PENDER COUNTY — A stack of judge’s orders, motions for summary judgment, motions to revise orders of summary judgment, and other court documents filed in the case of Pender Farm Development v. NDCO sits more than a foot high inside an old house occupied by the clerks of Pender County Superior Court in Burgaw’s town square.
The case involves Wilmington developer Raiford Trask III, who is currently constructing a 112,000-square-foot storage unit and excavating adjacent land in Scotts Hill to build out 136 townhomes. The work is being undertaken amid bitter litigation with partner investors that has dragged on for more than three years.
RELATED: Blake Farm: Court docs detail a development deal gone sour in Pender County
The central dispute between Trask and the investors, a group called NDCO, is whether Trask informed them of his intention to collateralize the land for multiple bank loans to finance higher-than-expected development costs. Trask and his attorneys have argued that Mike Cook, a Colorado Springs attorney and member of NDCO, “had full knowledge of the consistent plan to utilize” the property as collateral, while NDCO has argued otherwise.
Pender Superior Court Judge Michael Robinson appears to have sided with NDCO on that specific matter as a future trial looms, most recently delayed by the Covid-19 pandemic.
Steve Shuttleworth, a Carolina Beach councilman who had first approached Task about developing 1,164 acres of prime real estate located off Highway 17 just north of the New Hanover-Pender county line, summarized what he believed had gone wrong with the deal.
“It was a failure by the developer to complete any residential lot development, or to sell any portion of the residential project,” Shuttleworth wrote in an email on Wednesday. “The fact that this failure happened in the best real estate market in a decade caused extreme tension and issues between the parties.”
No ‘skin in the game’
Last November, Judge Robinson utilized what he called a rarely used, cumbersome procedure, Rule 56(d), to narrow down the issues to a set of ‘undisputed material facts’ established for the trial. While explaining why the rule was not often used in North Carolina courts, Robinson noted, “Trying to get counsel to concede areas of the case that are not in dispute is a difficult if not unrealistic task.”
In the November documents, Robinson outlined 58 underlying facts in the case. The third describes how Shuttleworth first approached Trask about being involved in the development of the project; the fourth how the property was “more hydrologically complex than Trask’s previous projects;” and the seventh that Trask did not instruct Shuttleworth to inform Cook or any member of the investor group, initially called Land Bank, “that the structure of the deal had to change because of his beliefs regarding increased costs.”
In a response issued through a public relations company called Talk, Inc. on Wednesday, Trask said any belief that he did not inform the investors “misinterpreted the findings” of Robinson’s November court order. He pointed to Robinson’s specific phrasing, “Trask did not instruct Shuttleworth to inform” Cook and the other investors; Trask’s response bolded the phrase to argue that Robinson did not specifically state that such communications never occurred.
“This does not mean that we did not inform Cook or any member of the Land Bank about increased costs,” Trask said. “We stand by our statement that Cook ‘had full knowledge of the consistent plan to utilize Pender 1164 Property as collateral for a development loan.’ There is nothing in either of the actual findings by the Court in November that is inconsistent with our statement that Cook had full knowledge of the plan to utilize Pender 1164 Property as collateral for a development loan. He did have full knowledge.”
However, Judge Robinson clearly stated that between the execution of the final contract and the spring of 2015, when Trask redesigned the project due to high development costs, “no mention was made by Trask of any need for development financing.”
The judge also said that there was no written communications leading up to the signing of the final contract “that demonstrates any belief on Trask’s part that there were going to be significant increases in the development costs,” costs that Trask realized would be “more expensive than anticipated and he did not want to ‘pay any cash out of [his] pocket,’” according to a deposition of Trask.
In an email sent to a fellow investor in June 2016, Cook said that during a recent call with Trask, Cook mentioned to him that he did not “view a personal guarantee the same as ‘skin in the game’ in the form of hard cash.”
