Biz Partner Cries Foul Over Christian Laettner Note

(CN) - Duke basketball greats Christian Laettner and Brian Davis may have been winners on the court, but their real estate company is a house of cards built on self-dealing and empty promises, a former business partner claims in court.

In a complaint filed in Durham County Superior Court, plaintiff Niemann Capital says it became involved with Laettner when it became a partner in an entity he controlled called BDV III.

BDV III, a limited liable company, was formed in 2003 to purchase and remodel former tobacco warehouses in Durham, N.C. and develop them into a commercial center to be named West Center.

Since at least 2010, there has been little or no work completed on the project, Niemann Capital says in its Jan. 11 complaint.

As a result, the only assets the partnership has are a "surplus cash promissory note" from an affiliate entity valued at $6.5 million, and an $11.8 million promissory note from another affiliate entity, the complaint says.

The plaintiffs claim that without their knowledge, Davis executed a $9 million promissory note on behalf of BBDV III from an entity controlled by Laettner. That note is referred to in the complaint as "The Laettner Note."

The plaintiffs say neither they or any other members of the partnership authorized the promissory note, and they contend there is no record BDV III ever received it.

Despite the irregularities, which the plaintiffs contend void the note, Laettner filed a suit against BDV III in June 2013, seeking repayment, "In violation of his fiduciary duties as manager of the business partnership."

Less than a month later, Julie Britton, another member of the partnership and manager of the BDV III, filed a separate lawsuit claiming the total $1.5 million she contributed to the LLC were in fact a series of loans she expected to be repaid.

The plaintiffs claim the BDV III's accounting records "are inconsistent" with these claims.

But Laettner and Britton, acting under the guise of their roles in the enterprise, filed answers to their own lawsuits "admitting the validity" of the debts, the plaintiffs say.

On July 23, 2013, BDV III entered into consent judgments in favor of Britton and Laettner.

"The practical effect of these two consent judgments is to wipe out any chance of repayment of the capital accounts of BDV III, the other judgment creditor, Wells Fargo, or any other accounts payables advances made by other individuals to BDV III, and to insure that managers Britton and Laettner are personally paid more than they were actually owed by BDV III from BDV III's funds," the complaint says.

"The Britton and Laettner Judgments were entered into as a result of collusion of interested managers and Davis, who has extensive personal ties with Laettner since they played together on Duke University's varsity basketball team and thereafter," it adds.

The plaintiffs contend the Britton and Laettner judgments do not reflect an actual debt owed by BDV III.

"The Britton and Laettner Judgments were not open, fair and honest in their procurement or substance, and are the result of self-dealing by the controlling managers of BDV III working in concert to enrich themselves at the expense of BDV III, plaintiffs Gary Heiz and Niemann Capital, Wells Fargo, and other creditors of BDV III," the complaint says.

Heiz and Niemann Capital want the earlier judgments set aside, and are also seeking injunctive relief, payment to BDV III's legitimate judgment creditor, Wells Fargo, repayment of all members' capital contributions, and punitive damages on claims of breach of contract, breach of fiduciary duty, constructive fraud, abuse of process, unfair and deceptive practices, and civil conspiracy.

The plaintiffs are represented by Thomas Stark of Chapel Hill, N.C.

A representative of Laettner did not respond to an emailed request for comment from Courthouse News.

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