A fight between one of Richmond’s oldest financial firms and a rural county near Charlottesville is headed back to court.
The Supreme Court of Virginia last week ruled to reinstate a lawsuit filed in 2011 against Davenport & Company by the Fluvanna County Board of Supervisors over a $70 million bond sale. That means the case, after being dismissed last year, will resume in Fluvanna County Circuit Court.
The Supreme Court’s decision came after the county board appealed last year’s dismissal of the case. Davenport had argued at the time that the case should be tossed out based on a technical legal issue involving the separation of powers between branches of government.
“We thought that argument sounded odd at the time,” said Fluvanna County Attorney Fred Payne. “It’s fair to say to say the Supreme Court thought it sounded a little odd to them.”
The board’s suit claimed that Richmond-based Davenport misled the county into issuing a certain type of bond in 2008 that would allegedly result in higher commissions and fees for the firm. The county is seeking more than $18 million in damages based on unnecessary interest on the bonds. The initial suit alleged several counts, including breach of fiduciary duty, fraud, gross negligence and unjust enrichment.
Davenport was the county’s financial adviser and represented it in the bond sale. Davenport’s public finance practice does bond work and advising for dozens of municipalities in Virginia, North Carolina and Maryland.
Until the dispute ended their relationship in 2010, Davenport had been Fluvanna County’s financial adviser for more than 15 years.
Davenport, which disputed the merit of the case from the get-go, declined to comment on the Supreme Court’s decision, other than through a prepared statement issued Monday.
“The decision issued by the Virginia Supreme Court on Thursday, April 18, 2013 addressed only the preliminary question of whether Fluvanna County could bring an unusual suit like this,” Davenport said in the statement. “It still remains that the County’s case has substantial legal and factual deficiencies. Davenport continues to stand behind the advice given to the County and is confident it will prevail in the lawsuit.”
Davenport is represented by McGuireWoods in the initial suit.
The county is also represented by Doug Palais, a Richmond attorney with the firm Park Palais.