Beaufort developers sue over Whitehall property sale

Beaufort developers Dick Stewart and Steve Tully are suing to stop the sale of the Lady’s Island Whitehall property that they had been working to buy for more than a year.

Stewart and Tully, under the corporation Whitehall Park, filed suit March 30 against the property’s past ownership group Aslan Whitehall LLC and First Chatham Bank. The men said they had the right through a January agreement to see and match a third-party offer and asked a Beaufort County court to stop an impending sale and enforce the earlier agreement.

In its response filed April 8, the bank said the “right of first refusal” agreement with Stewart and Tully applied only if Aslan Whitehall received an offer from a third party. Since the bank is selling the now-foreclosed property to another party and not Aslan Whitehall, the agreement doesn’t apply, the bank’s response said.

Stewart disagrees.

“We have the first right of refusal to see (the contract), and they haven’t shown it to us,” Stewart said Friday. “What are they hiding?”

Tully deferred comment to Beaufort attorney Tom Holloway, who filed the lawsuit. An attempt to reach Holloway was unsuccessful Friday.

First Chatham sold the property at a foreclosure sale May 2, said Hilton Head Island attorney Curtis Coltrane, who represents the bank. But the sale can’t close until the lawsuit is resolved, he said.

Atlanta group MidCity Real Estate Partners is the new buyer, Beaufort city manager Bill Prokop said. City officials have said the potential buyers visited the area numerous times leading up to the sale.

Attempts to reach MidCity president Kirk Demetrops were unsuccessful Friday.

First Chatham said its only obligation was to give Stewart and Tully notice the property was being foreclosed, which it did March 31. The bank asked Tully and Stewart to acknowledge they didn’t have first right of refusal, “primarily for the purpose of avoiding the issue were dealing with now,” Coltrane said Friday.

The developers declined.

Stewart and Tully, via their lawsuit, said the bank was acting on behalf of Aslan Whitehall, making the January agreement valid. They are asking for the right to see and possibly match the offer, to stop the impending sale and to be paid damages if the sale goes through.

First Chatham is asking that the lawsuit be dismissed, saying the language of the January agreement is clear. The bank’s motion to throw out the case is scheduled to be heard May 24.

Stewart and Tully had been trying to buy the vacant Whitehall property since November 2014, when they went under contract with Aslan Whitehall in a short-sale agreement. Their plan included 76 homes and sought public and nonprofit funding for a 4-acre, public waterfront park on the property.

The request for public funding never got much traction.

He said First Chatham sent Stewart and Tully two pages of the new contract but that neither contained details of the sale and the potential buyer’s name was redacted.

“We said we were not going to proceed (with the purchase) unless the city and county agreed to help us,” said Stewart, whose development company 303 Associates owned the property more than a decade ago. “It’s quite likely they agreed to help someone else. We would like to see what’s going on there.”

Prokop said the city has had no discussions with the new buyers except for planning and zoning requirements for the approximately 20-acre property on the Beaufort River across from Henry C. Chambers Waterfront Park. The property was annexed in 2005.

Aslan Whitehall’s contract with Stewart and Tully expired with no deal on Jan. 17. A Jan. 27 agreement said Aslan Whitehall must give Stewart and Tully the name of any third party with a contract with Aslan Whitehall for the property, provide the terms of deal and the chance to match the offer.

The bank says neither it or Aslan Whitehall violated the terms of that agreement.

This story was originally published May 6, 2016 at 10:18 AM with the headline "Beaufort developers sue over Whitehall property sale."