“The problem I am sensing is that I don’t think Raiford has the liquidity to fund the costs out of pocket and I think we were all sold on not only his experience and connections but also his financial ability to fund development,” Cook wrote of the developer, whose family has owned extensive areas of land in the Cape Fear region for decades.
“I believed Trask was going to pay all the development costs,” Shuttleworth said in his email. “How he was to pay for the development is one of the points of the lawsuit and I won’t comment on that.”
The ‘Steve Shuttleworth fiction’
In an apparent attempt to discredit Shuttleworth’s testimony, Trask’s attorneys wrote there was ample evidence Shuttleworth was “playing both sides,” creating a genuine issue of fact as to his status as an agent of PFD and Trask.
“NDCO’s Steve Shuttleworth fiction remains an issue for the jury to decide. NDCO continues to attempt to take a factual dispute, rightfully to be decided by the jury, out of the jury’s hands and have it decided as a matter of law by the Court,” Trask’s attorneys argued in a July 2020 motion.
They argued that NDCO attempted in multiple filings to argue to the court that Shuttleworth was “at all times and in all things” Trask’s agent.
“Steve Shuttleworth was not an agent of Trask,” they wrote, adding that he was a co-owner of the original property along with Cook, and the two “shared an allegiance long before Trask became involved.”
In response, Shuttleworth said he was engaged by Trask as an independent contractor to help facilitate the acquisition of the land and work as a consultant “in the hope for development.” He said he worked for both parties’ attorneys during the negotiation process, had no ownership of the property, and that “both parties knew of my extensive relationship with the prior owners and the independent contractor position with Trask.”
“There is extensive correspondence with me and all parties. It was an open and clear communication during that time. It’s of course disappointing that the attorneys would categorize it that way but it is a nasty legal fight,” Shuttleworth said.
Asked to provide a general comment on the current status of the litigation, Trask blamed the investors for trying the case “in the media instead of the courtroom.”
“Their strategy is to stir up controversy — ours is to communicate the facts and continue to operate with integrity. I am confident that we will have a positive outcome, and that our reputation for integrity and good faith will prevail,” Trask said.
In April 2019, when Port City Daily first reached out to Cook after discovering the lawsuit, he said NDCO and Trask had reached an agreement that Trask would develop the property where they had invested more than $16 million. Cook said that development hadn’t materialized.
“He not only didn’t do that, he also made off with an income-earning opportunity, without our knowledge, in connection with the wastewater treatment ponds that serve the Pluris facility that has been constructed; and then sued us, wanting 50 percent of property that he has done nothing to improve,” according to Cook.
In June 2014, Trask sold 28 acres of the property to a local water utility company named Pluris for use as a wastewater treatment plant, a move that is also central to the ongoing litigation.
Cook continued, “Our claims in the litigation seek to hold him accountable for his failures and deception, and we look forward to our day in court.”
On Friday morning, Cook continued to deny that he had full knowledge of Trask’s “consistent plan to use property as collateral.”
“In the periodic reports that Trask provided, financing was never mentioned until Trask ran out of money,” Cook said.
According to Cook, the operating agreement provides clear instructions on how a request to use property as collateral would proceed.
“The land ownership group followed that procedure,” Cook said. “After Trask was unable to obtain financing on the terms we had approved he filed suit against us because he had no other options.”
According to Trask, a trial has not yet been scheduled.
Catch up on Port City Daily’s coverage of the Blake Farm litigation and other issues with the development below:
October 31, 2018: State senator, representatives and Wilmington developer named in ethics complaint over Pender aquarium
May 2, 2019: Long legal dispute over Pender’s massive Blake Farm development approaches May hearing
January 29, 2020: Pender’s long-delayed Blake Farm development approved for private wells to support buildout
February 10, 2020: Court docs detail a development deal gone sour in Pender County
This article has been updated to include comments from Mike Cook.
Send tips and comments to the reporter at mark@localdailymedia.com or (970) 413-3815
