Failed Charleston condo development drags out in court

The estranged partners in Ashley River Properties II have been fighting for about a decade over this undeveloped land at Ripley Point Drive and the S.C. Highway 61 connector in West Ashley.

As business feuds go, the bare-knuckled brawl over some prime real estate at Ripley Point is the equivalent of the Energizer Bunny. It just keeps going and going.

The marathon bout broke out about a decade ago, after a couple of investors — one from Connecticut, the other from Manhattan — teamed up to develop the site and turn a tidy profit.

They haven’t, though their lawyers surely have.

The flurry of litigation between the two sides has included at least three lawsuits in two states, conflicting decisions from arbitrators, and a ruling from the S.C. Supreme Court that summed up the dispute as “long and tortured.”

The final round of this nasty split could be under way.

In one corner is Stuart Longman and his Emerald Investments LLC of Norwalk, Conn. In the other is Kriti Ripley LLC, an affiliate of New York-based investment firm Kriti Management Inc.

The two got together to develop and sell residential condominiums and boat slips across from the Charleston peninsula under a company called Ashley River Properties II. The venture was created in late 2003, after Longman needed an outside investor to get his Ripley Light Yacht Club project off the ground, according to court filings.

Kriti agreed to help back the deal. Much to its regret.

The terms called for Longman to contribute the real estate and the permits he had obtained for a 70 percent stake. Kriti kicked in $1.25 million in cash for the other 30 percent.

The arrangement quickly unraveled. “Immediately, Emerald and ... Longman ... diverted .... those funds,” the state Supreme Court wrote in a 2013 ruling. Longman’s response: “It’s clearly not something I agree with. I don’t think they got their facts right there.”

The gloves came off in 2005. Kriti terminated the operating agreement and took over the management.

That same year, a New York arbitration panel found that Emerald Investments had mishandled funds while failing to disclose critical information to its finanical backer. Longman lost his voting rights, and his stake was cut to 21 percent because he refused to pump more capital into the foundering deal, as Kriti had done.

Other developers watched from the sidelines as the area around Ripley Point was attracting new investment. Several would-be buyers looked at purchasing the project — one offer came in at $20 million — but none of the deals panned out.

All the while, the litigation escalated. Longman, who for years was unsuccessful in trying to force Kriti out for alleged mismanagement, scored a victory in 2010 when arbitrators restored his ownership stake to 70 percent.

The action then shifted back to Charleston, where Kriti pressed to take full ownership of the venture by foreclosing on Longman’s interest in the company. A local judge denied the request, saying that wasn’t the proper legal remedy.

Kriti took its case to the state Supreme Court, and the justices reversed the lower court ruling.

They also offered up a harsh assessment of Longman. In their June 2013 decision, the high court said he and his company had “engaged in a pattern of abusive litigation” and “have attempted to game the system in order to avoid any consequences for their wrongful acts while at the same time trying to make a profit at Kriti and Ashley River II’s expense.”

Longman is back in Connecticut, where he works in the solar energy industry.

While part of the marina is completed, the property where dozens of luxury condominiums were supposed to be built is still vacant, aside from a handul of boats stored at one end.

Kriti is underwater on the deal. Ashley River Properties II borrowed $9 million in 2006 against the project, which, according to a recent court document, is now valued at about $8 million. Losses have totaled more than $3.3 million since 2008, Kriti Management executive Davidson Williams said.

The New York company had hoped to acquire Longman’s interest at a foreclosure auction on Dec. 16. As fate would have it, the sale was canceled. The day before, Emerald Investments filed for bankruptcy protection, halting all legal actions involving the company.

Lawyers for Kriti are now heading back to court, asking a judge to dismiss the case. A hearing is scheduled for Tuesday in New York.

Longman maintained Friday that his share of the Ripley Light Yacht Club deal remains at 70 percent. The bankruptcy was a legal tool to force a sale, he added. He does not expect a speedy resolution. “Have you ever started something that in retrospect you wish you hadn’t?” Longman asked. “It’s been — difficult.”

Contact John McDermott at 937-5572.