On Friday, March 22, the attorney for the landlords in the federal civil lawsuit against the City filed a motion to amend their complaint against the Defendants. The amended complaint states that during the process of discovery in the case, the Plaintiffs learned that the Defendants have previously abused their fining authority to force property owners to sell real estate to benefit John Neace and other private developers.
The amended complaint addresses concerns raised in last week’s order for partial dismissal by citing evidence that seeks to prove that a pattern of extortion exists, and it names the Defendants as individuals rather than as officers of the city.
Specifically, the amended complaint alleges the following:
- “Sometime in or before 2010, the City began an effort to force the sale of a commercial property known as ‘Charlestown Plaza’ located at 1101 Market Street. In February 2010, Board of Public Works (“BPW”) minutes show that Mayor Hall directed the City Attorney to threaten the property owner with 2 years of retroactive fines totaling $6.1 million. According to the BPW meeting minutes of January 2, 2012, the City ultimately imposed $660,000 in fines on this property. This was done with the intent to force the sale of the property to the City’s preferred developer at the time, Jesse Ballew. In June of 2012, Mr. Ballew acquired the property via a company called C-Town Investments, LLC. The property was redeveloped, and the new owner was not required to pay any fines.”
- “Beginning in 2011 and continuing up to the time of the present scheme, the City is believed to have used large fines to force numerous homeowners/landowners to either sell their properties or donate them to the City. These properties, many of which ultimately wound up owned by companies controlled by John Neace and organized by John Hampton, are identified in Plaintiffs’ proposed 3rd Amended Complaint.”
- “In 2015, the City imposed over $620,000 in fines on the owner of a mobile home community known as Catalina Estates to force the owners to sell the real estate to one of John Neace’s companies. The City and Neace succeeded in forcing out the property owners, and the former “Catalina Estates” subdivision is now a Neace-owned development called “Springville Manor.” Catalina Estates is not part of Pleasant Ridge. It was a separate neighborhood of the City, and the Defendants’ use of extortion in Catalina Estates predated the Defendants’ use of extortion in 2016 against property owners in Pleasant Ridge.”
The amended complaint includes an affidavit from Lewis Maudlin, an attorney who represented Indyre, LLC. Mr. Maudlin attests that his client purchased property in Pleasant Ridge in 2017 and that the property had a clean title, but that immediately following the purchase the owner was contacted by city attorney Michael Gillenwater and was told that he had to either pay the city $79,000 in fines or sell the property to John Neace. Mr. Maudlin affirms that he was told he could not demolish the building or rent the building and that the only way to waive the fines was to sell but that John Neace would be allowed to continue to rent the property until its demolition and that Mr. Neace would pay no fines.
The amended complaint uses this evidence to allege that the Defendants engaged in extortion in the past and includes evidence that they will continue to do so in the future.
The Plaintiffs also added that the Defendants have violated the 8th amendment of the U.S. Constitution that prohibits excessive fining.
You can review the documents here: