Danielson trumped: Minor wins in Landmark hotel arbitration

Minor and Danielson during happier times at the groundbreaking of the Landmark.
FILE PHOTO BY JAY KUHLMANN

Back in February, some may have scoffed when liquidity-challenged business tycoon Halsey Minor vowed that he might eventually own one of his nemeses, a multi-billion-dollar banking company. But that was two legal victories ago, with the latest a private arbitration which awards Minor at least $6.6 million in the tussle over the unfinished Landmark hotel.

Coming just a month after teaching Christie's auction house–- via an $8 million jury award–- that it doesn't pay to play hardball with the man who co-founded CNet, the June 28 arbitration decision appears to vindicate the youthful-looking business tycoon and vanquish the hotel development company operated by Lee Danielson, the man who launched the 1990s renaissance of the Downtown Mall.

Ironically, it had been Danielson who had been pushing the matter toward arbitration as Minor's lawyer tried mightily to keep the matter in the courts. However, at a February 17 hearing, Charlottesville Judge Edward Hogshire forced the two sides to choose an arbitrator to lessen the courthouse burden. And what the arbitrator chose puts a hefty burden on Danielson.

Donald H. Kent of Richmond-based arbitration firm The McCammon Group ruled that Danielson possessed such a passion for building a luxury hotel that he misrepresented the construction costs–- including hiding the fact that the restaurant wasn't included in the budget.

"The cumulative effect of this deliberate and reckless conduct," wrote Kent, "amounts to gross negligence."

Contacted for comment, Minor points to a recent essay he penned about the structure of American law. In his June 15 article for the Huffington Post, Minor urges legal action against employees and managers of companies–- he mentions Exxon and British Petroleum among others–- that harm citizens. "The threat of public prosecution," writes Minor, "can be a powerful check on the corporate culture of pathological recklessness that is rapidly devouring America."

As for Danielson, the man who built the just-closed Charlottesville Ice Park and downtown Regal cinema, says he was shocked by the decision. "I did the best job I could," said a chastened Danielson.

Amid Minor's victory, however, there was a bit of a rebuke to his lawyer, DLA Piper, whose billings through February 11 were said to be $2.8 million. However, the arbitrator declared that "reasonable" fees were lower and capped the legal reimbursement at just $2.24 million. That combines with $4.2 million in damages, and the arbitrator left open the idea that Danielson's company may owe Minor for future losses.

As lawyers say, it may all turn out to be moot, as both Danielson and Minor have made statements suggesting that Danielson's company, Hotel Charlottesville LLC, is heading for insolvency. Minor insists he's not going that way.

The Charlottesville-bred Minor, whose business masterstrokes include making early investments in GoogleVoice and Salesforce.com, has held a fortune once estimated around $355 million. But lately Minor has found himself pegged as California's biggest tax deadbeat and losing a pair of creditor lawsuits.

In one of the creditor cases, a judge ordered Minor to pay the Sotheby's auction house $6.64 million and issued a court order demanding that Minor give up many of his worldly goods. As first reported in the New York Post, Minor must fork over all furniture, tapestries, chandeliers, and as well as furs, gems, and watches valued at $35 or more. The June 2 court order also requires Minor to give up all vehicles, including his Audi A8, as well as all collectibles "except for basic tableware and basic cooking utensils and crockery."

At one point, the court order called for Minor to turn over pets and even food beyond a 60-day supply, but judge Barbara S. Jones scribbled out those demands.

"Eating is not necessary for us, but Fluffy the cat stays," Minor jotted in a jocularly defiant email to a reporter. Minor has traced his liquidity woes to an allegedly unfair account freeze by Merrill Lynch, the Bank of America subsidiary which triumphed over him in one piece of litigation last year.

The arbitration decision leaves unanswered exactly what will become of the empty concrete shell looming over Charlottesville's Downtown Mall. In recent days, the 11-story would-be hotel has been rocked by allegations that it already serves as a hotel. For the homeless.

After the Landmark allegedly defaulted on its construction loan, control of the project began shifting to Specialty Finance Group, a division of Silverton Bank, which collapsed into the arms of the Federal Deposit Insurance Corporation. With numerous pieces of litigation–- including suits from the contractor and bank–- the FDIC has thus far declined to sell or indicate plans for the property.

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Original posting: In the high-stakes, high-profile litigation surrounding the long-stalled Landmark hotel project, financier Halsey Minor has won a major arbitration award against the company run by the former developer, Lee Danielson. C-Ville Weekly has a story of the award against Danielson's company which includes $4.2 million in damages and $2.4 million in legal fees.