Saturday, December 16, 2017
Business

Bitter feud over Manatee land deal tumbles into Tampa bankruptcy court

J. Robert Brown and R. Thomas Chapman could have been partners overseeing the birth of a $60 million residential development in Manatee County.

Instead, Florida's land development bust turned them into enemies.

Brown, a longtime real estate developer, accuses Chapman of using legal tricks to avoid paying him a $3 million, court-ordered debt. Chapman, a wealthy Pinellas County investor and businessman, says Brown's group is to blame for the project's demise and accuses him of going way too far trying to collect a debt that Chapman does not personally owe.

"You've been litigating going on seven years in state court without a resolution," U.S. Bankruptcy Judge Mike Williamson said as he tried to unravel the case in Tampa earlier this month. "Maybe it's time to get all of this resolved."

Their saga began nearly a decade ago when Chapman and a partner assembled more than 800 acres of Manatee County farmland for $14 million and struck a deal in 2005 to flip the site to Buckeye Road Trust for $30 million. The plan was to build more than 1,700 homes and a large shopping center there.

That dream fell apart after Cincinnati-based Buckeye did not win approval to rezone the land for residential use within a mandated two-year window.

Brown, as trustee for Buckeye, thought he found a slice of redemption in early 2012 when a court supported his breach-of-contract allegations against Chamax LLC, the company that owns the Manatee County land and was obligated to help Buckeye secure the rezoning. Chamax was ordered to pay back part of Buckeye's deposit plus legal fees, and interest — a debt now totalling $3.1 million.

The odds of Brown ever seeing that money took a big hit a month ago, however, when Chamax filed for bankruptcy reorganization.

Today, Brown is focusing all his attention — and ire — on Chapman, who owns 100 percent of Chamax.

"All we really want is to get paid what he owes us," Brown told the Tampa Bay Times. "The guy owes us $3 million and is trying to weasel out of it."

After all, Brown is quick to point out, Chapman does not appear to be hurting for money. A few years ago, Chapman estimated his net worth near $100 million. In late September, he and his wife, Lee, bought a Tuscan-style villa in Largo for $2.5 million. All cash. He owns properties worth nearly $6 million individually and through a family trust in Florida and North Carolina.

In December, he closed on the multimillion-dollar sale of his Clearwater surge-protection company, Advanced Protection Technologies, to St. Louis tech conglomerate Emerson Electric.

A few weeks later, on New Year's Eve, Chapman filed Chapter 11 bankruptcy reorganization for Chamax.

Chapman's attorneys told the Times their client's personal wealth is irrelevant. He was an investor in Chamax, they say, nothing more. In fact, he wasn't even the original controlling partner in the deal, only inheriting that role along with 100 percent ownership of Chamax when his partner walked away years ago and Chapman opted to keep paying the mortgage with BB&T.

The two sides laid out their starkly different viewpoints in interviews with the Times.

Chapman's attorneys described Chamax as typical of land deals upended during the state's real estate bust. Chamax's mortgage on the property, whittled down from a balance of $14 million to $9 million, came due on the day the bankruptcy was filed. With a refinancing off the table, bankruptcy reorganization was the only option, his attorneys said.

"Tom isn't the bad guy here," David Bacon, Chapman's longtime personal attorney, said in an interview. "Tom didn't create the debt. … He's just an investor that is going to lose his own investment dollars."

Chapman's bankruptcy attorney, Harley Riedel, estimated his client may lose about $6 million invested in the land. "He is not obligated to continue to fund and fund a company," Riedel said. "That's why you have corporations. You incorporate to avoid liability."

Brown sees it another way.

"This is a total scam of the bankruptcy system," he said. "The purpose of bankruptcy is if you have an operating business that can't pay its debts, (reorganization) lets it stay in business … as a going concern and restructures the debt. This is … a rich guy trying to avoid his debts."

Bitter feuds over soured land deals are as much a part of Florida as alligators and sunburned tourists.

St. Petersburg bankruptcy lawyer Charles Moore says this type of case has been played out repeatedly over the years: A wealthy investor files bankruptcy for a corporation but is personally shielded from paying off creditors. That's the express advantage for creating companies like Chamax as an LLC, or limited liability company. Moore likens it to the CEO of an automaker like GM, who is off the hook personally if the company files bankruptcy.

What sticks out this time, he said, is the scope of the development and amount of money at risk. It's also unusual, Moore added, for a case to last so long.

Or become so nasty.

Chapman's lawyers objected to what they described as threats from Brown to hurt Chapman's reputation and publicize the story by contacting the Tampa Bay Times, which he subsequently did. They were also irate over an email Brown sent to Chapman's wife and his pastor detailing the problems.

Brown says he sent an email to the pastor only after Chapman dismissed his obligations to pay and referred to answering to a higher authority than the legal system.

For their part, Chapman's attorneys likened Brown to a debt collector, saying they doubted he had any "skin in the game." Rather, they called him a middleman for Metro Development Group, which had intended to develop the land under a separate agreement with Buckeye. Metro Development eventually abandoned the project.

Brown said such allegations are completely false. Brown said he and the previous trustee for Buckeye Road Trust put $3.7 million into the property through contract payments, deposits and extension payments.

"A little less than $1.2 million of that was reimbursed to us by Metro," Brown said. "To say we don't have skin in the deal is more weasel-type activity."

Brown said Chapman and his lawyers have strung him along for years about getting paid. At one point last year, he said, Chapman's attorneys indicated Chamax was planning a friendly foreclosure, which could have made it easier to collect his $3 million.

"Then they said, 'We're not going to do any kind of friendly foreclosure,' " Brown said. "The next thing I know, we're getting notice that Chapman has filed for bankruptcy."

Countered Bacon: "I've known Tom Chapman for years, and he is a man of his word."

Chapman's attorneys said their client prefers to stay low-key, much like how he ran his company. "He doesn't relish publicity," Bacon said, adding that Brown's public campaign challenging his integrity "causes him a lot of distress."

Earlier this month, Chamax filed a restructuring plan in bankruptcy court offering two options: either Brown accepts $300,000 as paid-in-full or the property goes to auction and he risks getting nothing.

Brown's attorney, Jeffrey Warren, quickly pledged to file a motion to dismiss the proposed restructuring during a hearing the next day. "This is a contrived case intended simply to harm my client," he said in court.

Williamson, the judge, acknowledged the case was unusual — not the least because the mortgage was not in default and Chapman even planned to continue making interest payments to BB&T through the bankruptcy reorganization.

The judge was also critical that the case had gone on far too long. He set an April hearing for both the proposed bankruptcy plan and Brown's motion to dismiss.

In brief comments to the Times after the hearing, Chapman insisted he is in the right and bristled that Brown is trying to ruin a reputation he had painstakingly created in the community. Moreover, he said, Brown and his partners were the problem in the first place. "He tied up that property for two years. I didn't have the ability to sell it during the highest point in the market."

Moore, the local bankruptcy lawyer, said he sees little chance of Brown being made whole. "Sometimes you have a fairly aggressive creditor who doesn't get the point that the game is over," he said.

Moore's advice to Brown: Toss in the towel.

Times researcher Natalie Watson contributed to this report.

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