A $21 million lawsuit filed by York County, S.C., against companies owned by Carolina Panthers owner David Tepper could be moved to Delaware after a judge ruled the suit is related to an ongoing bankruptcy case in that state, documents show.
The order seems to be a legal victory for Tepper’s companies, which claim the York County lawsuit is part of the bankruptcy and are seeking to keep all claims about the failed project in Delaware.
The legal wrangling has come as a result of the failed effort to move the team’s headquarters and practice facility to Rock Hill. The deal fell apart amid a dispute over money.
The order issued late Wednesday by South Carolina federal judge Cameron Currie denies York County’s attempt to have York County jurors hear the case in South Carolina civil court.
Currie said in the order she is inclined to move the York County lawsuit, which is currently in South Carolina federal court, to Delaware federal court. That’s where the bankruptcy case of GT Real Estate is pending. Currie offered one caveat: a Delaware judge can accept a change of venue request from creditors to move the bankruptcy case to South Carolina.
GT Real Estate was formed by Tepper to oversee the Rock Hill project. GT Real Estate filed for bankruptcy June 1 in Delaware after construction had been halted. GT Real Estate was incorporated in Delaware.
“Having determined the court has ‘related to”’ jurisdiction..., the court is inclined to grant the Tepper Defendants’ motion to transfer this case to the Delaware District Court for reference to the Delaware Bankruptcy Court,” Currie wrote. “Transferring this matter to be included with the entirety of GTRE’s bankruptcy action would promote judicial efficiency.”
It would then be up to a bankruptcy judge to decide if the York County lawsuit moves forward or should be resolved as part of the bankruptcy, Currie wrote.
York County lawyers call Tepper legal moves “a sham”
Tepper lawyers have filed a countersuit against York County in federal court, asking for dismissal of the York County suit, and have asked a Delaware judge for an injunction to stop the York County suit.
In court documents earlier this week, York County’s lawyers argued that the cases are not related.
All Tepper companies’ legal attempts to keep the York County lawsuit out of South Carolina state court -- where York County jurors would hear the claims of conspiracy -- were “a sham,” York County’s lawyers have said in court documents
“This is a clear attempt by the Tepper Defendants to manufacture claims against Debtor for themselves and attempt to award themselves unjust and undue protection for the liability they know they have,” York County’s lawyers wrote on Monday in court filings.
York County’s lawyers and officials have not yet responded in court documents to Currie’s judicial order.
But in an emailed statement to McClatchy Thursday afternoon, York County’s legal team in the lawsuit said Tepper companies continue to try and duck any legal action in York County.
The lawsuit remains pending even with the ruling on where the case will be heard. The county’s legal claim that it was harmed by Tepper companies in a conspiracy where $21 million was allegedly misused remains active, the statement said.
“The Court’s jurisdictional ruling yesterday has no bearing on the merits of the County’s claims against the Tepper Defendants and the City of Rock Hill -- it simply determined that the County’s claims against the Tepper Defendants may be litigated in federal court due to the Tepper Defendants’ insider bankruptcy claim,” the statement from lead lawyer John T. Lay said. “It is also important to note the Court did agree with the County that its claims against the Tepper Defendants are not a “core” matter relative to the GTRE’s Bankruptcy case pending in Delaware.
“Therefore, York County is still entitled to pursue its claims against the Tepper Defendants separately from the GTRE Bankruptcy.”
In the statement from Lay, York County’s lawyers said the Tepper defendants continue to try and avoid legal scrutiny in York County where the allegations happened, and stated it will continue to seek justice for the people of York County.
“While York County would have preferred to litigate its claims against the Tepper Defendants in South Carolina state court, it is clear that the Tepper Defendants will stop at nothing to try to duck the scrutiny of the York County citizens they have harmed,” the statement said. “The County remains ready, able, and willing to pursue all of its strong claims against the Tepper Defendants wherever the Court directs to ensure York County’s citizens receive all monies they are entitled to.”
York County filed its lawsuit on June 8 against three other Tepper companies and the city of Rock Hill. The lawsuit alleges that Tepper’s companies -- Appaloosa Management, Tepper Sports Holding and DT Sports Holding -- misused $21 million of county money that was supposed to be spent on road improvements. The county’s lawsuit also claims the city of Rock Hill breached a contract to issue more than $100 million in bonds for the project.
York County wants its $21 million back.
York County also wants punitive damages against the three Tepper companies, which include Tepper’s massive hedge fund company and his Panthers companies.
The York County lawsuit does not name GT Real Estate as a defendant, and York County claims the actions are unrelated.
Currie wrote in Wednesday’s order: “In March 2022, the funding arrangements collapsed.”
But Currie’s ruling Wednesday states that even with that collapse, the York County lawsuit is “related” to the bankruptcy of GT Real Estate.
The York County lawsuit against the other Tepper companies was first filed in South Carolina state court, then transferred by lawyers representing Tepper companies to South Carolina federal court.
Rock Hill also has denied all claims by Tepper companies and York County that it was required to issue bonds.
Bankruptcy on hold for Delaware judge
On Aug. 11, GT Real Estate filed a new $82 million plan in the bankruptcy case that would pay York County over $21 million if the Delaware bankruptcy judge approves the plan in at a September hearing.
York County has not yet responded, in statements or legal filings, to the proposed bankruptcy plan.
Neither have the city of Rock Hill, or other contractors and creditors, who as a whole claim to be owed more than $100 million.
Construction stopped at the site in March. The site remains idle.
What happens now?
The change of venue motion filed by creditors that would move the bankruptcy from Delaware to South Carolina remains pending.
York County is one of more than a dozen creditors, including Rock Hill and contractors, that want the bankruptcy case heard in South Carolina.
The Tepper companies want everything to stay in Delaware, court documents show.
Hearings are expected in September in Delaware court on both the change of venue, and the overall bankruptcy proposal tendered by Tepper companies on Aug. 11.