DAVENPORT, Iowa – A state court ruled last week that IH Mississippi Valley CU is not liable for damages for a failed condominium project for which it had made a multi-million dollar member business loan.
The ruling clears the way for the credit union to foreclose on the troubled project in northeastern Davenport, known as Cypress Point.
The developers claimed the credit union tried to break its agreement on the $3.5 million loan and claimed breach of contract, interference with third-party contracts, negligent misrepresentation, fraudulent misrepresentation, breach of fiduciary duties and slander.
The developer claimed the credit union wanted out to terminate the loan because it had locked in at an interest rate lower than what it could get lending money to others and because it had exceeded its regulatory lending limits.
Attorneys for the credit union argued that the developers knew the provisions of the loan called for six-month extensions and that when the credit union decided not to extend the loan and filed for foreclosure, the developers began placing blame and pointing fingers at the credit union.
Plans for a $17 million gated developed were announced in 2003. The plan called for 168 townhouses in 14 buildings. There is now one building on the property, with four of the 12 units sold.
