WARSAW, Mo -- A business venture by a couple in Warsaw has now turned into a lawsuit against a local bank. At the base of the lawsuit--how much did the bank know about the property before selling it and did they hide potential problems?
Paul and Jennifer Curzon bought the Grand River Resort as a retirement plan. They wanted to fix the place up, live on location, and enjoy the rest of their lives there. Soon that plan fell horribly apart.
"Our dream," Paul Curzon exclaimed, "this was our dream. How could they do that?" That dream turned into a nightmare for Paul and Jennifer Curzon. "This thing has divided my whole family."
They bought the Grand River Resort in Warsaw out of foreclosure in 2009 from Hawthorn Bank. "We operated the resort for the first year with many issues," Paul said.
Those issues, he says, kept growing after mold was found in several cabins. According to the Benton County Health Department, the mold had been discovered before the Curzons purchased the resort.
"They really don't have a legal obligation to disclose anything--sales are caveat emptor. That means buyer beware." Foreclosure attorney Dave Wieland, says if Hawthorn Bank didn't know about the health department report it was up to the Curzons to investigate themselves.
"The bank said to me, why didn't you have the place inspected? Why would I have the place inspected when I'm buying it from a bank?" Paul said.
In November 2009, the bank signed a Sellers Agreement of Disclosure--stating what they did or did not know about the property.
"There's a world of difference between saying I'm making no disclosure and I'm making a disclosure that nothing is wrong," explained Wieland.
In section four of the agreement it states, "there are no pre existing code violations" which inlcudes any EPA or DNR code violations. Under the category the bank representative wrote "None Known."
Four months prior a letter addressed to Mr. Randy Roberts of Hawthorn Bank from the DNR Kansas City Regional Office states the water well on site was non-compliant.
"The bank or the owner, having made an affirmative representation that there is nothing wrong," said Wieland, "that would be a misrepresentation."
The Curzons have now filed a lawsuit against the bank. They are alleging the bank gave "fraudulent misrepresentations, written and oral, regarding material facts about the condition of the Property."
In a letter from Hawthorn's attorney, the bank contends they did tell the Curzons about the water well issue orally.
"That's going to be a matter of proof at trial," said Wieland, "the problem with relying on oral testimony, that's going to be a he said, she said situation."
With the mounting problems, the Curzon's stopped payment on their mortgage. That prompted Hawthorn Bank to freeze their accounts. All the Curzon's can do is wait and they don't have long. The resort is scheduled to go up for auction on January 11.
"We're just waiting to be foreclosed on now," Paul said, "hopefully that can be stopped."
KY3 contacted Hawthorn Bank about this story and gave them a chance to respond. Dave Garnett, Regional President of the Clinton Banks, said they had no comment on pending litigation or accounts with the bank.
An anonymous mortgage banker from Kansas City is funding the legal battle for the Curzons. The donor has also put up money to keep the resort from falling apart while situation is settled.