Developer Wins $6M Verdict In Rezoning Dispute With Brookhaven
A suburban city outside Atlanta has been ordered to pay millions to a developer and two homeowners after a jury found that city officials purposefully stalled a multifamily project in what an attorney described as an attempt to force a pay-for-play deal.
A DeKalb County Superior Court jury ruled this week that the city of Brookhaven, along with Mayor John Ernst and City Manager Christian Sigman, were guilty of tortious interference over a planned townhome project by The Ardent Cos. off Buford Highway and Bramblewood Drive.
The jury also ruled that the city, mayor and city manager must pay over $500K to two Bramblewood Drive homeowners, Jon and Courtney Wheeler, part of a group of residents who were planning to sell their properties to Ardent.
Including $200K in punitive damages against Ernst and Sigman, Ardent and the homeowners were awarded more than $6M, the Atlanta Journal-Constitution first reported.
“This is going to haunt me for the rest of my life,” Ernst said during testimony, according to the AJC.
The verdict stems from a 2018 lawsuit filed by Ardent and the Wheelers that alleged the developer's request to rezone property to allow for a 226-unit townhouse development was stymied by Brookhaven and city officials over numerous conflicts of interest.
Ardent negotiated to purchase 17 acres along Buford Highway and Bramblewood Drive from a group of homeowners in 2017. The developer then requested a rezoning and for the city to agree to abandon its right of way for a portion of Bramblewood Drive. According to the lawsuit, talks soon went south.
Ardent and the city disputed the value of that portion of the road: Ardent wanted to pay the city $250K for the rights, while Brookhaven officials said they would accept $1.5M per acre, a value the city demanded without any appraisal support, according to the lawsuit.
At the same time, Ardent alleged that Brookhaven officials offered a $30M tax abatement for the project so long as the developer sold six parcels of its site back to the city for a planned safety center, the Atlanta Journal-Constitution reported. Ardent also was allegedly asked to pay the city back half of the proceeds of the project if it sold the deal within four years, a move that Ardent called a pay-for-play scheme in its lawsuit. The AJC reported the incentive package failed to materialize at that time over a dispute on incorporating affordable housing into the project.
After Brookhaven rejected granting an easement in 2018, Ardent withdrew its rezoning request and the deal to sell the properties fell apart, said Simon Bloom, the founding partner of law firm Bloom Parham, who represented the developer in the lawsuit. The parties sued the city three months later.
While it's not unusual for municipalities to ask for something in return from developers seeking incentives, in this case, Brookhaven's demands became too onerous, Bloom told Bisnow.
"What I can tell you is it is very common for cities and counties to try to extract some quid pro quo in some major development. Nine times out of 10 the request or demand is palatable and developers just swallow it and move on," Bloom said. "But this one was just over the top."
The jury didn't impose a $12M penalty against the city Ardent requested, which it expected to earn once it finished the townhome project, the AJC reported.
Ernst and Sigman claimed that during negotiations with Ardent, they were following instructions and advice from Brookhaven council and city staff and did nothing unethical or illegal.
“I was just doing what a city manager does,” Sigman told the AJC.
Brookhaven has 30 days to appeal the ruling, and the city is considering its options, spokesperson Burke Brennan told the newspaper.
“The mayor, the city manager, the city attorney and all involved have a great respect for the jury and appreciate their responsibility. However, the city disagrees with the verdict,” Brennan said to the AJC.