York County Files Lawsuit Against Tepper’s Entities

Merely days after GT Real Estate Holdings, LLC (“GTRE”) filed for bankruptcy, York County has filed a lawsuit in South Carolina state court against multiple entities owned by David Tepper and the City of Rock Hill, alleging that the entities misused $21 million in Penny Tax Funds.

Specifically, York County named as defendants Appaloosa Management, LP, DT Sports Holding, LLC, and Tepper Sports Holding, Inc. Of note, Appaloosa Management, LP is David Tepper’s fund management company worth an estimated $13 billion.

Alleged Facts

The lawsuit revolves around the county-designated $21 million of Penny Tax Funds to expand Mt. Gallant Road. York County alleges that Tepper’s entities—through GTRE—would perform the work to expand Mt. Gallant Road if the county provided the funds, which was memorialized in the Land Development Agreement between GTRE and the city. According to York County, after York County wired the funds, the funds were not used for the Mt. Gallant Road project.

Additionally, the lawsuit notes the various issues on the Carolina Panthers’ headquarters project, including the city’s failure to issue the bonds and the GTRE’s subsequent termination of the project on April 19, 2022.

Causes of Action

Against the Tepper entities, York County included claims for civil conspiracy, negligence and negligence per se, interference with contractual relations, and negligent misrepresentation. In short, the basis for each claim is that the county provided the funds, and the entities did not perform the work.

York County included a breach of contract claim against the city due to the city’s failure to issue the required bonds on the project.

Analysis

Putting this lawsuit into context, this comes after GTRE filed for bankruptcy, which could lead to a minor payout for York County.

Looking at the project, York County alleges that many of the individuals acting on behalf of GTRE are employees of Tepper’s other entities. Therefore, despite York County admitting that GTRE owned the property and admitting that the individuals were acting through GTRE, York County is seeking to recoup the funds through the Tepper entities.

York County is unlikely to succeed in its claims against the Tepper entities. Although, the complaint could survive a motion to dismiss due to the low standard to overcome a motion to dismiss. The issue is that many of the actions were performed by and through GTRE, alleging that because the individuals are employees of Tepper’s other entities is likely too attenuated to hold the entities liable.

On the other hand, York County could succeed in its claim against the city. According to the county, the parties did have a contract requiring the city to issue bonds on the project, and the city failed to issue the bonds on the project, which led to the termination of the project. Thus, if the county can prove its allegations and the city does not have any defenses, the county may succeed in its claim.

Overall, the county is attempting to recoup its funds outside of GTRE’s bankruptcy action. The Carolina Panthers have a long way to go before this chapter is over.

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.