(WSB photo of ‘The Hole,’ 2 weeks ago)
When last we were in court on February 24 covering the legal maneuvering over “The Hole,” once King County Superior Court Judge Susan Craighead rendered her order putting the foreclosure sale on hold, there was a “last day of school” sense – as if the key players didn’t expect to see each other again for a while. The next trial in the two-part case, after all, isn’t scheduled to start for three months. Then – the case took another turn. Now a new hearing is set … on April Fool’s Day … for the motion that could do no less than preclude that future trial.

It’s a “motion for summary judgment,” filed by construction company Ledcor at the end of the business day last Friday, asking the judge to declare that the “deed of trust” for the property once supposedly transferred from Fauntleroy Place (the long-stalled project’s name and ownership entity) by Seattle Capital (its one-time financiers) is “invalid.” As colorfully contended by the lawyers:

First, the approximately $19.0 million loan by Seattle Capital Corporation to Fauntleroy Place … was a sham. There was never a “loan.” The Deed of Trust was created as a ploy by SCC to convert previously unsecured debt into credit and to fool a prospective investor [United Dominion Realty] and Ledcor. Contemporaneous with the recording of a Deed of Trust, SCC represented to Ledcor that approximately $4.5 million of the “loan” had been “allocated” to pay Ledcor’s contract amount. The money never was allocated, which makes perfect sense given that there never was any loan. Meanwhile, SCC otherwise used the Deed of Trust in order to maintain appearances with prospective purchaser UDR – who SCC believe only would reimburse SCC for loans. In June of 2008, SCC worked to rewrite history in hopes of plugging holes in an already sinking ship.

Previous testimony and documentation has revealed that when the UDR deal didn’t go through, what was left of the whole thing collapsed. Meantime, you can read the entire motion here. In a footnote, Ledcor goes on to argue that since it believes the Deed of Trust was “born of fraud,” then its transfer later by SCC to 3922 SW Alaska (which had been seeking its own foreclosure so it could start developing the site) was fraudulent as well, and if the judge agrees, lawyers contend, that ultimately could preclude the need for the second trial, while also canceling the pending appeal of the decision in the first one.

Does all this get “The Hole” any closer to development (or filling, for that matter)? You might recall that on February 24th, the judge said her best hope for that was for the Court of Appeals to speed up its consideration of the challenge to her original ruling from last November. If that decision is affirmed, then that clears the path for a foreclosure sale of the property once slated for Whole Foods, Hancock Fabrics, and apartments. (The site originally held Hancock and Schuck’s Auto Parts.) But we just checked the COA’s online docket for the case, and it reveals no new action – yet. (P.S. If you missed our November story on who’s accountable for the safety of “The Hole” while all this rages on – see it here.)