Rarity Pointe amenities in question at trial

By Josh Flory knoxnews.com

Would a swimming pool, clubhouse and tennis facility have saved Rarity Pointe?

That was one of the questions at issue during the second day of a civil trial involving former business partners Robert Stooksbury and Mike Ross, who had partnered on the Rarity Pointe waterfront development in Lenoir City.

In 2009, Stooksbury filed a lawsuit accusing Ross and others of engaging in racketeering activity, alleging among other things that Ross and other defendants diverted large portions of the capital from Rarity Pointe and other projects for their personal use, a charge Ross has denied.

During Wednesday's testimony, an expert witness called by Stooksbury real estate consultant Cord Middleton testified that if various amenities had been built as advertised, an additional $18 million worth of lots could have been sold at Rarity Pointe. Stooksbury's suit alleged funds that should have been used for amenities at Rarity projects instead were used for the personal benefit of Ross and other defendants, or to fund other developments, a charge Ross has denied.

During cross-examination, though, attorney Christopher Oldham who represents defendants Rebecca Jordan and Patricia Ross, who is the representative of the Dale Ross estate asked Middleton about other real estate projects that have had financial struggles, including the Tennessee National development in Loudon County.

Oldham noted that Tennessee National's amenities include a clubhouse, a practice facility and a wellness center with a pool, but noted that lots in the project have been advertised at steep discounts. He went on to ask the consultant if he was certain that Rarity Point would have avoided bankruptcy if the amenities had been built.

Middleton answered by saying that in his opinion, Rarity Pointe would have been significantly different from the other projects cited by Oldham. "Rarity Pointe's not next to a mushroom farm, No. 1," he said, in an apparent reference to the Monterey Mushrooms facility located near Tennessee National.

Last month, U.S. District Judge Thomas Varlan issued a default judgment in the case, saying that despite two orders of the court, Ross and other defendants failed to produce unobjectionable final and complete responses to discovery requests. This week's trial is for the purpose of assessing damages.

Another expert called by Stooksbury was local accountant Jimmy Rodefer, who had compiled a report detailing a diversion of funds that allegedly should have gone to Tellico Landing LLC, the entity in which Stooksbury, Ross and attorney Ward Whelchel had been partners.

That summary alleged that nearly $14.8 million had been diverted from Tellico Landing, including money spent on a failed condo-lodge project. The lodge project was a major point of contention on Wednesday, with attorneys for the defendants trying to build a case that Stooksbury had failed to provide a needed guarantee for the lodge financing, despite an agreement that he would do so.

Stooksbury's attorneys countered by saying their client had not made such an agreement, and was under no obligation to provide such a guarantee.

The trial is expected to continue today.