COLLEGE PLACE — A $2 million lawsuit by the city of College Place against a local auto dealer has been dismissed.
The order for dismissal was filed Thursday. It stipulates the lawsuit will be dismissed “without prejudice” meaning it can be re-filed. The dismissal order does not include an award of costs to either party.
The city had filed the suit on Jan. 29 in Walla Walla County Superior Court against Mark and Susan W. Gilbert, GA Group Properties and Gilbert Imports. Mark Gilbert is the owner of Gilbert Auto Honda and other auto dealerships.
In a joint press release this morning, Pat Reay, College Place city administrator, and Mark Gilbert confirmed the city and GA Group Properties had agreed to the dismissal, but offered no details. “Both parties are looking forward to a continued relationship in the future and the future expansion of the auto mall project in College Place,” he said.
The city’s suit alleged the defendants had failed to make payments promised to the city for construction of Commercial Drive. The road was built in late 2008 to serve Mark Gilbert’s dealership and a bank located on commercially zoned property alongside State Route 125. The dealership opened in the summer of 2011.
In order to finance construction Commercial Drive, the city entered into a development agreement with GA Group and other landowners in the vicinity. The GA Group agreed to dedicate a portion of its property for the road right of way and pay the city $150,000 after the city approved the agreement.
As part of the agreement, the GA Group also agreed to pay the city $135,000 per year over the ensuing 15 years, minus the amount of sales tax revenues the city received from the business.
According to the lawsuit, the GA Group failed to make the initial payment of $150,000 and then failed to follow up with payments of $135,000 due in 2009 and 2010.
In September 2010, the city and GA Group agreed to modify the development agreement to allow Gilbert to obtain new financing. Under the modified agreement, Gilbert paid the city $171,512.07 and agreed to start making annual payments of $135,000 starting Feb. 15, 2012.
The lawsuit charged that the GA Group again failed to make the first $135,000 payment due in 2012. The city then served the company with a notice of default on April 30, 2012.
The city also claimed in its lawsuit that it discovered the lot the dealership was located on was not a business of GA Group, but was owned by Gilbert Imports. That city claimed this violated the terms of the agreement between it and the company.
The suit also stated that the city later discovered properties owned by Gilbert on Commercial Drive used to secure the development agreement were not “free of liens, defects or encumbrances’ because they had been pledged as collateral in 2006 to help secure a $1 million obligation to Sallee Chevrolet, an Oregon corporation.
In its lawsuit, the city had sought damages totaling $2,025,000 plus interest starting from March 23, 2012 and going forward, less the amount of tax revenues paid to the city from sales generated by Gilbert Auto Honda.