Doerflinger fate still undecided

0 Comments | La Crosse Tribune, Jun 11, 2002 | by Kent, joan

The fate of the beleaguered Doerflinger building at Fourth and Main streets remains in question after a hearing in La Crosse County Circuit Court Monday.

Judge Dale Pasell said he needs more time before deciding whether the city of La Crosse or the lender on the renovation is first in line to obtain the former department store.

The city is seeking a summary judgment, which would mean the case would not go to trial. After hearing brief arguments on behalf of the city and Jim Daughtry of La Quinta Mortgage of La Quinta, Calif., Judge Pasell said he would issue a written decision in about two weeks.

"I know it is important, particularly to the tenants," he said.

The city is first in line to obtain the building, according to the development agreement between the city and MPC Systems, the developer, said Mike Ehrsam, the lawyer representing the city in the case.

But the lawyer for La Quinta Mortgage, Thomas M. Pyper of Whyte Hirschboeck Dudek of Madison, contended that Daughtry has first interest because he loaned the developer about $1.9 million to renovate the downtown landmark.

The city can either let the lender take over the building and finish the renovation, or pay the lender the money he is owed, Pyper said. "Otherwise, you are squeezing out the person who gave the financing the city required. The only way the lender can protect his interest is to make sure he has priority interest."

Ehrsam argued that Daughtry's loan was not a purchase money mortgage because it was not used toward the approximately $51,600 MPC paid for the building. In addition, he said he is trying to learn if the money was given to Conrad Seymour, spokesman for MPC, and if so, where the money went.

"To argue that these folks (Seymour and Daughtry) are not in bed together is ridiculous," he said, citing several other projects on which he said they have worked together. "If it goes as Seymour wants, (the $51,600) is all the city would get."

If Daughtry wanted to protect his interest in the building, he should have been involved in the development agreement, Ehrsam said.

The money was part of a purchase money mortgage, whether used on the actual purchase or in the construction, because the cost of the building included the cost of the renovation, Pyper responded.

"It would be nothing but wild speculation to say the money went to other projects," he added. "It is disingenuous to say that (the developer and lender) are in bed together ... or that the money was diverted."

The city also has asked that depositions made by Seymour for Daughtry's side of the case not be allowed as evidence because Seymour failed to show for scheduled depositions by the city's attorneys.

Meanwhile, City Attorney Pat Houlihan said the city is taking bids to provide heating, ventilation and air conditioning to the building. The city has filed a motion to obtain a lien against the building and rents for the cost, he said. Repairing the system will be considered during a special meeting of the La Crosse Common Council tonight.