Local Business Feud Erupts with Felony Revelations

Barricade and Tunnel in front of the French Market, Knoxville, September 2016
Barricade and Tunnel in front of the French Market, Knoxville, September 2016
Barricade and Tunnel in front of the French Market, Knoxville, September 2016

It’s a story (which I first wrote about last June) that just won’t go away. It’s unfortunate that a resolution couldn’t be found before matters escalated so badly. But if the situation seemed bad before, Tuesday night’s City Council meeting made what has gone before seem mild by comparison. During the public forum section at the end of the meeting, Allen Tate discussed the wall which has now been in front of the French Market for seventeen weeks. It was information he brought with him, however, which seems to change the conversation. Mr. Tate handed each city councilman a folder containing publicly available information detailing Mr. Dover’s 1991 felony conviction for defrauding a savings and loan institution.

I met with Susan and Allen Tate, owners of the French Market, to discuss the situation which led to the antagonism between the parties and, ultimately to the revelations. After walking through the plywood tunnel to the front door of the French Market, I noted a list of tally-marks on the wall of the plywood. The seventeen marks each represent a week the tunnel/wall has been in place. Mr. Dover’s original statements indicated the barricade was for facade work (which does not seem to have begun) and would be in place three weeks to a month.

I asked the couple to help me understand the sequence of events leading up to the council meeting. They said, at first, their relationship with Dover (their third landlord in the building) was pleasant. Then he proposed a change in the lease on which they still had about seven years remaining. His proposal was to double (or more, this was unclear) rent, charge for outdoor space and require they pay him a percentage of profits. It should be stated their lease was below market value because when they signed the five year (twice renewable) lease, the building had been vacant for years with no clear prospects beyond their offer.

Rick Dover at the Press Conference for the Pryor Brown Garage, Market and Church, Knoxville, June 2016
Rick Dover at the Press Conference for the Pryor Brown Garage, Market and Church, Knoxville, June 2016

They stated that once they balked at accepting the changes, they were told they would be forced out, with building manager Jack Shrode, literally throwing the code book down on the table and saying he would find a way to prove they were in violation of their lease. What followed were the previously documented (by Clay Duda at the Mercury) reports by Rick Dover to various inspectors which resulted in little in the way of violations and all were attended to.

The couple also alleges that Dover began harassing them in various ways, such as refusing to allow them to keep garbage in the alley, resulting in their employees having to walk to the State Street Garage with every bag of garbage. He built the well-discussed wall (in June, at which point they sued him) in front of the store, told them they could no longer sell beer and closed rear access. When their cooler died, they maintain he refused to let them use the rear access through which the freezer would fit, leaving them to cut it into pieces in order to be able to move it out the front. They then had to dismantle, then reassemble, the new one in order to be able to move it into the front.

They say he allowed them to put a patio fence out front, then complained to the city to have them remove it. The couple claims he had warned them that it would “get ugly” if they didn’t do what he wanted. They indicate they have since received eviction notices for the rear portion of their space – which contains their cooler, among other things. Concerned that he hasn’t cashed their rent checks (his office refuses their registered mail) for months, they fear he will claim they haven’t paid rent.

Most recently, he refused to pay for moving an electrical box into their space, rather than behind the space where he has removed their access. According to fire code, the box is required to be in a space they can observe and they maintain he would be obligated to pay for that move. He refused and the couple determined to pay the $8,000 for the move only to learn he would not provide access for their electrician. The result is that unless they receive an extension, their power will be cut off on Friday for the violation.

All of which brings us back to the city council meeting. Inside the folder were two documents accessible via the Internet. The first is an article from the L.A. Times detailing a lawsuit and awards of $464,000,000 to Sunbelt Savings for damages related to a scheme in which Rick Dover was implicated. The second document details some of what happened subsequently: As a result of that episode, Dover pled guilty to two counts of making false statements to Sunbelt, which is a felony violation of federal law. He served two years probation and was ordered to pay $19,600,000 in restitution. Subsequently, the judgement was appealed more than once and Dover filed bankruptcy. The undated document indicates that, at least as late as 2007 the debt had not been paid to the FDIC which now owns the debt.

