NORFOLK
The owner of the Granby Tower project isn't obligated to pay for the more than $13 million of work that the general contractor and subcontractors did on the suspended condo, a Circuit Court judge has determined.
The contract with Turner Construction Co. stated that the project's owner, 515 Granby, wasn't liable for the cost of labor and materials until it had financing in place for the 300-unit project, Judge Everett A. Martin Jr. said in his ruling this month. The financing, he noted, never materialized.
Granby Tower's owner and its member-developer, Frank "Buddy" Gadams of Marathon Development Group, were unable to find financing for the $175 million project despite having strong support from city officials.
Work on Granby Tower came to a halt in September 2007, two months after construction began. The project, announced with great fanfare in 2004, was supposed to include a parking garage and space for offices and retailers.
Turner and several subcontractors have sought to collect payments for their work and materials by means of mechanic's liens and lawsuits.
In a suit brought against 515 Granby last year, Turner said it was owed $13.65 million for construction work on Granby Tower. That would include the amounts owed to subcontractors.
In response to Turner's suit, 515 Granby and Gadams said they had no obligation to pay because 515 Granby never obtained the needed financing, a condition that the contract required before any payments could be made.
During a two-day trial before Martin in May, Turner argued that 515 Granby compromised a key part of their contract by issuing a notice for Turner to proceed with construction and then directing Turner to continue working despite the lack of construction financing. In addition, 515 Granby approved Turner's applications for payment, the general contractor said.
Before telling Turner to begin construction, Gadams and 515 Granby provided the general contractor with a commitment letter for the needed financing, which later fell through. But given the size of the Granby Tower project and Gadams' limited development experience, "I find Turner did not act reasonably in relying on the commitment letter," Martin said in his ruling.
At least one subcontractor, Suburban Grading & Utilities Inc. of Norfolk, has filed suit against Turner seeking payment for the demolition and excavation work it did on the Granby Tower site. Martin's ruling against Turner opens up the possibility that other subcontractors will try to collect from the New York-based construction company.
However, subcontractors in search of payments must contend with a "pay if paid" clause in their contracts, which says Turner has no obligation to pay subcontractors for their work if it isn't able to collect from 515 Granby, according to court records.
Jonathan L. Hauser, a Virginia Beach attorney who represented Gadams and 515 Granby, declined to comment on Martin's ruling, citing continued litigation with Turner over other payments.
Turner's attorney, Jeffrey Hummel, could not be reached for comment.
Tom Shean, (757) 446-2379, tom.shean@pilotonline.com
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Granby Tower ruling
This ruling brings to light a problem in the construciton industry that has been brewing since the Galloway vs Ballard default that left Steve Ballard holding the bag. Since then all contractors insist that "paid when paid" or "paid if paid" is a condition precedent to their liability to pay their subs. In todays depressed construction industry subcontractors and suppliers who want to continue to work must give in to such unreasonable contract language. There are no subcontractors or suppliers who are able to pass this condition precedent on to their manufacturers. They must assume liability and responsibility to pay for manufactured material regardless of the property owner's agreement with the general contractor. Subcontractors or suppliers who challenge the condition precedent for payment are told to accept it or we will buy from your competitor who will. This sort of language needs to be made unlawful for construction contracts in the state of Virginia. Where is the justice when someone can walk away from paying for contracting goods and services without fear of recrimination?
If you want to blame a government...
Blame the feds. Part of the reason the financing never came through was that the GSA held the site hostage for over a year by hinting that they would condemn it for the courthouse annex/expansion. By the time they looked elsewhere, the credit markets had all dried up. The City of Norfolk agreed to pay a $22M incentive payment AFTER Granby Tower was built (and subject to several million a year in property taxes that could have built schools and parks in other neighborhoods for decades).
What you are saying is that
What you are saying is that it was a huge epic bubble. The feds took interest in the land for a year, and that totally messed up the window of opportunity, because all the people were going crazy to try to get rich on this Real estate stuff. But now, none of that is worth anything near what it once was.
