MYRTLE BEACH — The second of three civil lawsuits filed over environmental contamination near the AVX Corp. manufacturing facility on 17th Avenue South here is scheduled to go to a jury trial starting Monday at the Horry County courthouse in Conway.
David and Steve Nance, partners in JDS Development of Myrtle Beach Inc., are suing the electronic components manufacturer, claiming groundwater contaminated with the degreaser trichloroethylene, or TCE – which migrated from the AVX site to surrounding properties – made it impossible to get bank financing for their planned Southern Pines condominium project at the intersection of 17th Avenue South and Beaver Road.
AVX denies the allegations and says some of the contamination could have come from the former Myrtle Beach Air Force Base, which was located adjacent to the manufacturer before it closed in 1993.
The Nances have said they had all the permits and financing in place by September 2007 to start construction of Southern Pines, but their bank withdrew a construction loan once the contamination was made public later that year by a separate lawsuit filed by Horry Land Co. and through a series of reports in The Sun News.
When the contamination was publicized, the Nances said, they “lost all financing for the project and could no longer market the [condos] to prospective buyers,” according to court documents.
The Nances, who filed their lawsuit in January 2008, want AVX to pay unspecified damages for the loss of value on the 4.4-acre parcel and for the loss of income that would have been generated by condo sales. The Nances were marketing the condos at prices starting at $180,000.
Lawyers for both sides could not be reached for comment last week.
AVX lawyers are expected to argue that this area’s declining real estate market – not groundwater contamination – caused the Nance’s property to lose value, ultimately dooming the Southern Pines project. The company also says the groundwater contamination has not caused any permanent loss of property values because it can be cleaned up to meet federal standards.
Those arguments also are expected to play a key role in a separate class-action lawsuit filed by about 230 people who own property near AVX in a roughly 12-block neighborhood. Those people say their property values have been ruined by the groundwater contamination. No trial date has been scheduled for that case.
AVX previously settled a similar lawsuit filed by Horry Land Co. – which owned property across the street from the manufacturer – just as a federal jury trial in Florence was entering its fourth day. AVX agreed to purchase Horry Land’s 21.5–acre parcel after testimony and trial documents showed the company knew about the pollution since at least 1981 but did not try to stop its migration and did not inform adjoining land owners, city, state or federal officials about the problem.
Horry Land discovered the groundwater contamination in July 2006, when environmental tests performed in advance of planned development showed TCE levels of up to 18,200 parts per billion in the groundwater. The maximum amount allowed by the U.S. Environmental Protection Agency is five parts per billion.
The S.C. Department of Health and Environmental Control says the contamination is not a health hazard because groundwater in that area is not a drinking water source.
A second part of that federal lawsuit centered on whether the military might have contributed to the groundwater contamination and, if so, how much it should pay to help clean up the pollution.
Judge Terry Wooten ruled last year that all of the contamination came from AVX, agreeing with DHEC officials who say the manufacturer is the sole source of the pollution. AVX has appealed Wooten’s ruling and the U.S. Court of Appeals for the Fourth Circuit is scheduled to hear oral arguments in that case on Oct. 23 in Richmond, Va.
AVX – which moved its world headquarters from Myrtle Beach to Greenville in 2009 – has been paying to clean up the pollution with a process called enhanced reductive chlorination, in which a substance similar to molasses is injected into the groundwater. The molasses-like mixture creates bacteria that eat the TCE, breaking it down into harmless matter. The cleanup is expected to take about five years.
Triton trustee sees no evidence of fraud
Robert Anderson, the bankruptcy trustee in a case involving former Triton Stone franchises in Conway and Charlotte, N.C., said he has seen no evidence that franchise owners Carroll “Tumpy” Campbell III – son of the late former Gov. Carroll Campbell Jr. – and John Cattano were defrauded by the group that sold them the businesses.
