Bank wants property returned Capital One sues group to get drive-through, says it was never part of deal
By: Lynn LaRowe - Texarkana Gazette -Published: 11/16
Capital One wants a Dallas investment group to give back property the bank claims was sold accidentally, according to a lawsuit recently filed in federal court.
Capital One admits a mistake was made when the "operational drive-through" situated on the Texas-side was included in a sale to the investors that was finalized in September.
"Capital One never intended to include the open drive-through in the sale, nor did it appreciate the erroneous legal description until after the transaction was closed, " said the lawsuit filed Oct. 29 in the Texarkana Division of the Eastern District of Texas.
The company that purchased the property, Eximius of Dallas, has plans to rejuvenate Texarkana's downtown area.
The sale was supposed to include only the Capital One Tower at 100 Broad St.in downtown Texarkana, an adjacent five-level parking garage, a "closed drive-through" next to the parking garage, a two-story office building at 217 Pine St. And a 19-car surface level parking lot located at the southeast corner of Main and Third streets, according to the complaint.
The lawsuit was filed on behalf of Capital One by Dallas lawyer Kenneth Johnston of the firm Kane, Russell, Coleman & Logan. It names Eximius Investment TXARK, New Fund Lending and NorthPoint Properties as defendants.
"Capital One believes that a mistake occurred and that if the parties can't work this out before a trial, the court system will allow justice to be done, " Johnston said.
The suit asks the court presided over by U.S. District Judge David Folsom to void the sale and allow the parties to start over.
Eximius consists of two members: Josh Harris and Jason Pappas. NorthPoint's sole member, Dave Carter, is also a part of the dispute. "The suit was just filed and we haven't yet filed an answer to the complaint, " said David Johnson, a Fort Worth, Texas, lawyer with the Winstead Firm. Johnson said the defendants intend to fight Capital One's claims.
The investment group said the properties were purchased as part of a larger plan to invest in and capitalize from the revitalization of Texarkana's downtown. The properties purchased will be turned into a restaurant and other businesses, Harris said. New Fund Lending financed the $670,000 sale, according to a deed of trust attached to the lawsuit as an exhibit.
The suit claims both sides realized at a point during their negotiations that the inclusion of the operational downtown Capital One drive-through was a mistake. The description of the land on which the drive-through stands was taken out but included in the final closing documents once again, the complaint said. On May 8, Capital One received a letter of intent from the buyers the suit claims contained "... An erroneous legal description of the property subject to the sale."
A purchase agreement negotiated May 16 contained an accurate description of the physical addresses of the properties the bank intended to sell, the lawsuit said. However, it still contained the "same erroneous legal description relative to the open drive-through in the letter of intent."
Two amendments to the purchase agreement were made Aug. 5 and Sept. 4, the suit alleged. "The amendments contain the correct physical addresses and description of improvements, " the suit said. "No reference to the open drive-through is made." The legal description, including the open drive-through property, was included again in a special warranty deed delivered to Eximius on Sept. 17, the complaint said. "As a consequence, the deed conveys the open drive-through, contrary to Capital One's intent or appreciation, " the complaint said. Capital One and the defendants began disputing the specifics of the sale about a week after closing the sale.
"On or about Sept. 25, Capital One learned for the first time that based on the mistaken and incorrect property description in the deed, that Eximius claims ownership of the open drive-through facility, " the complaint said.
On Oct. 1, Capital One asked the defendants to "re-convey" the open drive-through to Capital One or rescind the deed altogether. If the deed is declared void, Capital One said it will give back the money it received from the defendants.
Johnston said Capital One has received a demand letter from Eximius that gives it the choice of vacating the property or paying rent to continue using it.
A lease-back arrangement was never made or discussed for the operational drive-through though one was made for the bottom floor of the office tower where Capital One still conducts banking business.
The lawsuit theorizes that Capital One would have addressed the use of the operational drive-through prior to the sale if it intended to sell the property. Notifications required to governmental agencies of closing the drive-through were never made because the intent to shut it down never existed, according to the lawsuit.
"Capital One would not intentionally convey the open drive-through without negotiating a lease or filing the required documents with the Office of the Comptroller; neither of which occurred, " according to the suit. "Further, Capital One has entered into a sale-leaseback arrangement with NorthPoint and Eximius to permit banking operations to continue on the first floor of the Capital One Tower. A sale-leaseback was not negotiated or even mentioned in regard to the open drive-through and neither NorthPoint nor Eximius intended to purchase it."
The defendants will file documents telling their side of the issue in the next several weeks, said Johnson, Eximius' lawyer.
Anonymous
Texarkana, Texas
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