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Insulation hangs from the ceiling on the gutted fourth floor of the former Charleston Naval Hospital on Thursday, Feb. 8, 2018, as county officials and a reporter tour the building. Wade Spees/Staff

The former Charleston Naval Hospital is slated for demolition this year but the company that was supposed to renovate the vacant building has just sued a South Carolina mental health agency for failing to honor a lease for space there.

Chicora Life Center, the same Utah-based company that received a $33 million settlement from Charleston County over the hospital redevelopment project, is suing the Charleston Dorchester Mental Health Center for at least $1,692,519.

The center is an outpatient facility of the taxpayer-funded S.C. Department of Mental Health.

The same company remains in similar litigation with the nonprofit Fetter Health Care Network, which was sued in May 2016 for unspecified damages. Fetter Health Care was also sued for failing to honor a lease, and filed counterclaims against Chicora Life Center.

The former hospital at Rivers and McMillan avenues is North Charleston's tallest building, and the redevelopment project was intended to revitalize the city's struggling south end. The county, the Mental Health Center, and Fetter Health Care had planned to fill at least three floors of the building with public services centered on health care.

Charleston County backed out of the plan in 2016, 15 months after the building was originally supposed to be ready for occupancy. Fetter and the Mental Health Center also backed out, and the developer's lender foreclosed.

The owners of the Chicora company weren't detailed in the lawsuit filed Friday, but when the company earlier sued Charleston County, bankruptcy court filings listed its owners as Utah lawyer Doug Durbano, family members of Charleston-area redevelopment project manager Jeremy Blackburn, and Donald Trump Jr., the eldest son of President Donald Trump.

Efforts to confirm the current ownership of Chicora Life Center have been unsuccessful. A source close to Trump Jr. said he no longer owns part of the company, but The Post and Courier has been unable to independently confirm that, or locate a reliable source willing to make such a statement on the record. 

The company's lawyer, John Massalon, did not respond to repeated messages over several days. Court records show that when the most recent litigation was filed by Massalon, he sent copies to Durbano and Blackburn, but not Trump.

The Chicora company sought bankruptcy protection and sued Charleston County after the county backed out of plans to lease three floors of the hospital building, complaining of missed deadlines and shoddy workmanship. Following adverse rulings in bankruptcy court — crucially, a ruling that the county lacked legal grounds to break the lease — the county paid $33 million to settle the lawsuit and take ownership of the 23-acre hospital property.

The county concluded it would take another $66 million to complete renovations, and decided this year to tear the building down. The county also said asbestos had been found in the building.

Now, Charleston Dorchester Mental Health Center is being sued for failing to honor a 2015 five-year lease agreement for 9,807 square feet of space in the hospital building. Charleston County Council members were already discussing breaking the county's lease agreement, the same week that the Mental Health Center lease agreement was announced in 2015.

At the time, Chicora Life Center principal Durbano, a Utah lawyer and developer, called the Mental Health Center lease “yet another step toward our vision of creating a comprehensive social services hub for the community under a single roof in the heart of Charleston County.”

In addition to suing the Charleston Dorchester Mental Health Center, Chicora Life Center's lawsuit names as defendants up to 100 "John and Jane Does" who are alleged to potentially have some liability in the matter.

Chicora Life Center cites a December 2015 temporary certificate of occupancy issued by North Charleston as the date the lease should have commenced. In April 2016, the month after Charleston County backed out of its lease, the center sent Chicora Life Center letter "purporting to terminate the lease," according to the lawsuit.

The development company claims to have spent $821,173 improving the space the health center was to lease. The company is suing over that money, plus the rent, plus interest, plus damages and attorney fees.

Chicora Life Center has not owned the building since the fall of 2017, when the county's settlement was accepted.

Charleston Dorchester Mental Health Center has not yet filed a response to the lawsuit. In the related Fetter Health Care litigation, Fetter claims that Chicora Life Center did not complete work on the space the nonprofit planned to lease, and was then foreclosed upon and sought bankruptcy protection, leaving the company unable to perform as developer and landlord. 

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Reach David Slade at 843-937-5552. Follow him on Twitter @DSladeNews.

David Slade is a senior Post and Courier reporter. His work has been honored nationally by Society of Professional Journalists, American Society of Newspaper Editors, Scripps foundation and others. Reach him at 843-937-5552 or dslade@postandcourier.com