The 67-acre Diamond District site is bordered by Arthur Ashe Boulevard, Hermitage Road, the interstate and the railroad tracks. (BizSense file)
The developers hit with a $40 million lawsuit from their former teammate on Richmond’s Diamond District project are hitting back and calling for the case to be tossed.
In a response filed in Richmond Circuit Court last Friday, locally based Thalhimer Realty Partners seeks dismissal of the suit brought by the parent company of Republic Properties. That D.C.-based firm had led a previous iteration of the Diamond District development group and sued TRP and fellow collaborator Loop Capital after they formed a new group to pursue the project without Republic.
Republic alleged in its suit that TRP and Loop struck out on their own without first dissolving the partnership it says they had with Republic, which had assembled the previous group under RVA Diamond Partners LLC.
In its response, TRP alleges that the parties never came to terms on or signed an operating agreement for the partnership. TRP and Loop later formed a new entity – Diamond District Partners LLC – and entered into a revised development agreement with the city.
TRP further argues that Republic waived any rights it may have had against TRP, Loop and other defendants when it refused to sign off on an earlier development agreement and withdrew from participating in the project. Thalhimer has said Republic notified it in writing that Republic was bowing out of the project.
The response includes a declaration by TRP principal Jason Guillot, who is named individually as a defendant in the suit. The declaration states that the parties never formed a general partnership but rather “cooperated to pursue the Diamond District project” without ever reaching a formal agreement.
“Moreover, the parties that cooperated to pursue the Diamond District development project planned to do so as a limited liability company, and not as a general partnership,” Guillot’s declaration states, referring to the allegations in the suit brought by Republic Projects LLC, an entity tied to parent company Republic Holdings Corp.
“One or more members and/or agents of Republic Projects, LLC, formed an entity named ‘RVA Diamond Partners, LLC,’” the declaration adds, “but the parties never formed an operating agreement to establish RVA Diamond Partners, LLC as a viable limited liability company.”
A conceptual rendering of the Diamond District along Arthur Ashe Boulevard. (City documents)
The team change was made as the city pivoted its financing approach for the $2.4 billion project that includes a new baseball stadium to replace The Diamond. TRP and Loop, as Diamond District Partners, are now signed on to develop a 30-acre first phase of the 67-acre mixed-use development, while development of the anchor ballpark is being managed separately by the Richmond Flying Squirrels.
That arrangement is a change from the original development agreement with RVA Diamond Partners, which the city selected through a competitive solicitation process in 2022. The Republic-led team had reached terms with the city to develop the entire Diamond District project, including the new ballpark.
Republic says it stands to lose $40 million in value from the project if TRP and Loop continue without it. It is seeking that amount from the suit’s defendants, which in addition to TRP, Loop and Guillot include Diamond District Partners, Loop CEO James Reynolds and two other Loop associates.
The Loop defendants have yet to file a response in the case.
In its response, TRP alleges that Republic’s lawsuit shows there was no agreement among the parties regarding the terms of a partnership. The filings point to Republic’s refusal to sign the development agreement with the city, disagreement over the city’s request that TRP be designated as the group’s lead representative, and Loop’s refusal to accept proposed terms in a draft venture agreement with Republic.
TRP alleges that the draft venture agreement listed RVA Diamond Partners as the entity that would have made up the joint venture with Republic, not TRP or Loop individually. Even if such an arrangement between the parties had been formalized, the response states, it would have been governed by the venture agreement, which TRP says would have allowed TRP and Loop to pursue the project without Republic if it didn’t approve the development agreement with the city.
TRP also alleges in the filings that Republic encouraged TRP and Loop to continue pursuing the development with other parties when it refused to sign the agreement and withdrew from the project.
TRP, Guillot and Diamond District Partners are represented in the case by Harold Johnson with Williams Mullen.
Chicago-based Loop Capital is represented by Daniel Herbst in Reed Smith’s D.C. office. Herbst is also representing Loop CEO Reynolds and the two other Loop associates named as defendants in the suit. Republic is represented by Offit Kurman attorney Edward Tolchin.
The legal fight is playing out as the city and the Flying Squirrels are celebrating the start of the new stadium’s development.
Last week, the Double-A ballclub and Richmond’s Economic Development Authority formally signed a 30-year lease and development agreement for the $117 million stadium, to be built just south of The Diamond as the anchor of the overall Diamond District development.
A groundbreaking ceremony is scheduled for next Friday, and the stadium’s new name – expected to involve CarMax – is to be announced at an event Wednesday.
Lawsuit from Republic sounds like a reach. Maybe they thought the groups winning chances weren’t that high. Sour grapes
So let me get this straight the city accepted a “complete proposal” for a multimillion dollar redevelopment from an entity that applied that technically had no formal signed agreement, backing or finalization of roles???? It was just all smoke and mirrors that was to be worked out later after the award.