WILMINGTON — After 18 months of litigation, the city has reached a settlement agreement with a local business owner and will dole out $2.1 million to buy his properties.
Funk Yard LLC, owned by Peter Koke, sued the City of Wilmington in August 2021 for blocking access to one of his properties on Front Street. A civil lawsuit between Koke and the city could end in a multi-million-dollar resolution to settle multiple disputes.
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“The city has been involved in litigation with Mr. Koke for many years,” city spokesperson Dylan Lee told Port City Daily. “The city has cited several of his business properties for various code violations.”
Tuesday, the city council voted on appropriating the settlement funds; council member Kevin Spears was the sole dissenting vote on first and second readings. Without unanimous approval on the second reading, it will be heard again at the next council meeting.
“I don’t want to assume the general public knows what this is,” Spears said to his fellow members. “I do want us to better explain it. I’m certain once it hits the news tomorrow it will be very much newsworthy, and we’ll have to answer some questions about it.”
Koke owns 0.74 acres at both 1536 and 1536A Front St. under Funk Yard LLC. The properties are at the southern portion of Willard Street in the Greenfield Lake area in the South Front District.
He also owns 222 and 226 S. Front St. in the historic district under the company Ann Street House LLC. The latter, formerly The Taste of Country restaurant, was the subject of a 2014 dispute where Koke threatened to demolish the historic structure if the city did not waive more than $10,000 in fines, fees and penalties imposed on the building’s then-owner, Mark Evans. Evans sold the building to Koke’s sister in 2015, who then sold it to Koke in 2017.
A mile away in the South Front area, a half-acre Cape Fear Public Utility Authority easement on Willard Street, owned by the City of Wilmington since May 2013, sits adjacent to Koke’s land. He uses it for his salvage and recycling business Cape Fear Demolition, according to the property sign.
Koke hired attorney Grady Richardson for the property rights case in 2021. Richardson explained to Port City Daily Koke had been accessing his 1536 Front St. property from the public street since 2016 and his predecessor, Keith Hales, did the same for 25-plus years prior.
In the last few years, a hurricane knocked down a fence on the property. When Koke tried to rebuild it, the city told him he could no longer access his property from the Willard Street side. The city put up “no trespassing” signs.
“Mr. Koke’s complaint was the city was denying lawful access to his property,” Richardson said. “When we filed the suit, we were doing the title work and it was clear to me — I’ve done more than my fair share of street-end litigation — there was in fact a public street he was entitled to gain access over to get to his property.”
The complaint states the portion at the end of Willard — 60-feet wide, located to the west of Front Street, extending 330 feet — is abutting the southern end of Koke’s property. As a result, the city is blocking the ingress and egress, prohibiting access to it.
The lawsuit alleges the city’s “improper and unlawful obstruction” of the plaintiff’s access to the area has caused Koke to suffer damages.
Koke is stating the city “does not have sufficient legal ownership” of the public street to block or impede his use of it. He alleged the city never closed the street, meaning he should be able to have access.
It also states even if the city did close it off, it would mean equal ownership to Koke. State statute determines the right-of-way would be split evenly and go to the property owners on either side of the road. Koke’s property abuts the street.
As a result, Koke was asking for the courts to hold up his property rights and ensure the city is “precluded from blocking or otherwise preventing the plaintiff’s access.”
Back in 2021, he immediately called for an injunction to stop the city from blocking his land. That was not granted at the time.
When Richardson extended the lawsuit to cover all disputes between Koke and the city — including fees and violations of the 226 Front St. house — a judge ordered mediation between the plaintiff and defendant. It took place Aug. 12, 2022 but the parties reached an impasse after an almost full-day meeting, according to Richardson.
“Attorneys continued to try to resolve matters,” Richardson said.
A trial date was scheduled for Nov. 28, 2022, but two months prior, City of Wilmington attorneys Meredith Everhart and Melissa Huffman emailed Richardson outlining terms of a settlement agreement.
It includes the $2.1 million the council will vote to appropriate at its next meeting to cover the purchase of the three properties — 222, 226 and 1536 S Front St. — as well as damages incurred by Koke. Any liens and fines on Koke’s properties are deemed “satisfied” as part of the agreement and the city will pay the $4,190 that was expensed for mediation.
It also includes removing Koke’s name from a civil lawsuit initiated by the city to condemn a building.
A property at 503 Clover Road racked up $22,3402.09 in abatement fees for lot-cleaning, environmental hazards, trash and debris removal, locksmith services, and window boarding between 2016 and 2022. The city declared the property unfit for human habitation in July 2020 and has a lien against the property for expenses incurred, plus 8% interest.
Mary Ann Cotrone and Kevin Hoey purchased the property Nov. 22, 2010 for $61,000. On April 20, 2022, the pair transferred the property for $0 to Funk Yard LLC by way of quit claim deed — a way to expedite the transfer of property and release the owner of any interests.
Koke must show he has divested all interests in the 1,400-square foot residential home. He transferred it back to its original owner Mary Ann Controne on Feb. 15 for $0, according to New Hanover County records.
“That was an attempt by Mr. Koke to help Ms. Controne and Mr. Hoey in their interactions with the City but those efforts did not work,” Richardson said. “The Clover Road issue has been resolved already.”
The city agrees to dismiss Koke as a party to its Clover Road lawsuit, pending Koke agrees to never regain ownership of the property. The matter remains between the city and Cotrone and Hoey.
The settlement agreement also addresses pending criminal charges against Koke. According to case files, North Carolina State Ports Authority pressed charges against him for commercial littering in 2022. The city pursued charges against Koke for destruction of property in 2021.
The settlement “cannot guarantee” to drop pending criminal charges against Koke once signed, according to the agreement. However, it indicates the district attorney is amenable to do so if all other issues are resolved.
On Oct. 19, 2022, Koke agreed to the terms.
Two days later, the city’s attorney’s said council was unwilling to adhere to the terms of the settlement. Port City Daily reached out to the city requesting more information as to why but did not hear back by press; this will be updated upon response.
“The city was in breach of that settlement,” Richardson said.
The lawyer then brought forth a motion asking the court to compel the city to enforce the agreement. Judge Phyllis Gorham sided with Richardson on Jan. 13 and granted the request.
“I’ve been in Wilmington my entire life,” Richardson said. “I know about the constant disputes between Mr. Koke and the city.”
A former owner of multiple restaurants in town, Koke, was convicted of felony obtaining property by false pretenses in New Hanover County on April 1, 2008. Prior to 2015, he had also been convicted of 13 misdemeanors, including buying or selling a vehicle without a license, failing to file or pay income taxes, resisting an officer and other vehicle violations, based on prior PCD reporting.
Koke was found guilty of insurance fraud and obtaining property by false pretenses in 2018 and sentenced to 11 to 23 months in jail; though his sentence was suspended and time not served unless he violated his parole. He was also being investigated in California in 2018 for not having a business license, with clients alleging they paid for demolition services they never received.
“The overall takeaway [on the $2.1 million settlement] is Mr. Koke is happy with this outcome, with the city and with the court,” Richardson said. “I’m hopeful he and the city can mend their differences moving forward.”
City council will vote again on appropriating the $2.1 million at its March 7 meeting at 6:30 p.m.
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