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Developers file lawsuit against city

Developers Hosmer Brown III and Hosmer Brown IV say they never got back the deed for the Exchange Bank building. Michelle Leonard/Independent

Just when city officials thought the history book had been closed on the Exchange Bank building, they found out another chapter is being written.

The Farmington Economic Development Authority learned Monday that the building's owners, Hosmer Brown III and his son, Hosmer Brown IV -- owners of the 2004 Real Estate Company -- have filed suit against the city for issues relating to the Exchange Bank's ownership.

Though the Browns were in default of their 1998 purchase agreement with the city, city officials chose not to take the building from the Browns in June of last year. The reason? They did not want to get into a legal battle over the property.

Evidently the Browns felt differently, because they have filed several complaints against the city of Farmington and the EDA.

The city of Farmington has hired Robin Wolpert of the law firm of Greene Espel to handle the complaints. At this time, Wolpert has not been able to meet with city officials to go through the entire 10-page complaint, but a closed session to discuss the allegations will be scheduled with elected officials in the near future.

The complaint cites six counts, ranging from breach of contract to Minnesota constitutional violations. In a nutshell, Wolpert said, the Browns are asking that the deed to the property be returned to them, that they be reimbursed for money drawn on a line of credit they issued to the city and that they be paid damages for being forcefully removed from the building at one point.

Not black and white

The Browns were in violation of their original purchase agreement when the city chose to record the reconveyance deed on June 3, 2008.

When the Browns bought the building for $1 from the city's housing and redevelopment authority (now the EDA) in November, 1998, they signed a purchase agreement that stipulated all interior renovations to the 1880-built building would be completed within 15 months of the transaction. A number of extensions were granted over the years.

In April, 2006, the city requested a timeline that spelled out when the building would be completed. By November, 2007 the building was still not done, so the EDA notified the Browns they were in default of their agreement. More work was done by February, 2008, but the building was still not finished.

The Browns were given a deadline of April 1, 2008 to finish the work or the city planned to take action to reclaim ownership of the building. By that date, though, the work was still not done, and the Browns were asking for another extension. EDA members extended the deadline until June 1, 2008.

At that point, the city was in possession of the reconveyance deed and officials were ready to file the deed if the work was not done by June 1. EDA members granted the June 1 extension on the condition the Browns would sign an $80,000 line of credit, which the Browns did.

City of Farmington building official Ken Lewis was not able to sign off on all work as being completed by June 2, 2008, so the city filed the deed the following day, June 3. A couple of weeks later, though, the work was completed and city attorney Joel Jamnik advised city officials to reverse the actions and re-deed the property to 2004 Real Estate Company. City officials were reluctant to go back on their previous decision, but wished to ward off any possible litigation, and agreed to turn the deed back to the Browns.

New challenges

Whether that actually occurred now seems to be in question. City administrator Peter Herlofsky would not go into specifics about the matter Tuesday, but said the deed's status seems to be at the center of the complaints against the city.

"There's an issue with that and that's what we're working on," he said.

The complaint alleges the EDA failed to approve the action to return the reconveyance deed to the 2004 Real Estate Company.

Comparing the situation to a soap opera -- where one could step away for several months and still come back and know what is going on -- Herlofsky said he wasn't necessarily surprised to hear the Browns had chosen to pursue legal action against the city of Farmington and EDA.

"Some things just don't go away," he said.

Under the second count, Breach of Contract, the complaint also alleges, in part, that the city of Farmington recorded the reconveyance deed "without providing notice of default."

The complaint seeks a minimum settlement of $50,000, as well as attorney fees and any "other relief as the Court may deem just and equitable."

The Browns did not return a Tuesday telephone call.