He said/he said: Danielson sues; Minor speaks out

Halsey Minor (left) and Lee Danielson (right) were friendlier when they broke ground on the Landmark Hotel on March 11, 2008 with Mayor Dave Norris.
FILE PHOTO BY JAY KUHLMANN

After going quiet for nearly six months, Internet entrepreneur Halsey Minor is speaking up again about his stalled Landmark Hotel project–- including a new lawsuit he faces from the project's former developer, Lee Danielson. Minor says the other players in the project are all unfairly and inaccurately blaming him.

"I've heard all this junk from Lee, and the bank, and the contractors, and it's just not true," says Minor. "It's not my responsibility, it's theirs."

Minor's remarks come on the heels of a $5.75 million lawsuit from Danielson, whom Minor fired in November, accusing Minor of unlawfully breaking his contract with him as the Landmark's developer–- a counter to Minor's pending suit against Danielson and against federally-seized Atlanta-based lender Silverton Bank. Among the allegations Danielson makes in his claim in Charlottesville Circuit Court is that Minor demanded that Danielson find someone to buy out Minor's interest, a claim Danielson supports by producing an October 31, 2008 e-mail from Minor.

"Lee, I said by all means try to line up a buyer," wrote Minor, adding insultingly, "I have my doubts that this will happen given your difficulty raising money in a white hot market." The e-mail concluded, "I am certainly open to a buyer if one exists."

Minor says that Danielson simply misunderstood what was intended as a sarcastic joke. "I never said I was going to sell," says Minor. "I was being humorous.

"The idea of raising the kind of money I put into this project in this economy is laughable," Minor continues. "It's like asking, 'If you could sell your car for a million dollars, would you want to sell your car?' Sure you would, if you could find someone dumb enough to make the deal."

Danielson says it wasn't possible to detect vocal inflection as all their communications were conducted over e-mail, Minor's proposition never seemed like a joke to him.

"I never thought he was kidding," says Danielson. "When he said to find a buyer 'by all means,' I didn't think he was kidding, and I have witnesses who didn't think he was kidding."

Danielson also alleges in his suit that Minor green-lighted a penthouse bar that increased the construction budget by $2.36 million. If true, this may have violated the loan agreement with Silverton Bank and could explain why the bank withheld a $1.1 million loan payout, halting the project in November, three months before work stopped indefinitely.

Minor admits he did sign off on the top-level bar, but he says the change cost should have been nominal.

"All it took to have the penthouse restaurant was to move some equipment on the roof aside, and that was only about $800,000 more," says Minor. "The real cost overrun was that Lee didn't seek bids, and the bank stopped paying. That led to an army of people, starting with Lee, looking to get paid before the project stopped."

While Danielson admits that the penthouse restaurant was his idea, he say it was ultimately Minor's decision.

"He signed off on everything," says Danielson, "and I have the documentation to prove it in court."

Still, Minor says Danielson isn't the only culprit in the Landmark' debacle. Minor also blames Silverton Bank, which Minor says he chose largely for its stability, after getting bids from Wachovia and Virginia National.

"I sat down with their guy in charge of hospitality lending," says Minor, "and he told me they hadn't had a project go bad in 27 years."

Minor continued to feel good about the agreement until November, when he says Silverton didn't come through with a $1.1 million loan payment because, he alleges, the bank's finances were "constantly on edge." When Silverton was taken over by the Federal Deposit Insurance Commission earlier this month, Minor says he felt no sense of vindication for speaking out, but plenty of anger.

"When the FDIC got in there," says Minor, "they found that 179 of their projects had gone bad. They lied to me."

A look at the most recent report of condition Silverton filed with the FDIC reveals that as of March 31, Silverton had $168.4 million in bad loans.

A voicemail left at office number for the official Minor names was not returned at post time, and Silverton spokesperson Cristi Kirisits tells the Hook, "I think Mr. Minor must be mistaken."

Whoever it was defending Silverton's solvency, Landmark was supposed to be completed by this summer. But despite a recently rebricked Mall and a soon-to-open Urban Outfitters shop, the 11-level concrete hotel shell stands silent. Minor says there is a silver lining to Silverton's fall, as he believes the law will be on his side against his adversaries.

"Since they so maimed and wreaked havoc on this project," says Minor, "it's going to be easy for me to get out of the deal and go find a better one."

As the work stoppage nears its fourth month with no end to the legal and financial wrangling in sight, prospects for swift completion may seem bleak. Yet Minor maintains he will finish the hotel–- with a new team.

"When we begin again, I doubt I'm going to use any of the same contractors or subcontractors," says Minor. "We need a fresh start, instead of this cast of characters Lee put together."

Minor says he's frustrated that the hotel's progress has been stymied, but he believes the Charlottesville community is the real victim.

"The people of Charlottesville are jaded," says Minor, "and I don't blame them."