Cherry residents win ruling from NC Supreme Court after failed affordable housing deal
.jpg "Photo of Historic Cherry neighborhood sign in Charlotte. The neighborhood community organization has been in a years-long legal fight after a disputed development deal with them without control over land they owned and without promised affordable housing units.")
A North Carolina Supreme Court decision delivered Friday gives members of the Cherry Community Organization a path to recoup some losses stemming from a disputed development deal with a Charlotte company.
In its opinion, the court partially reversed a decision from two lower courts. Those earlier rulings had dismissed the neighborhood organization’s attempts to regain a stake in property it had previously hoped to have used for affordable housing in its historically Black and rapidly gentrifying neighborhood.
The Cherry Community Organization or CCO in 2018 won a breach of contract lawsuit against Charlotte developer Stoney Sellars and his firm StoneHunt, who failed to build the affordable housing that was promised. By the time the case was decided, though, Sellars’ company had gone bankrupt — and the land he’d acquired from the CCO in 2004 had been sold to another development firm.
The court back then ruled that he owed the Cherry organization money, around $7 million, but the problem remained on how the group would collect. Lower court decisions in 2018 and 2020 rejected the CCO’s argument that the new owner, Midtown Area Partners, should have to give back or compensate for the loss of the land in question.
The nonprofit CCO has argued for years that Sellars, and later Midtown Area Partners, acted in bad faith by using land the organization transferred to Sellars to build market rate housing and not the affordable units that were promised.
In Friday’s high court opinion, justices wrote that earlier legal arguments had revealed “a calculated scheme by Sellars and StoneHunt to fraudulently liquidate the subject property and to hide the monetary proceeds from legitimate creditors.”
Part of the Supreme Court’s ruling found that MAP did not purchase the land from StoneHunt in “good faith,” which could lead to the purchase being voided. Justices wrote that because StoneHunt and MAP were business partners, the latter was “imputed with the knowledge of their co-principal’s fraudulent intent.”
In a dissenting opinion, Associate Justice Tamara Barringer pushed back on CCO’s claims that MAP had not made the purchase in good faith, citing the firm’s interest in buying the land years before Sellars’ bankruptcy; the fact that MAP owned property nearby; and that the firm bought it from Sellars at a reasonable price after researching the property’s history and title.
Further litigation is expected.
The land MAP purchased possibly could be sought by Cherry as creditors.
“We’re delighted with the outcome and this is a huge step forward to getting justice for the Cherry Community Organization,” said Kerry Shad, an attorney for the group. “It’s been a long battle.”
This story was originally published May 6, 2022 at 5:51 PM.
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