A dispute over a hotel deal in the City Market area is escalating.
Pearce Development is alleging that a legal appeal that delayed its project was a scheme by a neighboring real-estate investor to sell its property to the firm at an inflated price.
Pearce Development is suing Tyrone "Ty" Hanlan and his 241-243 East Bay Holdings LLC, which owns property next to a proposed hotel site at 235 East Bay St.
The complaint was filed Thursday in Charleston County.
According to the lawsuit, Hanlan invited Pearce Development principal Dean Pearce to see his property and then offered to drop his opposition to the hotel project if Pearce agreed to buy Hanlan's property for about $200,000 more than the asking price.
Pearce Development is alleging abuse of process and malicious process, claiming that Hanlan filed his appeal to try to get Pearce to buy his property. The complaint is seeking a jury trial to determine financial damages from the delays, including increased construction and financing costs and lost profits from the hotel.
Alice Paylor, Hanlan's attorney, said her client was "shocked" to learn that Pearce was suing him and that it was Pearce who asked Hanlan if there was a way to settle the appeal. Hanlan then told Pearce that the only way Hanlan would settle was if Pearce or someone else bought his property, she said.
"Mr. Hanlan has grounds for his appeal and continues to pursue them," she said.
Hanlan bought 241-243 East Bay St. in 2015 for $2.3 million through his 241-243 East Bay Holdings LLC. The buildings are across Guignard Street from Pearce's hotel site.
In January 2017, the city's Board of Zoning Appeals denied the request for a 50-room hotel that included not only the site on East Bay but also the former Wild Wing Cafe at 35 N. Market St. and a parking lot behind it. The board said it would send too much traffic into a nearby neighborhood.
Hanlan listed his property for sale in April 2017 for $5 million, then lowered the price by June to about $4.5 million, according to the complaint.
In July, the board approved the hotel, saying that moving the traffic flow toward East Bay and away from Anson Street ensured the project would not significantly increase traffic in the neighborhood.
Hanlan sued the board, the city and Pearce Development predecessor Apex Real Property in August. His appeal argued that the zoning board didn't consider all of the relevant factors when it approved the project, including the impact on his property.
By September, Hanlan had raised his asking price to $4.95 million. It was later that month that he told Pearce that he would drop his appeal if Pearce would buy the property for $5.2 million, according to the complaint.
"The asking price in his demands ... far exceeded the fair market value of the ... real property," according to the complaint, which called the offer an overt attempt to coerce the hotel developer into buying a property that Hanlan wasn't able to sell.
Hanlan disputes that allegation. He has 30 days to file a formal response to the lawsuit.