The city has settled a civil lawsuit filed in Essex Superior Court against Middleton appraiser Greg Story for $15,000.
The suit sought damages in connection with an appraisal Story conducted in a 2016 eminent domain seizure of the historic O’Shea Mansion at 2 Washington St. The city sought damages in the amount of $7,587 for services paid by the city to Story and an additional $725,000 in damages, according to the complaint filed by City Solicitor Donald L. Conn. The complaint alleged that Story was negligent and breached the terms of a contract he entered into with the city to conduct the appraisal. The city also sought treble damages, costs and attorneys’ fees under state law, claiming that Story’s actions constituted illegal unfair and deceptive acts and practices.
“I was concerned about the expected cost of hiring experts and deposition/court fees and weighing the risk against our chances of success, I felt that a settlement was appropriate,” said Peabody Mayor Edward A. Bettencourt, Jr. “This closes the book on all remaining litigation regarding 2 Washington St.”
The property was owned by Empire Design and Development, LLC, which purchased the historic home from the city in 2015 for $350,000. Empire owner Michael Corsetti of Gloucester planned to demolish the then-123-year-old landmark and replace it with apartments and shops.
According to the complaint, the city took the land by eminent domain in 2016 to prevent its demolition, paying Empire $425,000 in compensation for the seizure.
The city and Story entered into a contract in 2016 in which Story agreed to appraise the property and testify as an expert witness on behalf of the city in the event litigation ensued, the filing said.
Empire sued the city in Superior Court, claiming the compensation was too low as the appraised value of the property was closer to $1 million. The lawsuit sought $1.8 million in damages.
The complaint states that on July 31, 2018, Story was deposed in the lawsuit. The deposition revealed that Story had been placed on probation for a six-month period by the Board of Registration of Real Estate Appraisers and was fined $2,000. The city claimed it learned Story had entered into a consent agreement with the board in April 2018 and that he had been placed on probation and fined.
“At no time prior to his deposition had the defendant disclosed the existence of the consent agreement to the plaintiff (the city),” the complaint said.
Following Story’s deposition, the appraiser’s attorney informed the city that he would not give expert testimony in the Superior Court case filed by Empire, according to the complaint. The filing continues that “after the defendant’s refusal to testify, and without an expert witness after the deadline for expert disclosure, the plaintiff settled the litigation.”
That settlement, along with a settlement in a U.S. District Court case filed against the city by Empire alleging violation of civil rights, resulted in the city having to pay a total of $825,000 in November 2018.
The complaint claims that Story’s “failure to disclose that he had been placed on probation and his failure to testify constituted a breach of contract, and that as a direct and proximate result of of the defendant’s (Story’s) breach of contract, the plaintiff paid to sett(le) the litigation and paid the defendant for services that had no value and has otherwise been injured or damaged.”
The property is being renovated by Melrose developer Ed Greeley. Greeley purchased the property from the city and is building the Bell Inn and Tavern, a one-of-a-kind inn and restaurant that is scheduled to open later this year.
“Protecting and preserving this Gateway property (and tree!) cost some money but the other option would have been extremely detrimental to the city and the downtown,” said Bettencourt. “And now we will have the Bell Inn and Tavern, a significant tax revenue generator and people generator at this important location. I’m proud of the action we took.”
