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South Causeway: Jury finds former big-box site in default
By Jason Lesley
A Georgetown County jury found this week that South Causeway LLC and owner Peggy Wheeler Cribb defaulted on a $5 million loan, clearing the way for First South Bank to foreclose on 18 acres on Highway 17.
Cribb had demanded a jury trial after the bank started foreclosure proceedings two years ago.
A deal to sell the property for a Lowe’s Home Improvement Center was stopped five years ago when the county imposed building size restrictions on the Waccamaw Neck after citizens organized a drive called Don’t Box the Neck to oppose large retailers. Ironically, the group reorganized just as this case came to trial after a proposal to put a big-box retailer at the site of Pawleys Plaza came before the county planning board.
Cribb filed for a seat on the Georgetown County School Board prior to the trial.
Cribb’s lawyer Audra Byrd called First South bankers “bullies” in her summation to the jury, claiming they changed the terms of the loan at the last minute, refused to provide promised funds for development of the property and revealed confidential information to scare off prospective buyers. She asked the jury to award Cribb at least $8 million, the difference in what a prospective buyer once offered ($12 million) and the land’s estimated value today ($4 million) as well as punitive damages to punish the bank for its behavior.
The bank’s lawyer Joel Collins said his clients acted appropriately and had the right to go through with foreclosure because the borrower failed to repay the note upon demand. He said Cribb rejected a $12 million offer for the property from the Charlotte development firm of Lincoln Harris in 2008, and bankers wanted her to accept an offer and repay her loan. Her demand for a jury trial was an attempt to buy time and sell the property for a profit in a falling market, he said.
“Time and time again, Ms. Cribb had offers to sell the property,” First South executive Wayne Lovelace testified. He said Lincoln Harris offered $12,352,500 for the 18-3-acre tract on July 2, 2008. Broker Robbie Buice brought her an offer for $9.5 million from a potential buyer, and broker Will Hudson brought her another for $10 million, he said. “She made poor decisions not to sell,” Lovelace said. “We didn’t dictate to her, other than hoping she would take one of these good offers and move on.”
Cribb’s lawyer told jurors that First South bankers had promised to see her through to the end of any development.
When Lovelace was asked if that was true, he said: “Never.”
First South Bank executive Chip Lyerly testified that the bank foresaw a “significant income stream over a long period of time” if the property were properly developed. He testified that Cribb didn’t begin the proposed engineering work on the property or pay the taxes when due, putting her into default.
The original First South loan included as collateral a $1.4 million residential lot on Pawleys Island belonging to Cribb and her son, Darwin Wheeler. The lot was released when a $300,000 loan from Kennedy Funding on April 10, 2009, was signed. It called for the maturity date to be moved up 12 months sooner than the original loan, Lovelace said. First South lawyers presented loan modification documents with Cribb’s signature and an e-mail saying she and her son favored that option.
Her lawyers said Cribb was caught completely off guard by the demand for a shorter re-payment period and signed under duress in order to get further funding and keep the property.
“She understood,” Lovelace said. “She later claimed a big switcheroo and a trick by the bank.”
Cribb’s lawyers claimed the bank revealed confidential information about the loan and its maturity date to both Lincoln Harris and Sotheby’s Auction Co. in order to scuttle deals for either complete or partial sales of the land.
Lovelace testified that selling some of the land to an unsuitable client, such as a biker bar, could devalue the remainder, but he denied doing anything to prevent Cribb from selling her property.
Stan Ashburne, an expert witness called by the bank’s lawyers, testified that he saw no problems with the loan documents he had reviewed. The bank allowed potential buyers of both the property and the note to review loan documents, and Ashburne said under cross-examination that was inappropriate but not illegal. Cribb’s lawyers used that admission as the basis of their argument, but jurors were not swayed.