Wednesday, July 28, 2010
Ukrop's sues Valley Bank over construction dispute
The defunct grocery chain says the bank owes it at least $8.7 million.
The latest from The Ticker blog
A defunct grocery retailer is suing Roanoke's Valley Bank for various unpaid costs related to the construction of its store, delays and subcontractor fees at its former Roanoke location.
Ukrop's Super Markets claims that Valley Bank, the new owner of the Ivy Market retail center, owes the company at least $8.7 million, in addition to accrued interest and court costs, according to the lawsuit filed Thursday in Richmond Circuit Court.
Ukrop's also wants to end its 20-year lease at the Roanoke site on Franklin Road, where rent started at $15 a square foot, court documents state. The lease began on March 23, 2006, and Ukrop's had five five-year options to renew it after the 20th year.
Ukrop's opened its Roanoke store on June 27, 2007, but the business closed more than two years later, on Oct. 24, 2009. The retailer blamed an unfinished Ivy Market center for its problems gaining frequent shoppers and sales.
Court documents state that Ivy Market's former landlord, IMD Investment Group of Troutville, did not follow through with obligations in its lease with the grocer, such as reimbursing Ukrop's for building its own 58,000-square-foot store.
Also, the landlord was supposed to pay Ukrop's $1,700 per day, starting Nov. 1, 2006, through at least June 27, 2007, until Ivy Market's first phase was complete
Ukrop's also claims that it had to pay subcontractors, because the landlord did not pay them, according to the court complaint.
Valley Bank, IMD's lender, assumed IMD's obligations after the 10-acre Ivy Market site foreclosed last month, according to the lawsuit. The bank bought the property for $18.6 million as the sole bidder at an auction last month.
Ukrop's declined to comment on the lawsuit Tuesday, said Courtney Moates Paulk, Ukrop's counsel, and an attorney with Hirschler Fleischer in Richmond.
Ellis Gutshall, Valley Bank's president and CEO, said Tuesday the bank is reviewing the lawsuit with its legal counsel.
As the new landlord, the bank intends to complete Ivy Market with the help of a developer and sell it. In addition to Ukrop's and a Walgreens store that remains open, Ivy Market was planned to house other small boutiques.
"Given the fact that we were quite candid in our comments to be an extremely active owner in the revitalization and re-development of Ivy Market, we were quite surprised and disappointed by the action Ukrop's has chosen to take," Gutshall said, via e-mail Tuesday, in response to the lawsuit.
During a May shareholders meeting, Gutshall said Ukrop's and Walgreens pay a total of $1.25 million in annual rent.
The Ivy Market site is assessed for approximately $16.5 million, according to city property records.
Ukrop's already took a step toward finding a business to help pay its rent in Roanoke a few months ago. The company hired Read Goode, a Richmond-based broker and developer for S.L. Nusbaum Realty Co., to market the Ivy Market site and find a business to sublease the store.
Goode said Tuesday that he planned to continue his work at the site.
Staff writer Michael Sluss contributed to this report.
