his parcel of land behind the roadsigns at the intersection of U.S. 50 and W.Va. 68 is at the center of lawsuit between J.C. and Eric Powell and Robert Keith Sheppard. The Powells, who are both attorneys, allege that Sheppard convinced them to invest $75,000 into a proposed retail development called Neal Run Crossing that has never materialzed. Sheppard’s attorney, Richard Hayhurst, has withdrawn from the case, and has sued him for failing to pay $5,700 in legal fees and expenses. (Photo by Lawrence Smith)
This parcel of land behind off the intersection of U.S. 50 and W.Va. 68 is at the center of lawsuit between J.C. and Eric Powell and Robert Keith Sheppard. The Powells, who are both attorneys, allege that Sheppard convinced them to invest $75,000 into a proposed retail development called Neal Run Crossing that, with the exception of this Western Sizzlin Steakhouse, has yet to materialze. Sheppard’s attorney, Richard Hayhurst, has withdrawn from the case, and has sued him for failing to pay $5,700 in legal fees and expenses.
PARKERSBURG – Records show prior to the one against Robert Keith Sheppard, J.C. and Eric Powell also filed suit against the two main players in a yet-to-be-developed South Parkersburg retail outlet alleging fraud.
Last year, the Powells named Larry George and Dr. Michael W. Johnson, a South Parkersburg chiropractor, as defendants in separate lawsuits relating to Neal Run Crossing, a proposed retail development off the intersection of Corridor D/U.S. 50 and W.Va. 68 in Wood County. Though each suit makes slightly different claims, both allege that George and Johnson defrauded the Powells by convincing them to invest into the project that, with the exception of a restaurant owned by Johnson, has yet to materialize.
The Powells, records show, first filed suit against George on June 18. The Powells named The Endurance Group, a limited liability company partially owned by George, as co-defendant.
Like in their suit against Sheppard, 70,the Powells allege that George,41, enticed them to invest into Neal Run by dropping the names of companies such as McDonald’s, Bass Pro Shops, Wal-Mart, Bob Evans, Rite Aid and Sheetz that expressed an interest in locating a store or franchise on the site. In fact, the Powells in George’s suit hint that Sheppard is the employee/agent hired “to fraudulently induce them to purchase an interest in Larry the Defendant’s and/or the Endurance Group scheme.”
Neal Run Crossing, the Powells allege, was nothing more than a ruse to help finance George’s lifestyle. Using The Endurance Group as a front, the Powells maintain that George took their money “to purchase a lavish house, a new motor vehicle, take a trip abroad and other improper acts that violated his fiduciary duties.” When they inquired to both George and Sheppard were about the status of the project, the Powells say they were told George “had found God and proclaimed that a significant portion of [their] money would be used for the church.”
In later filings, the church is identified as Fellowship Baptist in Vienna.
In their suit, the Powells allege that George “allowed a family member, who is also a common shareowner with the Plaintiffs, to sell valuable property of the Endurance Defendant at a below market value and then keep all of the assets and not make any distribution to the Plaintiffs.” Also, the Powells maintain the value of their interest in Neal Run was diminished when George allowed the same family member “to make false promises regarding the business property.”
The “family member” in George’s suit is later identified by cross-reference as Johnson in the suit the Powells filed against him on September 25. However, neither suit states how George and Johnson are related.
Facts concealed
In Johnson’s suit, the Powells allege he, with George’s approval, used Sheppard – with “a lucrative ‘finders fee’” as an incentive – to “misrepresent, mislead, fraudulently induce, misdirect, misguide, deceive, misinform and falsify” to them Neal Run Crossing. Though no date is stated in court records, the Powells maintain, George “has come forth and claimed …that he disagreed with the tactics to misrepresent, fraudulently induce, deceive and misdirect the Plaintiffs.”
The Powells maintain that, prior to the lawsuits, Johnson, 55, confided to them he “always possessed and maintained control of the Endurance Group LLC check book” since he “could not trust [George], the managerial partner.” This confession, the Powells allege, did not come until they “had fully paid their money.”
Also, the Powells allege that both personally and through Sheppard, Johnson made false representations as to both his financial condition, and the amount of money he personally invested into Neal Run Crossing. These false statements “were made to bolster the sales price” and “for the purpose of procuring the Plaintiff’s payment.”
