Town amends civil suit against EDA, McDonald to over $20 million

In a nice touch of calendar irony, the Town upped the ante on its civil claim against the EDA on Friday the 13th – Royal Examiner File Photos by Roger Bianchini

On Friday, March 13, legal counsel for the Town of Front Royal filed its amended civil complaint against the Town and County Economic Development Authority and the EDA’s former executive director and her two real estate companies, Da Boyz and MoveOn8.

It remains to be seen which way the traditional Friday the 13th bad luck will eventually fall legally in what has now grown from a $2-million precautionary civil litigation to what nearly 600 legal paragraphs contained in the 83-page amended complaint explains is now “not less than” a $20.22 million claim for damages by the Town of Front Royal.

With 39 additional pages of supporting documentation surrounding the 2014 Town transfer of ownership of the Afton Inn to the EDA for marketing for redevelopment – the Town also wants the Afton shell back free and clear – and its 10-page “Prayer for Relief” summary claim of the alleged financial damage suffered by the Town during the EDA Executive Directorship of Jennifer McDonald, it was a total of 132 pages of occasionally dizzying legalese dropped on the Warren County Courthouse and the EDA’s counsel and board of directors today.

The Afton Inn and Town Hall – nice bookends?

The Town is seeking a civil jury trial to determine the validity of its claims.

The Town’s counsel – the amended complaint is co-signed by Town Attorney Doug Napier and Anthony and David Damiani of the contracted Damiani & Damiani Alexandria law firm – cites negligence by the EDA Board of Directors in its lack of oversight of then EDA Executive Director Jennifer McDonald; accuses the EDA Board of “unlawfully vesting in McDonald all of the power and authority granted to the EDA” by state code thereby causing “the Town to suffer economic harm and damages exceeding $20 million and damage to its reputation.”

The EDA executive director and four of her then board members in mid-2018

Afton Inn claims
On the Afton Inn front, the Town alleges a violation of the 2014 Memorandum of Agreement (MOA) between the Town and EDA on the ownership transfer for marketing and development purposes.

“Pursuant to the Memorandum Agreement, any lease, agreement to sell, or agreement concerning the future use of the Afton Inn Property was expressly subject to the Town’s review and written authorization.

“The EDA breached the Memorandum Agreement by failing to submit the Afton Inn Development Agreement to the Town for review and written authorization and accordingly, the Afton Inn Development Agreement has no legal force or effect or validity as it pertains to the Town,” paragraphs 462-463 read, leading to the plaintiff’s conclusion regarding that development agreement between the EDA and 2 East Main Street LLC that, “Any funds spent or debts incurred as a result of the Afton Inn Development Agreement are the sole debts of the EDA, and the Town has no legal or moral obligation to satisfy those debts,” the plaintiff states, adding that were there to be any Town liability ruled, “then the Defendants are jointly and severally liable to the Town for breach of contract in the number of funds expended, which is $357,044.”

Now inexorably intertwined – the Afton Inn and Warren County Courthouse

Following the assertion of an invalid development agreement, the amended complaint continues that “in the alternative” to a breach of contract ruling, “the Town is a third-party beneficiary of the Afton Inn Development Agreement, and is entitled to specific performance of that agreement. If the EDA is unable to perform with respect to the Afton Inn Development Agreement, then the Town is entitled to have the title of the Afton Inn transferred to the Town.”

As previously reported by the Royal Examiner, due in large part to the EDA’s current financial situation and approaching insolvency fueled in part by the Town’s refusal to pay what has been called “an undisputed $8.4-million principal debt” to the EDA on construction of the new Town Police headquarters, the Afton Inn redevelopment project has been stalled since last spring when the EDA civil litigation against McDonald et al was filed.

The town council and staff have been behind closed session doors recently with 2 East Main Street LLC representatives. And Interim Town Manager Matt Tederick referred to 2 East Main Street LLC as the owner of the Afton Inn during a Community Development Block Grant (CDBG) Committee meeting of March 3.

The times they are a-changin’ – citizen Tederick and the former EDA executive director at a 2017 town council meeting

EDA-McDonald allegations
The Town amended complaint’s references to McDonald often assume her guilt on the 34 financial felony fraud and embezzlement indictments she has been served with since the EDA filed its $21.3 million civil litigation against her and what has climbed to 13 co-defendants since March 26, 2019.

“At all times relevant hereto, McDonald was acting within the course and scope of her employment as Executive Director of the EDA and her malfeasance was committed while conducting the business of the EDA.

“The EDA is vicariously liable to the Town for the fraud, deceit, conversion, and embezzlement of McDonald under the theory of respondeat superior,” the amended complaint states.

What doesn’t make sense? then EDA Board Chairman Greg Drescher may have been thinking at a June 2017 BOS work session discussion of the EDA’s Workforce Housing gift, not-a-gift project.

The Town’s amended complaint also accuses the EDA of “Unconstitutional Taxation” in justifying its “not less than $20,226,153” claim.

“Article I, Section 6 of the Virginia Constitution states in relevant part “that all men … cannot be taxed … without their own consent or that of their representatives duly elected ….” the complaint reads on page 80, leading to page 81 observation that, “The EDA’s actions resulted in an unauthorized tax on the citizens of the Town and County. Therefore such tax is unconstitutional and invalid and has caused the Town and the Towns’ taxpayers damages in excess of $20 million.”

In the succeeding and final allegation of the amended complaint the EDA is accused of “Unlawful Eminent Domain”.

“The Defendants, by their actions aforesaid, have condemned and exercised the power of eminent domain over the property of the Town and the Town’s taxpayers.

“The Defendants do not have the power of condemnation and eminent domain.

“The Defendants actions, in condemning the property of the Town and the Town’s taxpayers, is unlawful and unconstitutional, and has caused the Town and the Town’s taxpayers damages in excess of $20 million.”

Those “actions aforesaid” appear to reference the preceding 79 pages description of specific actions cited in the EDA’s civil litigation against multiple defendants, and the criminal allegations primarily against McDonald.

Connector road to where? It seemed like a good idea at the time – who first promised those 600, high-paying tech jobs at Royal Phoenix?