Court reverses $6.7M ruling against Brookhaven over failed project

Appeals court found local jury erred by ordering the city, its mayor and city manager to pay hefty fines over a development deal gone wrong
Brookhaven City Hall

Credit: City of Brookhaven

Credit: City of Brookhaven

Brookhaven City Hall

A Georgia appeals court panel reversed a jury ruling against Brookhaven and its top officials, which ordered them to pay $6.7 million over a failed mixed-use project.

The appellate judges ruled a DeKalb County jury was wrong to find that a scorned developer and two homeowners were owed millions by the city, its mayor and city manager after accusing them of intentionally derailing a project and ignoring multiple conflicts of interest. The ruling was made in late December, and a motion to reconsider was denied last month. The case now returns to DeKalb Superior Court where it could be retried.

The original March 2022 jury verdict ordered Mayor John Ernst and City Manager Christian Sigman to each pay $200,000 in punitive damages, a potentially unprecedented figure for city officials entangled in a real estate dispute. Ernst said in a statement Friday that the reversal “paves the way for total vindication in this matter.”

Sigman added, “I hope this ruling by the higher court dispels some of the rumors and innuendo in the community that we were doing anything other than what we are supposed to be doing, which is protecting the interests and assets of the taxpayers.”

The developer, Atlanta-based The Ardent Companies, and residents Jon and Courtney Wheeler sued Brookhaven and each of its top leaders individually in 2017 over a project with 226 townhomes that never got off the ground. The attorneys representing Ardent and the Wheelers did not immediately respond to the AJC’s request for comment.

Ardent struck a deal with more than 20 homeowners, including the Wheelers, to purchase about 17 acres along Buford Highway. The sale hinged on Ardent rezoning the properties and buying Bramblewood Drive, a dead-end neighborhood road.

Ardent accused Brookhaven and its leaders of obstructing the rezoning effort and refusing to sell the street for less than $3 million despite never having the road’s value appraised. Ardent said their own appraisal valued the 0.2-mile stretch of pavement at $250,000, less than 10% of Brookhaven’s asking price.

Ardent also alleged city leaders tried to force the company into selling roughly three acres to the city, which was considering using the property for a public safety center. In addition, the city was in discussions with the DeKalb County School Board about relocating Cross Keys High School to the same property.

In return for the city granting a hefty $30 million tax break for the developer, the lawsuit said Brookhaven tried to require Ardent to pay the city a portion of its profits if the property was sold within four years. Ardent called the request a pay-to-play kickback.

The city argued at the time the deal fell through due to disagreements over incorporating affordable housing into the development, denying the zoning request in September 2018.

Brookhaven appealed the verdict to the Court of Appeals in April, and the three-judge panel issued its ruling Dec. 28.

“Ultimately, Ardent and the city could not come to an agreement because the city wanted Ardent to use a lower income number to qualify for affordable housing and the city insisted upon a ‘clawback’ provision which would force Ardent to split the profits with the city for a period of time,” the ruling said.

The appeals court judges ruled that the jury erred by determining that the city waived its sovereign immunity during negotiations with Ardent. The panel also said the jury incorrectly relied on prior real estate negotiations involving Ernst and Sigman to determine whether they acted in bad faith.

A request by the attorneys for Ardent and the Wheelers for the appellate court to reconsider its decision was denied. The panel remanded the case back to the trial court, which will have the option to retry the case.