Furthermore, the Powells allege Johnson committed fraud when on July 17, 2007 he conveyed a tract of land owned by Endurance to Western Sizzlin, LLC, a corporation Johnson formed the month before, and exclusively owns, according to the West Virginia Secretary of State. Named as a co-defendant, Western Sizzlin, LLC is the franchisee of the Roanoke, Va.-based Western Sizzlin Steak and More restaurant, and the only business in Neal Run Crossing.
As further evidence of the fraud Johnson committed on them, the Powells allege he did not record the new deed until over two months later on Sept. 25. Also, no check has been written to the Powells for the sale of the land where the Western Sizzlin is now located.
Counterclaims yield details
Records show, that in addition to answering the Powells’ lawsuits, George and Johnson filed respective counterclaims against them. Though George filed both an answer and counterclaim for both he and the Endurance Group, Johnson only filed his personally.
In the answer filed on July 23, with the assistance of Parkersburg attorney C. Blaine Myers, George and Endurance denied all the allegations against them except that George is a resident of Wood County and Endurance is limited liability company doing business in Wood County. Though none were immediately offered, George and Endurance reserved the right to “assert any and all affirmative defenses available to them.”
In their counterclaim, George and Endurance maintain that George and Johnson are the original members of Endurance with George having a 75 percent share, and Johnson 25 percent. Records do not state when the Endurance was created, and the Secretary of State’s Office has no record of its existence.
Nevertheless, George conveyed to Endurance 41.24 acres of land with a fair market value of almost $2.5 million. Again, with no dates specified, records show “A business plan was adopted by The Endurance Group LLC,” for “future development.”
In an agreement entered on March 1, 2007, J.C. Powell was to purchase one-third of George’s interest in Endurance for $1.5 million. However, a new agreement was entered on May 2, 2007 whereby Powell was given a 12.5 percent interest in Endurance for the $750,000 he paid following the previous agreement.
Though their claim is not specific, George and Endurance allege that plans for development of Neal Run Crossing, including possible annexation by the city of Parkersburg, were “emasculated” by the “actions and conduct, including threats of litigation” by J.C. Because of this, developers withdrew their participation preventing not only Endurance from “effectively managing, developing, leasing or selling real estate”, but also caused George “irreparable financial harm.”
Both George and Endurance called the Powells’ allegations against them “scurrilous and unfounded.” Also, their complaint “constitutes a willful and malicious misuse and misapplication of process against the named Defendants, for the purpose of causing them financial harm.”
In his answer filed Oct. 29 with the assistance of Parkersburg attorney George J. Cosenza, Johnson admitted only to the fact that he lives in Wood County, and that Western Sizzlin, LLC is a Wood County business with $3 million in annual sales. He asserted a defense saying that the Powells failed to state a claim on which relief could be granted, and that they waived any right to recovery.
In his counterclaim, Johnson alleges that J.C. “breached his fiduciary duty to the Defendant…, and other members of The Endurance Group, LLC, by failing to meet his obligations to provide payment for his membership in said company.” Though Johnson’s counterclaim makes reference to the March 1, 2007 agreement where Powell was to pay $1.5 million for one-third stake in the company, it makes no reference to the revised agreement where he paid $750,000 for only a 12.5 interest.
Apparently, Powell’s investment was to help retire a $881,839 loan Endurance secured from Huntington National Bank to purchase the 41 acres for Neal Run Crossing. Nevertheless, Johnson alleges that as both as a result of Powell’s breach of fiduciary duty, and the fallout from the lawsuit he and Eric filed against George and Endurance “prevented development of the real estate owned by The Endurance Group, LLC” which diminished the value of the shares” Johnson owned.
Lastly, Johnson maintains that J.C. committed a further breach of duty by improperly transferring his shares in Endurance to Eric. Because this was done “in violation of the operating agreement of the company,” Johnson demands that all of Eric’s shares be forfeited.
Both counterclaims seek unspecified damages, court costs and attorneys fees.
A trial date of Feb. 3 was initially scheduled in the George suit. However, on Jan. 14, it was postponed due to “the parties working diligently toward a settlement agreement.”
The agreement apparently fell-through as records show Judge Robert A. Waters on Feb. 9 entered a new scheduling order. In the order, Waters set Aug. 14 as another date to mediate a possible settlement, Aug. 21 for completion of discovery, Sept. 11 for a pre-trial conference, and Sept. 22 to begin trial.
As of presstime, no scheduling order had been set in the Johnson suit.
Wood Circuit Court, Case Nos. 08-C-382 (George and Endurance Group) & 08-C-586 (Johnson and Western Sizzlin)