MOBILE, Alabama — Regions Bank must pay some $6.8 million to the developers of SaltAire subdivision on Mobile Bay’s western shoreline after two rulings by an arbitration panel this week.
Mobile Bay Investments, whose managing partner is Logan Gewin, sued Regions in March 2010, claiming the bank reneged on an $18.2 million loan, effectively derailing the 500-acre project in October 2008.
Arbiters awarded the bank $8.23 million in connection with a loan taken by Mobile Bay Investments to start the project.
The three-judge panel also awarded $15 million to Mobile Bay Investments in connection with its 2010 lawsuit, records show.
Arbitration attorney fees of more than $69,871 and the arbitration firm’s $28,800 fee were assessed against the bank.
Ultimately, the developers received $6.83 million, including some repayment of fees, according to local attorney Richard Taylor of Taylor-Martino, who represented Gewin.
“The verdict clearly established that Regions Bank broke its written promise to loan SaltAire the money it needed to complete the final phase of the SaltAire project,” Taylor said. “We believe very strongly that if Regions Bank had honored its written commitment in 2008, SaltAire would be a viable and successful real estate development today.
“Perhaps the verdict will let Regions Bank, and other banks, know that there is accountability.”
Regions declined to comment, according to Evelyn Mitchell of the bank’s corporate office in Birmingham.
The week-long arbitration was heard by an American Arbitration Association panel consisting of attorneys from New Jersey, Louisiana and Texas.
The bank has 30 days to appeal the award, but the grounds for such appeals are very limited under federal law, according to Taylor.
Mobile Bay Investments’ attorneys cited a May 30, 2008, letter from Regions to Gewin that they contend confirms an $18.2 million loan. The bank wrote that it would provide $14 million and arrange for another participant to hold the remaining $4.2 million, court records show. Gewin and his business partners relied on Regions’ promises and written agreements to finance the project, according to Taylor.
The verdict “will allow everybody to be made whole in some acceptable form or fashion,” Gewin said. “I’m now going to be able to work my way out of this. My mission is not over. I’ve still got work to do.”
Millions in liens were filed against the project by contractors, road builders, landscapers and other vendors after the project lost its funding four years ago.
Between $12 million and $15 million has been invested in SaltAire, which was to be a community like Seaside in the Florida Panhandle, with up to 1,250 homes surrounded by a fitness center, two stocked lakes, parks, shops, restaurants and other amenities.
Today, about a dozen upscale homes have been sold and are occupied in the subdivision that has 2,000 front feet on Mobile Bay.
Bay Mortgage Investors, which had an estimated $9 million first mortgage on the property, foreclosed on 250 acres on the north side of SaltAire in January 2010. Gewin retained the 250 acres to the south with plans to turn it into a nonprofit nature preserve.
Bay Mortgage Investors and Burton Investment Group, which have about $10 million in the project, have filed a lawsuit against Regions. That case is expected to go to trial in October.