Roanoke Rapids City Attorney Geoffrey Davis told the council Tuesday night he didn’t see how the city could consider a deposit check with no other information in it a valid upset bid on the theater.
Earlier in the day City Manager Kelly Traynham and City Clerk Traci Storey oversaw the opening of what was believed to be an upset bid only to discover it contained a check from Victor Freeman of The Victor Enterprises for $117,500 but no other accompanying information including an upset bid amount. “I don’t see how the city can consider that a valid bid,” Davis told the council. “To do anything else would require someone at the city to look into that and interpret that and I don’t think we’ve got that authority.”
Davis said he did not believe what was opened Tuesday meets the qualifications of a legitimate upset bid. “So at this point with the upset bid process passing and no new bids coming in, then I think we’re essentially done with upset bids.”
That means the last bid that came in — one for $2 million submitted by the Roanoke Rapids law firm of Wellman & White on behalf of their clients, which includes Weldon Mills Distillery — becomes the final bid.
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The next step in the process is to prepare a resolution in which the council must decide whether to accept or reject within 30 days of Tuesday’s date. “Essentially at this point city personnel would prepare the resolution with terms in it that would come to council for a final approval regarding the bid tendered by Mr. White and his folks and it’s for the council to accept or reject. If the council rejects that, that resets us to zero,” Davis said.
If the council accepts the resolution then the city would proceed to negotiate a contract of sale with Wellman & White and their clients that would ultimately lead to the final sale amount.
“I’m sure that Mr. Freeman is probably not happy with that but as I said I don’t see how we can take any other alternative interpretation,” Davis said. “This is a large piece of property and a lot of money moving around. This is not a simple transaction. I think that puts some due diligence incumbent upon bidders to make sure they meet statutory requirements and submit a legitimate bid.”
The alternative, Davis said, should the city consider what was opened Tuesday as a legitimate bid, “I think we’re begging for a lawsuit from the last highest bidder. I don’t think they would have any other choice.”
Davis plans to get with the city manager to prepare a draft resolution for the council to consider.
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Responding to a question from Councilman Carl Ferebee on whether the check matched what would be the correct percentage of a qualified upset bid, Davis said, “I think if you did the reverse math and came up with what that bid would be I think it would meet that qualification.”
In response to further questions from Ferebee, Traynham said the previous bids came with some sort of correspondence which stated the bid amount and offer. “As far as the other submittals we’ve had, they’ve had the purchase price stated with the check amount that corresponds to the 5 percent (deposit).”
Davis said the bids are sealed and staff doesn’t open them beforehand. “That’s both to protect city employees and to protect the sanctity of the bidding process. I think there’s an onus on bidders to do it in such a way that they perfect their bid.”
He said, “It’s not really for city personnel to hold their hands or give them legal advice. That’s something in these kinds of transactions they really need to go out and seek themselves. I’m not saying that reflecting on any one person in this whole process, I’m just saying we’re kind of operating at a higher level here in a commercial transaction than what you maybe would over something like a parking fine or something like that.”
Davis reiterated, “To me, from a legal standpoint, the only interpretation we can take is that this is not a qualifying upset bid that has come in during the period so at this point the cycle of upset bids ends.
“If council accepts the highest bid now and passes that resolution, what that resolution is going to authorize is the negotiation of a contract and that contract is going to spell out all the little pieces — just like you’d have in a traditional real estate contract that people are more familiar with — all that little 8 point type font describing the liabilities of the buyer and the seller and those different kind of aspects.”
Thus far Davis hasn’t heard anything from Freeman’s attorney and he confirmed that the deposit check would be returned. “There is a very hard limit on anything that we would characterize as legal advice that we could give to anybody without it being unauthorized practice of law. It’s really not up to us to give advice on too many aspects of this process other than this is the date, this is the time, you need to have it in by this time period.”
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Councilwoman Sandra Bryant asked, “So we are not to assume because this check came in, how do you all know that it’s a bid?”
Storey responded to Bryant’s question and said two ladies came to city hall on July 10 and she met them in the lobby. They had an envelope and asked her whether they needed to include terms and conditions. She told them no. Storey went back upstairs to prepare a letter confirming receipt of the envelope which one of the ladies held until her return. “They held the bid the entire time and then we signed off on it. I gave them a copy, I kept a copy and I took it upstairs and put it in the safe.”
Storey said the envelope did not come out of the safe until around 3:50 p.m. Tuesday. “I didn’t know what was in it and actually it was in two envelopes when we opened it today.”
Traynham said on the exterior of the envelope it was written that an upset bid was enclosed but not a bid amount.
Asked Bryant: “So they asked if they had to have terms and conditions and you said no?”
Replied Storey: “We talked at the last meeting and it didn’t have to include terms and conditions. They were handing me the bid. They said this was the upset bid, written on the outside was ‘upset bid.’ It was already sealed like it should have been.”
Bryant then asked, “So when we said ‘no it didn’t need the terms’ are we saying a letter was not needed?”
Said Davis: “I think there needs to be something saying who the bidder is and what the bid amount is.”
Traynham replied: “The first time they brought one to me they actually wanted me to sign a form that they had already prepared and I said I don’t want to look at it because if it has an amount on there I don’t want to know what it is (to) keep it confidential.”
Traynham placed the contents in a big envelope and typed a letter acknowledging receipt. “As far as terms and conditions, we’ve been talking about those back and forth each meeting. The upset bid process is to drive up the sales price. Terms and conditions and whether someone is seeking something else, that’s not part of the process. We’ve been pretty clear about that purchase price and the corresponding bid deposit are by statute what is required for the upset bid process.”
Bryant said, “We were talking about a lawsuit on the other side, we may be looking at one on this is my assumption because they did include a check with an amount more than 5 percent over the preceding amount and it had ‘upset bid’ written on it so I don’t know how we cannot consider that.”
Ferebee also said he believed, even without a document stating an amount, it was an upset bid.
“I think you’re kind of making the arguments the other side would make,” Davis said. “Maybe that’s where this ends up one way or the other.”
Storey said she only knew that the contents of the envelope felt big like there were papers in it. And since this has been a sealed process, she said, “How would I know it didn’t have an amount of a bid written on it or in it?”
