IN THE CIRCUIT COURT OF MADISON COUNTY, ALABAMA. CARL E. FALLIN, SR., ) ) Plaintiff, ) ) v. ) Civil Action No. ) CITY OF HUNTSVILLE, ) ) Defendant.

Transcription

1 ELECTRONICALLY FILED 10/22/2014 3:44 PM 47-CV CIRCUIT COURT OF MADISON COUNTY, ALABAMA JANE C. SMITH, CLERK IN THE CIRCUIT COURT OF MADISON COUNTY, ALABAMA CARL E. FALLIN, SR., ) ) Plaintiff, ) ) v. ) Civil Action No. ) CITY OF HUNTSVILLE, ) ) Defendant. ) COMPLAINT This action seeks declaratory and injunctive relief against a municipality which has given away public property, and is threatening to give away public property, in a manner not permitted by the Alabama Constitution and under the guise of economic development. It also seeks relief to obtain public records related to this give away. The Parties 1. Plaintiff Carl E. Fallin, Sr. ( Fallin ), is an individual resident citizen and pays taxes to the City of Huntsville regularly. He operates a business within the City of Huntsville and pays an annual tax which gives him the authority to conduct his business there. 2. Defendant City of Huntsville ( Huntsville ) is a municipal corporation organized and existing under the laws of the State of Alabama. Jurisdiction and Venue 3. This Court has jurisdiction over the subject matter of this action pursuant to 142 of the Alabama Constitution and Ala. Code , -31, and -33. Relief is

2 authorized by Ala. Code , Ala. Code , et seq., and Rules 57 and 65, Ala. R. Civ. P. 4. Venue is proper in this Court over an action in which Huntsville is a defendant because Huntsville is located within Madison County, Alabama; a substantial part of the acts or omissions giving rise to this action occurred in Madison County, Alabama; and the real property that is the subject of this action is located within Madison County, Alabama. Facts 5. This action challenges Huntsville s improper financing of a project commonly known as Parkside Town Centre ( the Parkside Project ), which is the proposed site for a Cabela s, Inc. ( Cabela s ) outdoor retail store in Huntsville. The developers of the Parkside Project are Mike Culbreath, a public official and member of the Huntsville City School Board; James Packard; and their business entities Attitude, L.L.C. ( Attitude ), and Mushashi, LLC ( Mushashi, and, together with Culbreath, Packard, and Attitude, Developers ). 6. Huntsville and Developers have entered into a series of real estate contracts and transactions whereby Huntsville has paid or will pay approximately $7.6 million to, or on behalf of, Developers to purchase property with an appraised value that is dramatically less than the amount paid. 7. Huntsville s contribution of money to the Parkside Project does not follow customary procedures for use of public resources for economic development. A portion of the public monies used by Huntsville, as described herein, include the taxes paid by Fallin. 2

3 Unless relief is granted to Fallin, his taxes will be needed to replenish monies spent by Huntsville on the Parkside Project. 8. For the reasons described below, the proposed and completed transactions between Huntsville and Developers should be enjoined and, if necessary, set aside. 9. In 2009, Developers identified the proposed location for the Parkside Project in Huntsville, a 2-lot parcel ( the Property ), adjacent to which was located a detention/retention area commonly known as Lake 5. Huntsville owned a utility and drainage easement ( the Easement ) covering a large portion of the Property. 10. Developers persuaded the then-owners of the Property to sell the Property to Packard for $306,000. After Packard contracted to purchase the Property, but before the sale was closed, Huntsville vacated 28 acres of the Easement (leaving approximately 6 acres covered). As a result, Developers could use the Property for the Parkside Project. Huntsville vacated the Easement for absolutely no money and is now proposing to purchase, or has purchased, a portion of the Property back from Developers for over $2 million, as described below. 11. In 2012, after developing a portion of the Property, Developers decided to expand the Parkside Project in order to attract Cabela s from a similar project in the City of Madison called the Old Town Project. Huntsville entered into a series of real estate transactions whereby Huntsville has paid or will pay approximately $7.6 million to or on behalf of Developers -- not Cabela s -- to purchase property with a true appraised value of less than $300,000. 3

4 12. Huntsville has concealed, and continues to conceal, the nature of the transactions with Developers and the benefits to them. Among other things, Huntsville s officials have falsely disseminated information that the transactions with Developers were necessary to attract Cabela s, when, in fact, they were not necessary. 13. Huntsville officials misrepresented to the public the amount of public funds expended in connection with the announcement that Cabela s will locate a new store in Huntsville. They have stated publicly that Huntsville has spent $2.9 million, when, in actuality, Huntsville will pay more than $7.6 million. Moreover, those monies are being paid to or for Developers -- not Cabela s. 14. On July 26, 2013, Packard entered into a contract with SMS Properties, L.L.C., to purchase approximately 10 acres of property adjacent to the Property for $850,000 ( the Cabela s Site ). On April 28, 2014, Attitude closed on the sale of the Cabela s Site from SMS Properties, L.L.C. Huntsville contracted with Developers to pay $3,584,200 for a 2.86-acre tract for Cabela s Drive ( the ROW ) and a 3-acre tract for a landscape buffer ( the Buffer Property ) carved from the 10-acre Cabela s Site. 15. In addition, Huntsville contracted to pay Developers $2.1 million for 4 acres to expand Lake 5 ( the Lake Property ) near the proposed site for the Cabela s outdoor superstore. Huntsville has actually paid Developers $850,000 for 1.62 acres of the Lake Property and has an option to purchase the remaining 2.38 acres of the Lake Property for $1.25 million. 4

