Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, June 14, 1993 TAG: 9306140217
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
SOURCE: By JOE KENNEDY STAFF WRITER
DATELINE: LENGTH: Medium
Before closing the deal with developer Richard Hamlett, he had a lawyer insert a covenant limiting building on the lot to a single-family home. Unfortunately, the lawyer specifically excluded the construction of an apartment house, as well. That has given Sidney's Inc., a bankrupt Roanoke apparel chain, an opening to sue, claiming that the restriction applies only to apartments - and not the construction of a road.
The matter didn't come up until late last year, when a lawyer for Sidney's asked a federal bankruptcy judge for permission to build a road through the lot to the 50-acre tract the company owns behind it.
Sidney's wanted to develop the larger piece of land to help pay its creditors. Initially, bankruptcy Judge Ross Krumm ruled in McGimsey's favor. A week later, after hearing evidence, he changed his ruling, saying the covenant, while enforceable, was not intended to prevent the building of a road.
"That was not exactly what I had in mind," says McGimsey, who lives just up the street.
McGimsey appealed to the federal district court in March. In April, Judge Samuel Wilson ruled in his favor, saying the covenant prohibits road construction.
Sidney's has filed an appeal with the 4th U.S. Circuit Court of Appeals. A hearing has not been scheduled. McGimsey, meanwhile, is waiting it out and puzzling over a tangle of events he thought he had prevented.
Several years before he sold the lot to Hamlett, McGimsey says, he was approached by a developer who asked to buy the lot.
McGimsey says he and the developer discussed the old quarry site behind it. Once owned by the Virginia Iron, Coal and Coke Co., it looked suitable for a housing development, particularly if it could be reached off Peakwood Drive. The land already has access from U.S. 220, but, McGimsey says, it would be worth more with a road through the Peakwood section. His lot looked like the best, and perhaps only, spot for such a road.
McGimsey didn't sell the lot to the developer. Later, when Hamlett sought to buy it, McGimsey insisted on the single-family restriction because Hamlett was a builder of apartments. His lawyer added the apartment clause as an extra precaution, he says.
When Sidney Weinstein, the Sidney's president who was then a Peakwood resident, bought the lot, "He never called me to take it [the restriction] off," McGimsey says. Thus he was surprised when the first court action was filed.
McGimsey figures the suit was prompted by creditors who wanted their money. According to court papers filed earlier, at the time of the bankruptcy, Sidney's owed secured creditor Dominion Bank about $1.5 million and Central Fidelity Bank, an unsecured creditor, some $700,000.
"When we negotiated with the unsecured creditors, part of our agreement was that we would bring this lawsuit," says John P. Fishwick Jr., the lawyer representing Sidney's.
"The only thing that's happened is that the creditors and the bank have asked us to pursue the matter," Weinstein says. "It's really a financial matter, and really up to the courts . . . . I'm just pursuing it at the request and behest of the creditors."
In court, Fishwick has argued that the deed specifically forbids construction only of apartments, and not a road. Courts generally favor the free use of land, he says. "If we prevail, it enhances the value of the property."
In a sense, the case pits neighbor against former neighbor. McGimsey knew Weinstein, who has moved off the street, from parties and the like, and he sympathizes with his financial problems.
"But," he says, "we didn't cause them."
Fifty-seven people, from Peakwood and surrounding streets, have either contributed to his legal expenses or pledged to do so, McGimsey says.
McGimsey, a former senior vice president of Moore's Lumber and Building Supplies who now owns and operates apartments, says that even if he and his neighbors lose in court, a developer would need permission from the city planning commission to build a road. They would certainly take their arguments there. He also thinks the engineering requirements might make the road unfeasible.
He says he and his supporters won't give up. But the Sidney's creditors, who number in the hundreds, may have deep pockets.
"We're just going to see it through to the end," Fishwick says.
by CNB