I agree.
I even know stories of people who bought in the building with no intention of ever living in it. The only goal was to resell Granby Tower condos for huge profits. They already have lots of money, but I guess it wasn't good enough. Ooops.
Sorry old people, your going to have to work. You didn't save for retirement, but young people aren't all willing to take out 50 year loans to buy your dilapidated shack with the roof dripping off the back.
I thought the city part of
I thought the city part of the deal was in the form of tax breaks? That would mean that there has been little money out of pocket given to him from the taxpayer. Obviously we lost the tax revenue of the businesses that were bought out. I don't mind the hole, I miss the grassy areas where Belmont at Freemason and that hotel sit.
UNBELIEVABLE
Citizens need to just stop paying taxes altogether!
i agree
Let's put the money to better use. Oh, my bad, that would be like doing the right thing by Norfolk. You would think one would put the money towards the neighborhoods.I won't hold my breath though, sheesh!
In case some of the older
In case some of the older folks are curious, the term 'My bad' came into widespread popular use in the mid to late-1990s in the USA via the 1995 movie “Clueless”.
How much of norfolks taxpayers money?
Can't help but wonder how much of Norfolk taxpayers money Buddy Gadams walks away with? I would expect a good report would follow the money and fill the readers in on how much the project cost the taxpayers, WHO in city government is responsible for approving the taxpayers money be spent on this project, was there any background check on Buddy Gadams before turning over tax dollars to him. Other questions: Is Buddy Gadams in bankruptcy now, due to this failed project? What did he put on the line for this project? Who in the city government has benefited by this and other public/private projects? Who in city government has friend or family that has benefited from these joint projects? Is it time to expose the corruption of local government? Is it time to invoke TERM LIMITS on all local government seats of public trust to prevent CORRUPTION and COMPLACENCY and get back to "CITIZEN POLITICIANS" the way our forefathers intended our government to be? Just some questions that come to my mind.
It's all on the public record
This has all been discussed here in previous articles and can easily be researched in the public library.
Garbage pit
And when is he going to clean up that bug infested trash pit he created? Or maybe the norfolk council could care less how it looks since he is a pet developer and fraim has this pipe dream that someday, somehow he will build a tower.
Project
One low life -- who will do business with this guy in the future?
NOT ME
I sure wouldn't...
"Buddy"
"The owner and its member-developer, Frank “Buddy” Gadams, were unable to get financing for the $175 million project, and work on Granby Tower came to a halt in September 2007, only a few months after it began."
End public private ventures in Norfolk. This is just another PPV, like Waterside, that is not in the citizens best interest. That will not happen.
From the Linkedin website about Buddy Gadams:
"Mr. Gadams also devotedly contributes to political causes."
Obviously.
Mr. Shean--
I do hope your organization will again report (tomorrow??) on the folks still waiting on their deposit refunds. As an investor who actually did receive a refund (of partial deposit 15K) way back in 2004, I have a keen interest in your keeping Buddy's feet to the fire on this one. As do many others in HR. Thanks.
Reputation
His reputation is mud. He may have won the battle, but he'll lose the war. He's done here.
Buddy was pretty shrewd.
Apparently he covered himself pretty well with this contract. OK, Buddy. You win THIS time. But I doubt if any contractors will ever do business with him again under a similar contract.
It is true...
any flies on Buddy Gaddams are paying rent, but as soon as the economy turns around and there is financing available, they will line up to do business with Buddy, because this is but one project stalled of many many projects that have made many many bucks for all concerned.
His is still a star worth hitching to. Don't count him out.
You say star...
I say albatross around the neck of the city of Norfolk
Line up, huh?
"Thank you sir, may I have another"......Animal House.
BUDDY GADAMS
This issue wholly confirms the obvious: Buddy Gadams is a low down, no good piece of trash that should be run out of Norfolk. On the hand, the Turner Construction contract specialist(s) who agreed to the indicated terms of the contract should be fired! Their ignorance comes with a price tag....$20 plus million dollars!