Gateway loan backer sues United Way

A Whitefish man who set up a money-market account as collateral that allowed Northwest Montana United Way to complete the $2.3 million purchase of Gateway Community Center in 2015 has sued the agency for breach of contract and fraud.

Summerfield Baldridge filed the lawsuit in Flathead District Court against Northwest Montana United Way and Westside CCC Inc., the corporation that holds the asset of the former mall property, stating his agreement with the agencies was to expire within two years, with return of security interest and interest owing paid to Baldridge.

“The security interest has not been returned and interest owing has not been paid to Baldridge within two years,” the complaint states. “As a result, Baldridge has suffered damages.”

Baldridge said in the complaint he was solicited by United Way to first establish a money-market account for $600,000 with Glacier Bank, and then allow the bank to use the account as security for repayment of the loan Westside CCC secured to buy the former Gateway West Mall. That property is now the Gateway Community Center, a hub for nonprofit groups.

Articles published in the Aug. 26 Daily Inter Lake detailed the financial challenges of United Way and Westside CCC in maintaining the 100,643 square feet of building space purchased from American Capital Management.

Eighteen nonprofit organizations currently rent space in the center or use it as incubator space. At full build-out the center could accommodate more than two-dozen nonprofits. Volunteers, businesses, service groups and builders have invested more than $1 million in materials and in-kind work for building improvements over the past several years.

Baldridge maintains he didn’t intend to donate the interest, and, in fact, wrote “No” over that language in the agreement.

The lawsuit further alleges the defendants, their employees, officers or agents, “represented to Baldridge that [they] were in the process of obtaining grants and other charitable contributions that would render the use of Baldridge’s money-market account as security for the underlying loan unnecessary,” and that the money-market account would be released as collateral for the loan no later than the end of 2017.

Regarding the alleged fraud, Baldridge states in the lawsuit that United Way and Westside CCC “knew or should have known at the time the representation regarding the ‘bridge’ aspect of the agreement was made that it was either false or defendants were ignorant of the veracity of the statement which is false.

“In other words, the defendants could not and had no reasonable basis to reasonably guarantee that the arrangement would be a ‘bridge’ arrangement which would expire within two years of the parties’ agreement,” the complaint notes.

Baldridge is asking the court for a declaratory judgment, and wants the interest owed him. He also wants adjudication that the agreement is invalid or that it may be rescinded, but that he be compensated in equity for the use of his money-market account.

He also asked the court for an order directing United Way and Westside CCC to release his money-market account as security for the Glacier Bank loan.

Baldridge has requested an entry of default because of United Way and Westside CCC’s “failure to plead or otherwise defend” the lawsuit’s assertions, according to the most recent court documents filed in the case.

United Way Executive Director Sherry Stevens told the Inter Lake recently the agency plans to launch a low-key capital campaign separate from United Way’s annual giving campaign. She said United Way also is pursuing outside foundations and large donors to help pay off the mortgage.

When contacted by the Daily Inter Lake, Baldridge said he could not comment on the pending litigation.

Baldridge’s attorney, Paul A. Sandry, did not return phone calls made to his office by the Inter Lake. Stevens also did not return a phone call.

Features Editor Lynnette Hintze may be reached at 758-4421 or lhintze@dailyinterlake.com.