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First of many hearings held in Water Street Parking Garage lawsuits
Sean Tubbs | Thursday, June 16, 2016 at 2:46 p.m.

Judge Richard E. Moore presided Wednesday over what could be the first of many Charlottesville Circuit Court hearings to resolve several legal disputes between city government and the private company that currently manages the Water Street Parking Garage.

The Charlottesville Parking Center filed suit against Charlottesville in March alleging city officials have kept rates in the structure below market rate, breaching their fiduciary duty to the condominium association that owns the structure.

In April, the city countersued, alleging that CPC broke a legal contract when the company purchased 106 spaces from Wells Fargo last October. That action gave the private company additional representation on the Water Street Parking Garage Association.

The current management agreement between CPC and the condo association expires on June 30.

On June 7, the CPC filed a petition requesting the court appoint a special receiver to manage the association’s affairs while the lawsuits proceed.

At issue Wednesday was the scheduling of a court date for that petition.

“After June 30 we do not know what will happen to the parking garage,” said William Prince IV, an attorney with Richmond-based Thompson McMullan representing CPC.

Prince said an emergency receiver is needed until a permanent one could be appointed.

Thomas Wolf, a Richmond-based lawyer with LeClair Ryan hired by the city, told the judge he did not think there was an emergency.

“The subject matter here is a successful 1,000 space parking garage that is not going anywhere,” Wolf argued. “Receivership would be an extraordinary remedy.”

A court date had been set for June 22, but city attorney Craig Brown will be on vacation and is not available.  

Judge Moore said civil cases usually take a while to schedule, but he could make time for an emergency hearing on a different date.

“Sometimes we need a crowbar to find the time,” Moore said.

Moore attempted to keep the conversation restricted to scheduling because he said he had not had time to read all of the pleadings. However, both sides had the opportunity to make basic arguments about the issue.

“CPC’s primary concern is that the management agreement expires on June 30 and there is no foreseeable resolution for the condominium association,” Prince said. “I am thinking of the monthly parkers.”

The condominium association is managed by an eight-member board of directors. The association’s by-laws define a majority as a 70 percent vote of that body. The city currently controls four seats on the board and CPC currently controls the other four.

“The city owns more than sixty percent of the spaces, but one issue is that CPC took spaces from Wells Fargo illegally,” Wolf argued, referring to the October transaction that is the subject of the city’s countersuit.

Wolf told the judge he believed the garage could still operate after June 30 even without a management agreement in place.

“[CPC] can stay on managing the garage or someone else can collect the money to ensure the garage stays open,” Wolf said.

Prince disagreed and said an entity has to pay insurance and handle other essentials needed to operate the garage.

Another attorney in Wednesday’s hearing represented the condominium association.

“We are in an untenable position,” said Ty Grisham of the firm Grisham & Barnhardt. “We have represented the association for 18 months and things have devolved very quickly.”

Wolf stated the city has begun the process of purchasing CPC assets through eminent domain.

“All of this will be moot in due time,” Wolf said.

“But not by June 30,” Moore reminded him.

Moore asked Prince why the CPC was so concerned about getting a receiver appointed.

Prince responded the company has financial concerns and is also concerned about further legal action from the city if the garage is closed.

“CPC wants the garage to stay open,” Prince said. “[But] its operational status is in question.”

Wolf also argued there was no emergency because the garage would still collect income.

“They don’t lack the money to operate on a daily basis,” Wolf said. “They are not insolvent.”

Grisham disagreed that the garage could stay open without a court-appointed receiver.

“Because of the stalemate, they will not agree on appointment of a manager,” he said.

After that comment, Moore asked the parties how much time they felt would be needed for the hearing on the emergency receivership.

Prince said the matter could be resolved in less than an hour.

Wolf disagreed.

“We spent half an hour doing just this,” he said. “I can’t imagine doing this in an hour because the issues are so voluminous. The idea you can come before the court and in a few minutes get an order that takes over a business that has been successful for over 25 years is unimaginable.”

Wolf said he would like to schedule at least three hours for the hearing.

An exact date for the hearing was not set but Moore agreed to find at least that much time. The first possible date will be June 27 at 3:00 pm, but that could change depending on the judge’s schedule.
 

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