5 16. If Huntsville purchases the ROW, Buffer Property, and remaining Lake Property it has agreed, or obtained an option, to purchase, Huntsville will have paid Attitude $5,684,200 for real property, as well as spend approximately $2 million to build Cabela s Drive; relocate water, sewer, and natural gas lines to serve the shopping center; add turn lanes and a traffic signal on Governors West at the main entrance; and fill in a portion of Lake Huntsville s impermissible financing of the Parkside Project is not necessarily apparent when considering the small investment (either the fictitious $2.9 million investment or the more accurate investment of over $7.6 million) made by Huntsville. It only becomes apparent when considering Developers investment in the ROW, Buffer Property, and Lake Property and their actual or imminent return on their investment. 18. Specifically: (1) Huntsville will purchase the 2.86-acre ROW from Attitude for $1,749,125.66, while Packard originally paid only $306,000 for the entire acre tract of land on which the ROW is located; (2) Huntsville will pay Developers $1,835, for the 3-acre Buffer Property, when Developers paid only $850,000 for the entire 10-acre Cabela s Site, on which the Buffer Property is located; and (3) Huntsville paid $850,000 for 1.62 acres of the 4-acre Lake Property, while Attitude paid only $133,250 for the entire Lake Property. Moreover, Huntsville has an option to purchase the remaining 2.38 acres of the Lake Property for $1.25 5

6 million, over nine times the amount Attitude and the other Developers paid for the Lake Property. 19. Neither Attitude nor the other Developers did anything to improve the ROW, Buffer Property, or Lake Property or to otherwise cause their fair market values to exponentially increase in value during the limited time they owned these properties. The ROW, Buffer Property, and Lake Property remain in the same unimproved state as when Developers purchased them in However, Developers stand to make a net profit on their transactions with Huntsville in excess of $4.7 million. 20. Under Section 94 of the Alabama Constitution, it is unconstitutional, and in excess of statutory power, for a municipality such as Huntsville to grant public money or a thing of value in aid of or to any individual, association, or corporation, unless the action has been fully advertised to the public, as provided in and Amendments 191 and 245 of the Constitution. Huntsville s acts and omissions (as described above) are so arbitrary and unreasonable as to constitute a misuse of power not authorized by law. 21. In its business relationship and actual or imminent transactions with Developers, Huntsville has applied public funds or attempted to apply public funds for the benefit of Developers -- virtually financing or bankrolling the Parkside Project. 22. In an October 1, 2014, letter (delivered to Huntsville on October 2, 2014), Fallin requested that Huntsville make available to him for inspection and copying certain records of Huntsville related to its activity and spending or planned spending of public funds 6

7 for the purpose of arranging for Cabela s to locate a retail store in Huntsville, and, particularly, at the Parkside Project. 23. The particular items requested in Fallin s October 1 letter were any and all public writings or records concerning or related in any way to: public money spent, or committed to be spent, directly or indirectly by Huntsville for or on behalf of Cabela s, Developers, or any other person or business entity associated with Cabela s or Developers; the purchase, sale, lease, encumbrance, conveyance, or release of real property by Huntsville within the Parkside Project and/or associated with Developers; the appraisal or value of any real property purchased, sold, encumbered, conveyed, or released by Huntsville within the Parkside Project and/or associated with Developers; the economic impact on Huntsville and/or Madison County associated with Cabela s operations; the escrow of money associated with Cabela s and/or the purchase, sale, lease, encumbrance, conveyance, or release of real property by Huntsville within the Parkside Project and/or associated with Developers; public notice of the terms and conditions of and parties to the purchase, sale, lease, encumbrance, conveyance, or release of real property by Huntsville within the Parkside Project and/or associated with Developers; public notice of the terms and conditions of and parties to transactions involving money, benefits, or incentives provided, credit afforded, loans made, financing of and/or payments directly or indirectly to Cabela s or Developers; the documents made available or delivered to members of the City Council related to Cabela s, Developers, and/or the purchase, sale, lease, encumbrance, conveyance, or release of real property by Huntsville within the Parkside Project and/or associated with Developers; 7

