“…the Board has wrongfully presented a Complaint premised on a claim that Davenport’s representative – Mr. David Rose – lied to the Board in connection with financial advice which he gave to it,” Reid said in the motion filed Friday (Dec. 13) in the Fluvanna County Circuit Court. “That critical fact is demonstratively false, and it always has been so.”
And attorneys representing the Board knew it but didn’t turn over audiotapes that proved Rose wasn’t there until two years after they were asked, the motion stated.
“The Board and its counsel have maligned Mr. Rose and Davenport with a Complaint that they have known is not well-grounded in fact, causing inherent reputational damage and significant, unwarranted legal expense,” the motion stated.
The financial advice centered on how to best finance the county’s new $56 million high school which opened last year.
Response
Shaun Kenney, the chairman of the Fluvanna County Board of Supervisors, referred all questions to Fluvanna County Attorney Fred Payne. Payne said “We’ll be following up in due course. We’ll be filing a motion to set this for hearing as soon as possible.”
Responding to the request to dismiss, the Board’s attorney Douglas M. Palais of Richmond, stated in a Dec. 9 letter to Davenport’s lawyers that the audiotapes are made public after each meeting, so they weren’t withheld. Palais, however, admitted that the person heard giving the questionable financial advice to the Board at that 2008 meeting was that of then-County Administrator Cabell Lawton.
But that doesn’t matter because Lawton was restating advice given to the Board by Rose at an earlier meeting, Palais claimed.
“…your allegation that the Board or counsel knew of this error at the time that the Complaint was filed is simply wrong, and in any event, has no substantive significance,” stated the letter from Palais.
In the request for dismissal, Reid asked the court for a hearing to determine if the Board and its representatives deliberately withheld the key piece of evidence of Rose’s nonattendance at the Nov. 24, 2008 meeting it said is at the crux of the case.
It also asks the court to make the Board pay for Davenport’s legal fees.
“When an attorney becomes aware that he sued a party in error, it acts as a functional fraud upon the court for the attorney not to dismiss the claim or otherwise rectify the situation,” Davenport’s lawyers stated in the request for dismissal. “The Board and its counsel never told Davenport until Dec. 9 after being confronted… never told the court all the while filing opposition to and arguing against Davenport…didn’t tell the Supreme Court while at the same time filing and arguing an appeal of the trial court’s dismissal….(and) tried to mediate and exact a monetary settlement .”
Then Rivanna Supervisor Gene Ott and Cunningham Supervisor Don Weaver called the Nov. 24, 2008 meeting to get a second opinion on bond purchases to fund the new high school.
“It is apparently for that reason that Davenport was excluded from participation in the meeting,” the request for dismissal stated.
In his Dec. 9 letter, Palais questioned the assertion the Board withheld evidence (meeting audiotapes).
“The allegation that meeting recordings ‘have only recently been provided to Davenport’ is a bald-faced misrepresentation,” the letter stated. “These recordings are public records and were made available to Davenport more than two years ago. Your firm waited until ‘recently’ to review them.”
Palais also stated the lawsuit doesn’t “center upon” a single alleged statement made by Rose.
“As you know, it centers on a long-standing pattern and practice of malfeasance by Davenport in general and Rose in particular.”
The Board recently refinanced bonds to save money. Palais said in the Dec. 9 letter, “we intend to amend the complaint …in light of the partial refinancing.”
Reid, Davenport’s lawyer, said in a Nov. 27 letter to Palais that Rose’s investment advice was sound and “is proving out to be the lowest reasonable cost option for Fluvanna County.”
Lawsuit
The lawsuit filed by the Board of Supervisors against Davenport & Co. LLC seeks $18 million in compensatory and punitive damages based on allegations of fraud, breach of fiduciary duty, breach of contract, gross negligence and breach of the Virginia Securities Act. The lawsuit also seeks reimbursement of all fees paid by the county to the defendant.
The suit is asking that Davenport, a 150-year-old investment firm headquartered in Richmond, be found responsible for misleading the Board regarding the best method to finance the new high school that opened in August 2012.
Davenport advised supervisors on bonds to fund construction of the new high school. The heart of the legal action is a claim that Davenport received excessive fees, caused Fluvanna County to be liable for nearly $18 million in excess interest payments and gave deceptive and self-serving advice.
On Feb. 23, Fluvanna Circuit Court Judge Benjamin N.A. Kendrick dismissed the lawsuit, saying it was not the circuit court’s job to determine liability in such cases.
On April 18, the Supreme Court of Virginia unanimously reinstated the multi-million dollar lawsuit.
Davenport has vigorously denied the allegation, saying in an email to the Fluvanna Review in June that Davenport “stands behind the advice given to Fluvanna County one hundred percent.”