Campbell and Cattano, former treasurer of the S.C. Republican Party, filed a lawsuit last year against Triton Stone Group – the national granite and stone wholesaler that brokered the 2011 sale of the franchises – claiming Triton Stone misrepresented the franchises’ finances and then used extortion and “strong-arm tactics” to get them to pay debts owed by the previous franchise owners.
Columbia lawyer Todd Kincannon, former executive director of the state Republican Party, filed the lawsuit – scheduled to go to trial next year – on behalf of Campbell and Cattano, who did business as Congaree Triton Acquisitions LLC.
Anderson last week filed an adversary proceeding against Kincannon, asking a judge to force the lawyer to turn over any documents that would back up the civil lawsuit’s claims.
“There are no records that [Anderson] has been able to locate that would support the allegations of the complaint which [Kincannon], by signing the documents, states are true and valid issues, supported by both facts that he has reviewed and case law,” Anderson said in court documents.
Anderson said Kincannon has repeatedly refused to turn over any documents related to the civil lawsuit.
Kincannon could not be reached for comment last week.
Kincannon prepared the franchise purchase agreement for Campbell and Cattano and represented them in negotiations leading up to their acquisition of the franchises, according to court documents. Anderson said he also wants all emails, notes and other documents related to those negotiations.
No court date has been scheduled to hear Anderson’s request.
The adversary proceeding follows a court-appointed financial examiner’s report that shows Campbell and Cattano paid themselves thousands of dollars in consulting and labor fees and took thousands more from their franchises’ petty cash funds even as their business was failing and the pair told creditors there was not enough money to pay past-due bills.
Congaree Triton Acquisitions LLC was forced into Chapter 7 bankruptcy liquidation in June by Judge John Waites.
The company had hoped to reorganize under Chapter 11, but Waites said financial information submitted by Campbell and Cattano “was both inaccurate and misleading, making it nearly impossible for [court officials] to rely on the financial picture being painted,” particularly in light of significant ongoing losses. Waites also said in his order that there is evidence of gross mismanagement of the Myrtle Beach and Charlotte franchises.
The Conway and Charlotte franchises were shut down as a result of Waites’ order and any remaining inventory will be liquidated to pay creditors.
Whitley’s retirement official on Oct. 1
The last official day for Horry County Magistrate Gerald Whitley will be Oct. 1, according to county spokeswoman Lisa Bourcier.
Whitley, 60, submitted his retirement paperwork to the county last week, although he verbally notified state court officials on Aug. 27 that he was stepping down despite having more than 2 1/2 years left on his current four-year term as a magistrate judge. Whitley has already left his office and is taking accrued vacation and leave time until his retirement becomes official next month.
Jean Toal, chief justice of the S.C. Supreme Court, has appointed Margie Livingston as interim magistrate to take Whitley’s place until a new judge can be appointed next year by area legislators.
Whitley has not returned telephone calls to The Sun News.
Whitley’s retirement came one day after the newspaper published a story about mortgage problems at a North Myrtle Beach townhouse project he co-developed with Grover “Bubba” Rabon III in 2007-08 called Charleston on Edge. Public documents show most of the units at that project were sold to out-of-state buyers for prices far higher than market value. Those buyers made only a few payments on their mortgages before defaulting on the loans. Banks lost more than $2 million on loans at the seven-unit property, court records show.
No indictments have been issued related to Charleston on Edge and it is not clear whether the project is the focus of any criminal investigation. Greg McCollum, a Myrtle Beach lawyer representing Whitley, said that Whitley did not know any of the townhome purchasers and was not involved in any of the mortgage transactions. His only role, McCollum said, was as seller of the properties.
Whitley started his career in law enforcement in 1973 as a patrol officer for the North Myrtle Beach Police Department, eventually leaving that department as a corporal in 1980. He worked for the Horry County Police Department from 1983 until 1985, when he was first appointed as a magistrate judge. Whitley left the bench briefly in 1994 to become the interim police chief in Horry County. He was passed over for the permanent police chief job the following year and was re-appointed as a magistrate judge, where he served until this year.
Contact DAVID WREN at 626-0281