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Halsey Minor Awarded $6.4 million in Landmark Hotel Arbitration Ruling;
Separate Litigation Continues for Stalled Project

By Rachana Dixit, The Daily Progress, Charlottesville, Va.McClatchy-Tribune Regional News

July 03, 2010--Halsey Minor has come out as the victor of an arbitration on the Landmark Hotel, winning millions in damages plus attorneys' fees and costs against the company run by former hotel developer Lee Danielson.

The award, $4.2 million in damages plus $2.2 million in attorneys' fees and any additional fees and losses, were outlined in a June 28 letter to Minor, the hotel's owner, and Danielson's attorneys.

"I think it has cleared up a lot of false rumors and innuendo about who is responsible for what," Minor said in an interview. "It's the facts."

The skeleton of the hotel has sat vacant on Charlottesville's Downtown Mall since construction stopped more than a year ago on the nine-story, 100-room building. During that time, Danielson and Minor made conflicting statements to the media about the project's status.

The men and their respective companies -- Minor's Minor Family Hotels and Danielson's Hotel Charlottesville -- have filed suits against one another, and earlier this year, a Charlottesville circuit judge ruled that arbitration was necessary to discuss issues on parts of the lawsuits not related to contract termination.

The arbitration hearing took place from April 19 through April 23 at the Omni Charlottesville Hotel. Minor had sought nearly $12.4 million in damages and indemnification of future losses, while Danielson sought $5.6 million and attorneys' fees.

Danielson did not return messages seeking comment.

According to the letter, Arbitrator Donald H. Kent said the agent -- Danielson's company -- breached the development agreement between his company and Minor's by making material misrepresentations and omissions regarding the budget, misrepresenting true costs, failing to inform the owner that restaurant costs were not included in construction estimates and not acting in the owner's best interest in dealing with the media and the lender.

The arbitration ruling states that the cumulative effect of this "deliberative and reckless conduct" on the part of Danielson's company amounts to "gross negligence."

The hotel project has been mired in controversy and the subject of several lawsuits. Minor has also blamed the project's issues on Silverton Bank's financial troubles, alleging that a bank subsidiary, Specialty Finance Group, had failed to deliver on loan payments. However, the bank has said in court filings that Minor defaulted on the loan "almost immediately."

Minor and Silverton Bank -- which was seized by the Federal Insurance Deposit Corp. last year and subsequently dissolved -- have filed lawsuits against each other in connection with the hotel project. The suits are still pending.

"The FDIC controls this project," Minor said. "It's not me."

Minor said that case will go to trial this fall. As to the fate of the hotel, he said he was "not going to let it sit there."

"If we live in a democracy, then the FDIC and the banks should have to pay for the destruction that they reaped on my personal life and the city of Charlottesville," Minor said. "If we don't live in a democracy and the FDIC gets to first and foremost defend the banks at the expense of citizens and borrowers, then God knows what's going to happen."

LaJuan Williams-Young, a spokeswoman for the FDIC, said the corporation had no comment about Minor's statements.

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To see more of The Daily Progress or to subscribe to the newspaper, go to http://www.dailyprogress.com.

Copyright (c) 2010, The Daily Progress, Charlottesville, Va.

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