GT Real Estate Holdings, LLC Files Complaint Against York County

The legal battle continues over the failed Panthers’ headquarters project in Rock Hill, South Carolina. In response to York County, South Carolina’s lawsuit filed in June, GT Real Estate Holdings, LLC (“GTRE”) has filed a complaint seeking a declaratory judgment in the United States Bankruptcy Court for the District of Delaware, the court with jurisdiction over GTRE’s bankruptcy action.

York County’s Complaint

Within days of GTRE filing for bankruptcy, which imposes an automatic stay against creditors taking action against GTRE/GTRE’s property, York County filed a lawsuit in South Carolina state court. To avoid the automatic stay, the complaint did not name GTRE as a defendant. Instead, the defendants are entities owned or controlled by David Tepper, including Appaloosa Management, LP, DT Sports Holding, LLC, and Tepper Sports Holding, Inc. As a part of the lawsuit, the County is seeking to recoup $21 million in Penny Tax Funds provided by the County for the Panthers’ headquarters project in Rock Hill, South Carolina.

Specifically, the County’s complaint included causes of action for civil conspiracy, negligence and negligence per se, interference with contractual relations, and negligent misrepresentation.

In the County’s complaint, the County alleges that the defendants’ conduct was performed by or on behalf of GTRE. Therefore, via its complaint in the U.S. Bankruptcy Court for the District of Delaware, GTRE is pushing back on the County, and GTRE is asking the Court to declare that the County’s complaint violates the automatic stay.

GTRE’s Complaint

There is no doubt that this is GTRE’s first attempt at avoiding litigating this issue in South Carolina, York County’s home turf, and into the federal bankruptcy court under an impartial judge familiar with the matter.

GTRE’s complaint utilizes the County’s complaint to its advantage. None of the County’s allegations include particular injuries due to actions on behalf of the other entities. Instead, the County’s allegations that any creditor’s damages on the Panthers’ headquarters project are due to the City of Rock Hill’s failure to issue infrastructure bonds. Due to the City’s failure to issue infrastructure bonds, the project failed, which makes the County’s claims an action against GTRE/GTRE’s property in violation of the automatic stay granted under 11 U.S.C. § 362.

Similarly, GTRE points to being “a necessary party to the State Court Action because its liability must be determined in order to give effective relief to the County.” Basically, if the South Carolina state court were to make determinations on issues in the case, could lead to another court preventing GTRE (via collateral estoppel) from taking alternate positions in other litigation, including bankruptcy litigation.

Whether GTRE’s complaint will succeed remains to be seen. Either way, GTRE would rather move the litigation over tax funds out of South Carolina and into a more favorable venue.

Landis Barber is an attorney at Safran Law Offices in Raleigh, North Carolina. You can connect with him via LinkedIn or via his blog offthecourtdocket.com. He can be reached on Twitter @Landisbarber.