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Courts: Judge denies motion to dismiss Harmony suits

By Charles Swenson
Coastal Observer

Two lawsuits that allege Georgetown County mishandled funds obtained from the developer of the troubled Harmony tract and left property owners with unbuildable lots will be allowed to move forward, a Circuit Court judge ruled last week.

Judge Steven John denied a motion from the county to dismiss the cases because the statute of limitations had expired. Those suits, filed in 2012, are among seven that have been filed against the county claiming that funds held by the county in letters of credit to assure that infrastructure was built were improperly released to the developer. Five of those suits were filed this year by Stephen Goldfinch, state representative in House District 108 which includes the Harmony tract south of the Sampit River.

The 2012 plaintiffs are represented by Bill Moody, a Georgetown attorney. The county, represented by David Mills of the McNair Law Firm, argued that the two-year statute of limitations contained in the state Tort Claims Act had expired before the suits were filed.

David Repko, a plaintiff who lives in Baltimore, asked the county tax assessor in December 2007 to reduce his property taxes because the lots he bought in October 2006 for $77,000 and $78,000, were unbuildable.

“December 2007 he knows he’s got a problem,” Mills told the judge at a hearing last week. The suit was filed four and a half years later.

The state law under which people can sue governmental entities specifies “two years after the date of loss was discovered or should have been discovered,” Mills said. “Not when he or she develops a full-blown theory of recovery.”

The plaintiffs in all the cases are asking that they be paid their purchase price and related costs.

The county requires developers to post letters of credit for infrastructure if the developers want to sell property before infrastructure is completed. County records show that two letters of credit worth $705,192 for the section of Harmony where the plaintiffs’ property is located were cashed in October 2007. The developer, Harmony Holdings, filed for bankruptcy in January 2008.

The county approved payments to contractors for drainage and engineering work, but retained $165,291, according to the records.

Moody argued in court that it wasn’t until other property owners, Peter and Elizabeth Jackson of Litchfield, filed suit in December 2010 that his clients learned there was money to cover infrastructure and that the county had disbursed the funds.

“It’s clear my clients could not have known this until after the Jacksons took action,” Moody told the court.

The county settled with the Jacksons in May 2012, the same day Moody’s other clients, Grover and Cynthia Gossett of Virginia, filed their suit. That suit will also be allowed to continue following John’s ruling.

After hearing arguments over the statute of limitations, John questioned Moody about the plaintiff’s claim. While noting that it wasn’t relevant to the issues at the hearing, he asked why they didn’t ask for the county to install the infrastructure.

When the suits were filed, it wasn’t clear if there was any money to complete the work, Moody said. “We couldn’t get any answers” from the county, he said.

The plaintiffs may amend their complaint, he added.

Reading from Repko’s letter to the tax assessor, John emphasized that Repko said his lot “was not able to be built upon.”

“Why is that not notice to your client that he knew or should have known he had a claim?” the judge asked.

Repko didn’t know about the letter of credit, Moody replied. “Even the county didn’t know at that point if the developer would be able to complete the infrastructure.”

Mills argued that Moody’s clients could have found out about the status of the infrastructure “by reasonable diligence.” There’s no evidence that the county “pulled a fast one,” he said. Instead, the plaintiffs “made an assumption about the bankruptcy that was not correct.”

John took the matter under advisement, but within hours notified Moody to prepare a written order denying the county’s motion.

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