2007, but completion has been delayed by negotiations over the placement of a cell phone tower. The suit said Wachovia’s actions threaten to derail those negotiations and prevent the completion of the development.
The suit seeks damages and to block Wachovia’s action, and to declare unenforceable a $5.48 million fee imposed by the bank on the termination of an interest-rate swap agreement.
Source: http://www.bizjournals.com/triad