8 any resolution of the City Council, including, but not limited to, the resolution adopted by the City Council on June 12, 2014 (No ), associated directly or indirectly with Cabela s or the Parkside Project; and the subjects or subject matter discussed in the minutes of the City Council on June 12, forward. 24. The time period of the requested documents was January 1, 2009, going 25. Fallin also requested the documents to be produced include not only physical items but also electronically stored documents and communications. 26. Fallin has received no response from Huntsville concerning his October 1 open records request. forth herein. COUNT ONE Violation of the Open Records Act, Ala. Code to Fallin realleges and reasserts the preceding factual allegations as if fully set 28. The Open Records Act, Ala. Code , provides that [e]very citizen has a right to inspect and take a copy of any public writing of this state Fallin has requested particular public writings from Huntsville relating to the above-described transactions concerning Cabela s. 30. In violation of , Huntsville has failed to make the requested documents available to Fallin for inspection and copying. 8

9 WHEREFORE, premises considered, Fallin demands a judgment against Huntsville that: (1) enjoins Huntsville, and all persons acting in concert with it from refusing, to make available to him the records related to the Cabela s transactions as requested above; (2) declares that Huntsville is required to provide the records requested; (3) deems void any actions that the requested documents show were taken by meetings occurring in violation of the Open Meetings Act, Ala. Code 36-25A-1, et seq.; and (4) provides such other relief as may be just and proper, including an award of attorneys fees and costs of this action. forth herein. COUNT TWO Violations of Ala. Const. art. IV, Fallin realleges and reasserts the preceding factual allegations as if fully set 32. Huntsville has engaged, or will imminently engage, in the illegal or wrongful conveyance, disposition, or diversion of municipal property. Indeed, Huntsville s contracts with Developers are illegal and constitute the unauthorized appropriation, use, and expenditure of public funds in violation of Ala. Const. art. IV, 94, and not authorized by Ala. Const. art. IV, 94.01, and Ala. Const. amends. 191 and 245. Huntsville s actual and proposed actions in purchasing the ROW, Buffer Property, and Lake Property has resulted in waste and injury to Huntsville s property and funds and to the community in general for the benefit and aid of a private individual. 9

10 33. The actual or prospective purchases of the ROW, Buffer Property, and Lake Property at excessive and unreasonable prices are affected by fraud (actual or constructive), corruption, collusion, unfair dealing, and abuse. 34. Based on the above, an actual, justiciable controversy has arisen and now exists between Fallin and Huntsville concerning the rights and obligations of Huntsville under any contract with Developers. 35. Fallin desires a judicial determination of the rights, status, or other legal relations of Huntsville and Developers based on the contracts for sale of the ROW, Buffer Property, and Lake Property and the construction or validity of those contracts and other declarations that will terminate the controversy or remove an uncertainty between Huntsville and its citizens and taxpayers, such as: whether Huntsville s acts and omissions related to the Parkside Project and Developers violated public policy or were unlawful, unconstitutional, or otherwise wrongful and improper; whether any actual sale of the ROW, Buffer Property, or Lake Property must be set aside; whether any actual sale of the ROW, Buffer Property, or Lake Property constitutes a misuse of public funds; and whether any proposed sale of the ROW, Buffer Property, or Lake Property must be enjoined. 36. A judicial declaration is necessary and appropriate at this time under the circumstances in order that Fallin may ascertain the rights, status, or other legal relations of Huntsville and Developers based on the contracts for sale of the ROW, Buffer Property, and Lake Property and the construction or validity of those contracts and other declarations that will terminate the controversy or remove an uncertainty between Huntsville and its taxpayers. 10

11 37. If Huntsville and Developers are not enjoined from continuing their wrongful conduct, including, but not limited to, the expenditure of public funds and the purchase and sale of the ROW, Buffer Property, and Lake Property, then Fallin and other Huntsville taxpayers will continue to suffer substantial and irreparable injury. Fallin has no adequate remedy at law for the injuries and damages suffered by him and, therefore, he requests that this Court issue a preliminary injunction and a permanent injunction after a trial on the merits. WHEREFORE, premises considered, Fallin demands a judgment against Huntsville that provides the following relief: A. A declaration that: (1) any actual or proposed purchase by Huntsville of the ROW, Buffer Property, and Lake Property is void, illegal, and ultra vires; (2) any deed conveying the ROW, Buffer Property, and Lake Property from Developers to Huntsville is void and invalid; and (3) any deed conveying the ROW, Buffer Property, or Lake Property is due to be canceled of record; and B. Preliminary and permanent injunctive relief restraining and enjoining Huntsville and its councilmen, mayor, officials, agents, and other persons or entities working for, on behalf of, or in concert or participation with them from proceeding with any of the property transfers between Huntsville and Developers and otherwise continuing their wrongful conduct; and C. Such other and further relief to which Fallin may show himself justly entitled at law or in equity, including attorneys fees and costs of this action. 11

12 Respectfully submitted on October 22, s/ Albert L. Jordan Albert L. Jordan (JOR002) s/ Matthew D. Fridy Matthew D. Fridy (FRI035) OF COUNSEL: Wallace Jordan Ratliff & Brandt, LLC 800 Shades Creek Parkway, Suite 400 P.O. Box Birmingham, Alabama

13 To be served by a process server at the following address: City of Huntsville c/o Chuck Hagood, City Clerk 308 Fountain Circle Huntsville, Alabama