French Market, Knoxville, Late Summer, 2012
French Market, Knoxville, Late Summer, 2012

Clearly, the documents raise questions. Did the city know? If so, why did they proceed? Is it relevant to the relationship between the city and Dover? What is the current status of the debt? After talking to Susan and Allen Tate, I reached out to members of city council, city administration and, finally, to Rick Dover for answers to some of these questions.

Councilman Mark Campen said, “I do think it’s quite a shame to have the disagreements between the two, resulting in the current wall being in place as long as it has been there. This is a major deterrence to Mr. Tate’s business and I think it needs to be removed immediately. There has to be a way to meet codes and not have that unsightly wall, which has undoubtedly cost Mr. Tate a great deal of loss in revenue from his restaurant. Mr Dover has been involved in many great developments in and around Knoxville and I think this ongoing battle at the Farragut Hotel is tarnishing his reputation. The French Market has been an incredible, local business and I think we as a city should do more to settle the situation and support this homegrown business.” He declined to comment on the felony conviction.

Councilman Marshall Stair said, “It is certainly troubling.  I was unaware of the judgment, which is very large and the underlining crime does cause concern, but it does not seem to have affected his ability to complete Oakwood School and some other recent projects.  The appearance of the wall in front of the French Market and the length it has been there are also troubling and I would encourage Dover Development to remove it if it is not absolutely necessary, which it does not appear to be at this point.

This dispute between two businesses I appreciate is unfortunate, and I am not sufficiently familiar with the facts to place blame.  Dover Development has done some great historic renovations like Oakwood and the Alexander Inn, and I am genuinely excited about the restoration of the Farragut into a hotel, not to mention the fact Dover’s involvement in the Pryor Brown alone probably saved it from demolition and becoming a surface parking lot, a project I personally worked on while on Council and worried about for years.  At the same time, I love the French Market (ate there Monday) and appreciate what it has added to Gay Street since it opened years ago and want it to continue to succeed.  I certainly understand a giant plywood wall in front of a small business is not helpful and should be removed. I hope cooler heads prevail and these two entities, which both play important roles building downtown, can change course and work together.”

Rick Dover, Family Pride Corporation, Knoxville, January 2015
Rick Dover, Family Pride Corporation (Now Dover Development), Knoxville, January 2015

Rick Emmett, speaking for the city said that Mr. Dover was upfront regarding the now twenty-five-year-old conviction and that the city is only providing a PILOT, so it has no money at risk if the project doesn’t get completed. He also pointed out that only a small pool of developers could borrow the kind of money needed for this project or could otherwise make the financing work and that if banks felt Mr. Dover is a good risk, that is probably some assurance that the risk is reasonable. He also noted that the permit for the barricade expires October 8 and said portions of it will be removed starting tomorrow.

I emailed Rick Dover and asked if we could talk and he agreed to a phone conversation. Later I was informed he would not be able to talk directly to me due to lawyer’s advice. He agreed to answer emailed questions. I sent him the description of events as I understood them and asked him to present his side. I asked him about his current legal status and whether there was a chance it could impact the project. He later emailed me saying he would get back to me, but had just returned from a trip outside the country and is “digging out from a pile of work.” If I hear further from him, I’ll let you know.

So, what does all this mean? Clearly, there is a conflict that needs to be resolved. Many of us love the French Market and want to see it stay downtown. We also very much need Knoxville High School, the Farragut Hotel and Pryor Brown to be preserved and renovated. Does a twenty-five-year-old felony conviction matter?

As you discuss it below, please restrict your comments to what you know to be true or to your opinion and state it as such. And remember to be respectful and civil in your discourse.

Ed Note: Rick Dover subsequently discussed his legal issues with the News Sentinel at length here.

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