GRAND RAPIDS -- 24 Hour News 8 has learned there is another lawsuit against River Grand developer Duane Faust. Faust is one of three developers interested in purchasing 16-acres of city riverfront property.
According to the lawsuit, Faust and his ESNA Corporation occupied suite #1875. He was renting 3,500 square feet since October 2004. It was a five-year lease that Faust personally guaranteed. The lawsuit, which was filed in May, claims a breach of contract and says Faust owed more than $63,000 through that time.
In a letter to Faust, the property manager wrote, "Over the last several months we have grown increasingly concerned about several issues that have developed and been unresolved. Routinely the monthly rental payment has been late or unpaid."
Troutman Sanders, an Atlanta law firm representing the landlord, says it can't find Faust to serve a summons. The firm told 24 Hour News 8 it went to Faust's home at 205 Inwood Terrace in Roswell, Georgia, but it is vacant. We called Faust's phone number ourselves, but it has been disconnected.
In the first lawsuit, which was filed June 15, Athens First Bank & Trust of Georgia claims Faust defaulted on a $113,000 loan. In an attempt to satisfy the loan, Faust and the bank agreed to a workout loan, which Faust has defaulted on, as well.
Industry insiders 24 Hour News 8 spoke with Tuesday say workout loans are not a good thing. It is a situation where the bank and loan holder are onto Plans B, C or D, making sure the loan gets paid.
In August, the Development Steering Committee reviewed Letters of Interest from the three developers - Faust, Moch International of Grand Rapids, and Barnes/Stevens of Buffalo, New York.
24 Hour News 8 wanted to know if there were any signs of financial difficulty found within Faust's Letter of Interest filed with the city of Grand Rapids.
"I didn't see any of that in the Letter of Interest. I also looked at all of the confidential financial documents and I didn't see anything to indicate that there was legal action pending," said Kayem Dunn, a member of the Development Steering Committee.
"It's not up to me to comment on that," Grand Rapids Mayor George Heartwell told us. "We've got a process that we've put in place to evaluate the financial strength of anyone of the three who submitted Letters of Interest. Assuming Mr. Faust will submit a full proposal, we've got a process in place to evaluate his financial strength and this may well be an issue."
When we asked Mayor Heartwell where does this leave the city and its riverfront development plans, he had no comment, and said he had to get back to City Hall.
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