Jackson Jambalaya

The Lost Rabbit Public Improvement District submitted a resolution to the Madison County Board of Supervisors stating the district is broke and unable to afford legal counsel. The resolution states one "landowner is responsible for 98% of the income" and that landowner has not paid in two years. The resolutoin further states there are questions whether the PID was properly formed and thus the district may not have the authority to collect assessments. The district suspended all work by vendors as it lacked the ability to pay them. The resolution is posted below.

Docstoc is acting up so here is the link to the resolution.

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Allstate filed a Notice of Dismissal (without prejudice) in U.S. District Court Thursday in Illinois for its complaint against Baker Donelson and Butler Snow. Allstate sued the two law firms after it purchased $18,605,000 bonds from the Lost Rabbit Development Public Improvement District. Earlier post. WLBT covered the story last week:

Why did Allstate file suit against the two firms only to drop its complaint? The key phrase is probably "without prejudice". Usually the terms "with prejudice" is used when the case is settled. I'm going to go out on a limb here and speculate this complaint was a warning shot across the bow but no settlement has occurred- yet. Apparently the problem with the PID was the PID did not get all the signatures from the homeowners/leaseholders in Lost Rabbit and it might not have been formed properly. WLBT has a good story on the matter.

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Allstate Insurance filed suit against the law firms Baker Donelson and Butler Snow on July 15, 2011. Allstate accuses the two law firms of committing fraud and withholding vital information when the insurance company purchased all of the PID bonds for Lost Rabbit at $18,605,000 on July 17, 2008. Lost Rabbit is a planned development community by the Reservoir in Madison County. The development has been plagued by numerous financial problems for the last few years.

The lawsuit states a Public Improvement District (PID) was created to build infrastructure and "collect special assessments towards repayment of the bonds." Butler Snow was the bond counsel for the issuance of the bonds and Baker Donelson created the district and issued the bonds as well. Allstate states it:

"requested and the District caused the Baker Firm to prepare an opinion letter directed to the Plaintiff verifying that the District was properly and validly formed. The Baker opinion letter represented to the Plaintiff that the District was duly established and validly existed as a public improvement district with the right and lawful authority to fund, finance, and construct the development....'

Allstate then argues the letters produced by the two firms:

"contain misrepresentations of material facts and failures to disclose material facts relating to the establishment, legal validity, and authority of the District and the District's power to levy and collect special assessments on the revenues which were pledged to repay the bonds."

Allstate claims the PID was not created in accordance with the law and the two firms hid that "fact". Allstate accuses both firms of committing securities fraud under Illinois and Mississippi law and requests the court to approve a rescission of its purchase as well as awarding it court costs and attorney's fees.

What is interesting is an item appeared on the agenda for the July 18, 2011 meeting of the Madison County Board of Supervisors advertising a petition to rescind the PID. However, the petition was withdrawn before the meeting. What is interesting in this complaint is there are no real details of the alleged fraud or what facts were withheld from Allstate. I'm inclined to think this complaint is a shot across the bow and more will come later.

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