The 67-acre Diamond District site is bordered by Arthur Ashe Boulevard, Hermitage Road, the interstate and the railroad tracks. (BizSense file)
Investment bank Loop Capital continues to make its case that it should be dropped from a $40 million lawsuit involving its former teammates in Richmond’s Diamond District development.
The Chicago-based firm filed a response last week to the lawsuit brought by the parent company of Republic Properties, the D.C.-based firm that once led the Diamond District’s development team and sued Loop and local firm Thalhimer Realty Partners when they continued with the project without Republic.
Republic alleges that Loop and Thalhimer breached their partnership by forming a new entity, Diamond District Partners (DDP), and entering into a revised development agreement with the city. Loop argues that it never signed on to be part of the new entity, has no interest or involvement in the project and therefore should not be a party to the suit.
Loop says that it has asked to be dropped from the suit but that Republic has refused to do so. It seeks dismissal from the court in its response, which was filed Nov. 15, four months after Republic filed the suit in July.
Thalhimer, which filed its response in August, also in recent days filed a memorandum supporting its request for the suit to be dismissed, ahead of an initial court hearing scheduled in December.
In the brief, Thalhimer describes Republic as having “a severe case of ‘quitter’s remorse’” after refusing to sign an initial development deal with the city and pulling out of the project in May 2023.
“A year later, when DDP finalized a separate (and materially different) deal with the City, Republic began to regret its decision,” Thalhimer says in its filing. “This lawsuit is a baseless attempt by Republic to claim ownership over a development project that Republic previously and deliberately abandoned.”
In its response, Loop states that “Although Loop Capital had discussions with the City of Richmond, Thalhimer Realty Partners … and Republic about possibly participating in the project, neither Loop Capital (or co-defendants tied to the firm) ever actually signed onto the project.”
It later adds: “That the Loop Defendants are not part of and have no interest in the Diamond District real estate development project bars Republic from seeking relief against the Loop Defendants.”
A rendering of the ballpark-anchored Diamond District development along Arthur Ashe Boulevard.
Last month, an attorney for Loop confirmed to Richmond BizSense that the firm is no longer participating in the project. A BizSense article reporting that is included as an exhibit in Loop’s response to the lawsuit.
Also included is a declaration from Loop adviser Gregory Peck, who said he advised Thalhimer in early April that Loop was not part of the project and requested that Thalhimer remove Loop Capital “from any Development Agreement with the City of Richmond and to make such a request to the City of Richmond.”
Loop’s filing also includes Thalhimer’s response to the suit, in which Thalhimer confirmed that Peck had advised the firm on April 7 that Loop did not want to be part of the project “unless and until we have a resolution of some sort with Republic.” However, Thalhimer also says that Loop had maintained it intended to be part of the project up until the DDP development agreement was executed in mid-May.
While City Council approved the agreement at its May 8 meeting, when Loop was still presented as being involved in the project, it was a week later when the agreement was signed and executed at the May 15 meeting of Richmond’s Economic Development Authority.
At that EDA meeting, the development team was referred to only as DDP, with neither Loop or Thalhimer mentioned by name. Chief Administrative Officer Lincoln Saunders has said the city became aware that Loop was having reservations soon after City Council approved the agreement.
Despite backing out of the project as a team lead and investor, Loop did see through the city’s bond sale to secure financing for the Diamond District’s anchor baseball stadium – a process that wrapped up in July.
Republic alleged in its suit that Thalhimer 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.
Thalhimer and Loop allege in their responses that the parties never came to terms on or signed an operating agreement for the partnership, and that Republic’s argument that they breached a partnership fails because they never executed an agreement. The joint venture was to operate as an LLC.
Thalhimer and Loop further argue that Republic waived any rights it may have had against Thalhimer, Loop and other defendants when it refused to sign off on the 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 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. Diamond District Partners, now led by Thalhimer solo, is 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 and paid for by city bonds.
Republic says it stands to lose $40 million in value from the project. It is seeking that amount from the suit’s defendants, which in addition to Thalhimer, Loop and Diamond District Partners include Peck, Thalhimer principal Jason Guillot, Loop CEO James Reynolds and Loop associate Susan Cronin.
Loop is represented in the case by Alan Bart and Daniel Herbst with Reed Smith, as are Peck, Reynolds and Cronin. Harold Johnson with Williams Mullen is representing Thalhimer, DDP and Guillot. Republic is represented by Offit Kurman attorney Edward Tolchin.
The success or failure of this project depends directly on the outcome of this case. The city waits with bated breath…
Recall all the positive press as the selection process was narrowed down from 15 development teams, to three, to two, to RVA Diamond Partners. At the time the city explained its decision, saying “ RVA Diamond Partners was selected as the city’s development partner because their vision aligned with city goals.” How much of that vision is impacted by the dissolution of this team. Seems the partners weren’t all that much partner-like. If I’d been the other entities that spent thousands of dollars putting together their visions and proposals, I’d be pretty upset that , in effect, the city selected… Read more »