Todd Dykshorn, principal of Architecture Design Office, was sued by the Bank of Hampton Roads last month for allegedly misrepresenting to the bank the status of two Scott’s Addition properties that developer Justin French was converting into apartments. The bank said in its $15 million suit that it continued to lend on the projects based on information Dykshorn provided. Today, the properties are incomplete and underwater. (You can read about that case in an RBS story here.)
Not so fast, says Dykshorn’s attorney Jack Burtch of the firm Macaulay and Burtch. “There was an ongoing conversation between Todd Dykshorn and the bank about what was going on, and he had raised some issues with them,” Burtch said, “What they say in the papers is that he just signed off on stuff and said things were fine. The fact is that is not the whole story.”
Burtch said that the bank told Dykshorn to keep moving forward despite his concerns. Burtch filed a demurrer, which is an objection to a legal claim, in Richmond Circuit Court, asking the judge to throw out the case because the plaintiff fails to state any actionable claim against Dykshorn.
The suit against Dykshorn charges him with two counts of wrongful conduct. Burtch writes in his response that Virginia law does not recognize that as an actionable claim, such as breach of contract or fraud.
“We filed papers which basically say their case is not legally sufficient. If they are going to sue us, tell us what [my client] did wrong,” said Burtch.
Richard Matthews of Pender and Coward in Chesapeake, the main attorney for the Bank of Hampton Roads, could not be reached by press time.
According to the bank’s suit, Dykshorn was hired to certify that the draw requests corresponded to the amount of work being completed by French. After dispensing $15 million in construction funds, the projects at 3031 Norfolk St. and 1700 Summit Ave. remain largely incomplete.
It’s not clear where the money went.
French is awaiting a pretrial hearing regarding nine felony charges, possibly related to his misuse of historic tax credits among other potential charges.
Prior to his arrest, French had stopped paying his loans in an attempt to remove Markel Corporation as his tax credit partner on several properties — including the two involving the Bank of Hampton Roads. As to why the bank would go after Dykshorn and not French, Burtch said he can only speculate.
“They loaned money to somebody and it didn’t work out, now they are looking for someone else to take responsibility, and that is just my speculation,” Burtch said. A hearing for the demurrer has not been scheduled.
Al Harris covers commercial real estate for BizSense. Please send news tips to [email protected]