Davis details plans for Heer?s building

Just like ice cream and hot fudge, downtown office space and developer Warren Davis go together. And the Heer's building may be the cherry on top.

Nothing is settled yet, al-though Davis did on Oct. 26 win a $2.5 million judgment against a recalcitrant insurance company that's held up redevelopment of the seven-story, 150,000-square-foot building for six years.

United Fire and Casualty Company withheld precious in-surance dollars that would have repaired water and vandalism damage that occurred in No-vember 1995. When Davis filed suit to collect and added a claim for vexatious refusal to pay, United Fire filed a counterclaim. The result was that no bank would lend Davis money on the building because it was in litigation, Davis said.

Now, after a 12-0 verdict in his favor, Davis and his trial lawyer, John Price, are waiting to see if United Fire received the strong message the jury sent and pays the claim.

Price, of Carnahan Evans Cantwell and Brown PC, isn't optimistic. "It's been six years and they've showed no inclination to want to pay so far. I would be very pleasantly surprised if they offered a good faith settlement."

Interest on the judgment ticks away at the legal rate of 9 percent, higher than Davis can get in the marketplace, so he isn't worried even if there's no check in hand. If United Fire is able to appeal, Davis said he isn't afraid of another trial. He be-lieves he would win again.

With that confidence, Davis is already conferring with the architectural firm of Esterly Schneider & Associates and the construction firm of Meco Sys-tems Inc. to transform the old department store into office and retail space, and perhaps some apartments at the higher levels.

"As far as waiting, I have a bad habit of not waiting for very long," Davis said the week after the verdict. "If we can find a few hundred thousand dollars somewhere here in the next week, we may start."

Where to begin

Davis said he is talking with Spirtas Wrecking Co. of St. Louis about taking off the glass and steel facade and the outside framework down to the old terra-cotta. Spirtas is no stranger to downtown Springfield, having previously handled demolition on the Thompson car dealership on St. Louis St. in preparation for Jordan Valley Park development.

Davis said the city is willing to help. The old canopy has to come down and a new sidewalk is needed. "It'll look like it did in 1915 ... with some wrought iron overhang." Price said historic-building tax credits are being explored and are a strong possibility for the project.

As for potential tenants, "it's a fact that for the lower level we have a letter of intent from one company for about 30,000 square feet they want to lease," Davis said.

On the first floor he plans a small restaurant and small stores "that will draw not only from the building, but from all around the square, the state offices."

Davis pictures "many small restaurants all different types a cigar store, a cappuccino store or cafe, a little bookstore, a place where you can go and relax and spend your lunch hour or spend time after work ... or (before) a play at the Gillioz or Landers, or whatever function is going on at Jordan Valley Park."

Davis, who owns the McDaniel, Woodruff and Bank of America buildings downtown comprising about 400,000 square feet of office space said many businesses want to locate in center city, but there is little space available. The Bank of America building is full, the Woodruff is at 90 percent and the McDaniel is at 96 percent.

"He's getting calls for office space that he cannot fill," Price said . Many callers want 15,000, 20,000 or 25,000 square feet of space, "and there are very few places to go unless you ... build down south," Davis said. He has noticed that since Sept. 11, many potential tenants want less space and cheaper rent.

Davis already has an architectural firm ready to lease space and a law firm that wants 20,000 square feet. One company "might be interested in as much as 90,000 square feet."

What else may be going inside? "Well, I think my lawyer, John Price, is going to have a pad up there in the penthouse," Davis joked. There may be one or two living spaces at the top, but stories twoseven will be office space, he said.

As part of the renovations, Davis plans to wire all the floors for fiber-optic access.

The jury speaks

The late October trial was the second round in the saga of Heer's versus the insurance company the first decision was for the insurer in June 1998, but Circuit Judge Donald Bonacker set aside the decision. He said it was "against the weight of the evidence" and that the jury considered the issue of whether the building was vacant when it wasn't instructed to do so.

The appeals court agreed with Bon-acker in October 1999 and sent the case back for a new trial on Feb. 5, 2001. But Circuit Judge Henry W. Westbrooke withdrew from the case before the jury was even pulled because he was close friends with one of the key witnesses.

It would be another nine months be-fore the case was heard.

Davis claimed that the interior damage to the old building was caused by a sprinkler system tampered with by vandals. The insurance company claimed the damage was from frozen pipes and that because the building was vacant, the policy was void.

After the most recent verdict, Circuit Judge Mark Fitzsimmons asked the insurance company attorney if he wanted the jury polled so that the jurors would give their individual responses.

To a person, Davis recalled, the jury members stood, looked directly at the attorney and said "Yes," this is the verdict.

That was "the jury telling them they should have paid this claim and penalizing them for unreasonable conduct for delaying and ultimately deciding not to pay the claim," Price said. "Those jurors were pretty adamant."

The jury awarded Davis $1.2 million in actual damages, plus $612,000 in interest, another $120,000 as a statutory penalty for failing to pay the claim and $285,000 in attorney fees.

The insurance company has 30 days from the verdict date to file a motion for a new trial, which Price fully expects the company to do. But it will cost the company about $220,000 to post an appeal bond if the motion for a new trial is denied.

Reflecting on the difficulty the litigation issue has caused, Price said, "The hardest part of this is it has held up redevelopment of this building. It not only hurt Mr. Davis, who has had to continue to pay utilities, insurance, taxes and maintenance, and upkeep and security on the whole thing," but downtown development as well. Davis estimated his costs to be close to $500,000.

"The problem is, all along we knew he was going to have to borrow money from a bank to do the renovation work and what bank do you know that will loan money on a building in litigation?" Price asked. "None," Davis said. "It shut us off."

It its counterclaim to Davis' suit on the insurance claim, United Fire asked to recover all its costs on investigation and its attorney fees. Both judges said no.