Saturday , September 24 2022

Former Charleston Naval Hospital owner loses appeal seeking rent money from Fetter Health | News

NORTH CHARLESTON — A plan to renovate the former Charleston Naval Hospital ended six years ago in bankruptcy and cost Charleston County more than $33 million, but the would-be developers have continued to sue health care providers who expected to be tenants.

A lawsuit against nonprofit Fetter Health Care came back from the S.C. Court of Appeals with a ruling in Fetter’s favor. A larger claim against state-affiliated Charleston Dorchester Mental Health Center is ongoing.

Both health providers had planned to move in following renovations and, like Charleston County, were sued when they decided the condition of the building was unacceptable.

In 2012, Donald Trump Jr. — once listed as a part owner of Chicora Life Center — had pitched a redevelopment plan for the former 175-bed hospital in North Charleston to city and county officials, telling them it would attract top medical establishments such as the Cleveland Clinic or the Mayo Clinic.

County Council jumped on board in mid-2014, agreeing to a 25-year lease for three floors of the building. Fetter Health Care and the Charleston Dorchester Mental Health Center agreed to lease space — all of which depended on the tallest building in North Charleston being extensively renovated.

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Fetter Health Care medical staff conduct a COVID-19 test at a mobile screening site operated with Charleston County Public Safety Directorate at Royal Missionary Baptist Church on Monday May 4, 2020, in North Charleston. Gavin McIntyre/Staff

The process was expected to take six months or less, county officials were told at the time.

The county backed out of the plan in March 2016 after repeated delays and controversy. It wound up paying $33 million to settle a lawsuit after the developers declared bankruptcy. Fetter and the mental health agency were then sued for breach of contract over unpaid rent and alleged renovation expenses.

A key problem Charleston County faced in bankruptcy court and leading to the costly settlement was a judge’s ruling that the county had “waived any right to assert any defaults or breaches” in the lease contract.

At the end of 2014, as the developer’s original deadline to complete renovations loomed, County Council Chairman Teddie Pryor signed an amended lease that removed all deadlines for completing the work, as The Post and Courier previously reported.

After the county took ownership of the 10-story, 400,000-square-foot building at Rivers and McMillan avenues in 2017, officials determined it could cost another $66 million to complete necessary renovations.

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It would have cost $66 million to complete renovations to the former Charleston Naval Hospital, Charleston County concluded after taking ownership of the building. File/Staff

In 2019, the county planned to demolish the building, but instead sold it a year later for $15 million to developers who plan to renovate it with shops and more than 300 apartments.

Instead of occupying space in the former hospital, County Council decided to construct a new building across the street and to name that building after Pryor.

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A depiction of the Charleston County social services building under construction at Rivers and McMillan avenues in North Charleston. The former Charleston Naval Hospital is across the street in the background. File/Provided

Like the county, Fetter had refused to move in to the former hospital in 2016 after finding the space “completely unfinished” and “a disaster,” according to court filings. This month, the state Court of Appeals upheld an earlier ruling in Fetter’s favor, which found that improvements promised in the lease signed with Chicora in 2014 had not been made.

The South Carolina Court of Appeals ruling in Chicora Life Center v. Fetter Health Care.

In the Court of Appeals ruling, the building’s condition was described as follows: “Fetter executives inspected the premises and found what they described as ‘a wreck,’ ‘a mess,’ ‘a disaster,’ and ‘Friday the 13th,’ stating things were ‘completely unfinished’ and noting there were broken walls, unfinished ceilings, broken floors, missing doors, locks not on doors, missing sinks, missing toilets, leaks from the plumbing into exam rooms, a mildew smell, and inoperable elevators.”

In the unanimous three-judge ruling, the Court of Appeals wrote: “Nothing in the lease gave Chicora the right to make improvements unsatisfactory to Fetter, force Fetter to still move in, and restrict Fetter’s remedy to a claim for damages.”

Armand Derfner, one of the lawyers representing Fetter, noted that the earlier court ruling which the Court of Appeals upheld awarded Fetter legal fees along with the return of a $17,000 deposit.

Derfner otherwise declined to comment on the litigation and Fetter officials did not respond to phone messages.

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A Charleston County employee crosses the 10th floor elevator lobby trying to get the HVAC working at the former Charleston Naval Hospital on Thursday, Feb. 8, 2018. File/Staff

Chicora Life Center was seeking about $315,000 from Fetter for rent and renovation costs. In earlier bankruptcy court filings, the Chicora group was described as being owned by Utah lawyer Doug Durbano, family members of Charleston-area project manager Jeremy Blackburn and Trump, the former president’s eldest son.

Ownership apparently changed after the settlement with Charleston County that concluded the bankruptcy case. When the lawsuit against the mental health agency was filed, Chicora was described as “a single member limited liability company” based in Layton, Utah, where Durbano’s law firm is located.

Durbano did not respond to an email seeking comment. John Massalon, Chicora’s lawyer in both health provider lawsuits, did not respond to phone messages.

The Chicora company could potentially ask the Court of Appeals to reconsider its Fetter ruling, or ask the state Supreme Court to hear an appeal. Meanwhile, Chicora is still pursuing a roughly $1.7 million lawsuit against the Charleston Dorchester Mental Health Center.

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Construction work is done to the former Charleston Naval Hospital on Thursday, Sept. 22, 2022, in North Charleston. Andrew J. Whitaker/Staff

Like Fetter, the mental health center found the building unfinished and refused to move in. The health center is a facility of the S.C. Department of Mental Health.

“That case is still being defended by the Department of Mental Health and we are prepared to go to trial in December,” lawyer Drew Butler said. 

Butler said the department’s defense is similar to Fetter’s in that both allege the building was not fit for use, despite North Charleston having issued a certificate of occupancy. He said depositions are ongoing, and he plans to seek summary judgement prior to trial.

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