Club owners sued over lien Stadium authority charges Hammerjacks did not disclose debts

June 19, 1998|By Eric Siegel | Eric Siegel,SUN STAFF

When a wrecking ball crashed into Hammerjacks last spring, it seemed as if the Maryland Stadium Authority's protracted dealings to acquire the mammoth South Baltimore nightclub to use as a parking lot was over.

Not quite.

On Tuesday, the stadium authority filed suit against Hammerjacks, charging that the club had improperly failed to disclose that there was a lien for unpaid city property taxes on two of the three parcels the authority bought.

Last month, the stadium authority paid off the debt -- about $40,000, including interest -- which had been purchased at a city auction by a group of investors, according to records and interviews.

The authority is seeking reimbursement from Hammerjacks for its expenditure.

Frank Burch, an attorney for the stadium authority, said yesterday that the state agency, which operates Camden Yards and is building the new football stadium for the Baltimore Ravens, was "surprised" to find that there were unpaid taxes on the property.

He said that the authority had hired a title company to search the property but that its report did not identify the unpaid tax bills.

Efforts to reach representatives of Hammerjacks Ltd. II, the corporate entity that sold the club to the stadium authority, were unsuccessful.

The stadium authority had been dickering for nearly a decade to buy the South Howard Street club.

In April last year, the authority finally reached an agreement to buy the three parcels that made up the club's complex for $3.1 million.

As part of the agreement, Hammerjacks was to convey "unencumbered" title to the stadium authority, according to the suit. Hammerjacks worked with Commonwealth Land Title Insurance Co. to identify any liens against the property, the suit said, but never identified a lien by the city for unpaid property taxes of $26,154 on two of the parcels.

Phone calls to Commonwealth's legal counsel yesterday were not returned.

Last May, at the city's annual tax auction, the lien was sold to Tax Sale Investors, which paid $33,160 -- the amount of the taxes, plus fees and interest to that point -- for the right to collect 24 percent a year interest on the debt.

The stadium authority did not learn of the lien until two months ago, according to the suit, when Tax Sale Investors contacted the authority and said it would foreclose unless the authority redeemed the company's interest. The authority paid the company last month.

An attorney for Tax Sale Investors said the company purchased the lien knowing it would be redeemed but said he was mystified the authority didn't know about it.

"It doesn't make sense," said Harry L. Chase. "When you do a title search, you pick all that up."

Pub Date: 6/19/98

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