A battle over the Stonebridge Public Improvement District is taking place in Hinds County Chancery Court between Secretary of State Delbert Hosemann, a bank, and the Stonebridge developer. The Secretary of State took possession of 58 Stonebridge parcels after the taxes and assessments were not paid.* Mr. Hosemann attempted to negotiate a settlement between the state, Rankin County, and the bondholders. However, the original developer argued its rights were violated and asked the Chancellor to cancel the settlement.
The Rankin County Board of Supervisors authorized the creation of the Stonebridge PID at its December 4, 2006 meeting. Stonebridge was developed by Green Hills Development Company, LLC. The company is owned by Ben Turnage. Stonebridge sold bonds for $22 million in 2007. The PID eventually defaulted on the bonds. UMB is the trustee for the bonds.**
Green Hills sued Secretary of State Delbert Hosemann, several Rankin County officials, and several companies owned by UMB Bank. Green Hills admits in its complaint that the taxes were not paid on the property taxes in dispute:
3.2 On August 31, 2009, and in subsequent yearn, the Subject Property was struck off to the State of Mississippi as a result of unpaid property taxes. These taxes included city, county, and school ad valorem taxes. These taxes also included assessments made by the Stonebridge Public Improvement District ("the PID"), which were assessed (the "PID Assessments") on the real property in the Stonebridge development to benefit the PID pursuant to Mississippi statutory law. On August 31, 2011, when the statutory period for redemption expired, the tax sale on the Subject Property matured.
However, Green Hills claims that it told the Secretary of State it wanted to re-purchase the property. The complaint charges the SOS refused to seriously entertain the offers or provided the information needed for Green Hills to re-acquire the property. Green Hills argues it's right to repurchase the property was violated by the agreement.
Green Hills also asserts that NMB “knew full well” that Green Hills wanted to re-purchase the property. The plaintiff claimed it “possesses preferential rights to purchase the subject property” under state law.
Green Hills complained the defendants who purchased the property received "favorable treatment" that was “unavailable to other potential purchasers, including Green Hills.” Mr. Hosemann, UMB, and the Rankin County officials signed a forebearance agreement that would allow UMB to actually purchase the subject property. The Tax Collector agreed not to collect the PID assessments that are due during the forbearance period. The Secretary of State sold “part or all” of the property to UMB and Kenneth Paul Bradley.
The plaintiffs argued that these actions damage its real estate business and that the defendants interfered with its right of redemption to buy back the property it lost through its failure to pay taxes and assessments. The words malicious and unfair competition are used in the complaint.
Green Hills claims the Mississippi Administrative Code states that the Secretary of State must send a certified letter to the property owner that notifies him that his property was forfeited to the state. The Secretary of State should also make “reasonable efforts” to locate and notify Green Hills of the forfeiture during a thirty-day waiting period. Green Hills charges the State violated its right to due process and equal protection under the law.
Green Hills asks the court to void the sales and allow Green Hills to buy back all or any part of its former property. It also asks the court to award damages against UMB for tortious interference with its business interests.
Strong stuff. Stern stuff. However, Mr. Hosemann fired right back at Green Hills in his response
3.4 After Green Hills’ real property was forfeited to the State of Mississippi, following the two-year period of redemption, Green Hills was notified in writing that its described real property had been conveyed to the State of Mississippi for the non-payment of taxes. Green Hills was further timely notified that if it was interested in obtaining title to the real property, it should complete a written application to the Mississippi Secretary of State’s office on the prelcribed form. This defendant admits Green Hills never made proper written application to purchase all or any part of its real property following the real property’s forfeiture to the State of Mississippi….
Mr. Hosemann argued again that Green Hills “never made application” to buy back part of its former property after the state took possession of it. It appears that the Secretary of State is arguing that Green Hills’ assertions do not coincide with the facts and that his office followed the exact procedures that are required by law.
Green Hills is not exactly the sort of plaintiff who will take its ball and go home if it faces some opposition in court. The company shrugged and asked the court to toss some of Mr. Hosemann’s defenses in a motion to strike. The motion to strike argues that the Secretary of State’s defenses provide insufficient notice to the plaintiff:
The Secretary of State has pleaded sixteen affirmative defenses. The majority of these affirmative defenses fail to provide Green hills with fair notice required by Rule 8 and others have no basis in the law. Accordingly, Green Hills respectfully requests this Court to strike the Secretary of State’s affirmative defenses as set forth herein….
and/or release). In addition, even if the Secretary of State had pleaded facts sufficient to give Green Hills proper notice, Green Hills would still not know what affirmative defenses the Secretary of State is referring to by mere reference to a lengthy provision in the Mississippi Code.
Mr. Hosemann claims that Green Hills did not follow the law and thus forfeited its property and its rights to the property. Green Hills complains that he didn’t cite any actual facts to support his defense and asks the court to dismiss the defense.
The Secretary of State asked the court to dismiss Green Hill’s motion to strike and wasted no time in throwing punches at Mr. Turnage’s company. He stated in the first sentence:
Green Hills’ motion to strike certain affirmative defenses is both procedurally and legally meritless, as well as factually inaccurate. Green Hills wrongly and repeatedly claims the SOS asserted fifty-three (53) affirmative defenses…The two sides have filed subsequent responses that repeat the same arguments. This dispute within the dispute has not yet been adjudicated by the court.
Mr. Hosemann also asked the court to dismiss the case or transfer it to Rankin County in December. The law apparently states that these types of suits must be filed in the county of the land in dispute. Stonebridge is in Rankin County. Thus, the Secretary of State wants to transfer the case to the Rankin County Chancery Court (The Rankin County Chancellors are just salivating to get this Flying Dutchman of a case. The Stonebridge PID has been the subject of several lawsuits over the years.). The Chancellor has not ruled on the motion.
Attorney Michael Heilman represents Green Hills. The case is assigned to Judge Patricia Wise.
*The number of parcels is taken from the plaintiff's complaint.
** However, UMB stated in a June 2015 letter to bondholders:
The Trustee has formed three special purpose entities (the “SPEs”) for the purpose of owning, managing, maintaining and disposing of the tax forfeited Developer Property proposed to be acquired from the State. Subject to obtaining Court authority, the Trustee caused the SPEs to submit applications to purchase a total of 106 specifically-identified parcels (the “Applications”) comprising all of the Developer Property that has been struck off to the State. The aggregate purchase price of the property proposed to be purchased in the Applications is $862,780.00, which was determined per parcel based on State’s tiered pricing system. The Trustee believes that recovery of the Developer Property as sought in the Applications is necessary for the orderly and efficient disposition of this property, to maximize its value and to preserve value for holders of the Bonds. If the Trustee is successful in acquiring the property as contemplated by the Applications, the Trustee proposes to market and dispose of the property in accordance with directions received from the Majority Holder pursuant to the Indenture.