A music promoter who sought to purchase the State Fair of Virginia two years ago is asking for more than $15 million in losses and punitive damages from the organization that now owns the fair and a Richmond law firm that represented him during negotiations.
Mini-USA Inc., owned by Gratton Stephens, filed a lawsuit Nov. 14 in Richmond Circuit Court. It alleges common law conspiracy, negligence and legal malpractice against Williams Mullen, claiming that the law firm used information it attained while representing Mini-USA in its attempt to buy the State Fair to assist the Virginia Farm Bureau Federation, which the firm simultaneously represented, in its successful purchase of the fair. Both entities are named as defendants in the lawsuit.
“The defendants secretly combined with one another to acquire the interest in the State Fair for Farm Bureau alone, using confidential due diligence information and other proprietary and/or trade secret materials prepared and/or created by Mini-USA, and while Williams Mullen was still engaged as the attorney for Mini-USA in Mini-USA’s own, pre-existing effort to acquire the State Fair for itself and its investors,” the 27-page filing states.
Stephens, who was in negotiations to buy the fair before it went to auction in 2012, declined comment Friday when contacted about the suit. His lawyer, Rebecca Royals of Butler and Royals, also declined comment, saying, "The pleadings speak for themselves.”
The nonprofit organization that owned the State Fair filed for bankruptcy in December 2011. Soon afterward, Stephens retained Williams Mullen to represent Mini-USA in its effort to acquire the fair’s facilities, equipment and its associated intellectual property, according to the lawsuit. Mini-USA gained access to confidential financial, marketing and operational information from the fair’s parent company when the two signed a non-disclosure agreement in February 2012, the filing states.
In need of financial backing, Stephens approached the Farm Bureau’s president, Wayne Pryor, in April 2012 about investing in the venture. Mini-USA and the Farm Bureau then signed a non-disclosure agreement drafted by Williams Mullen in April 2012, according to the lawsuit. At a meeting later that month, Stephens gave a detailed presentation to Pryor about his plans to acquire, manage, market and promote the fair. Pryor told Stephens he would solicit an investment from the bureau’s board, the lawsuit claims.
The fair went to auction in May 2012. Mini-USA was present, but did not bid on the property, based on instructions from its Williams Mullen attorney and an arrangement with the fair’s lead lender, ArborOne, according to the suit. Mark Lovell, CEO of Memphis-based Universal Fairs, bid $5.3 million, on top of a $250,000 deposit, and won the right to purchase the fair by July 6 of that year. Mini-USA learned from ArborOne that Universal Fairs likely would not be able to pay the sum by the closing date, and Mini-USA began negotiating with Lovell to purchase the rights to the fair, according to the lawsuit.
After a Mini-USA presentation to the Farm Bureau board, Pryor told Stephens that the organization would invest $1.5 million in his effort to acquire the fair, the lawsuit states. Stephens turned over the confidential financial and marketing information he acquired from the state fair’s parent company to the Farm Bureau after the commitment, according to the suit. Meanwhile, a Williams Mullen attorney negotiated on Mini-USA's behalf for the sale of the rights to the fair with Universal Fairs, the lawsuit claims.
Within days of the purported agreement with Stephens, the Farm Bureau backed out of its financial commitment to Mini-USA in an email sent from its marketing director to Stephens, according to the lawsuit. Soon afterward, Universal Fairs raised its asking price from $7.5 to $11 million, the lawsuit claims.
“On information and belief, Universal Fairs inexplicably raised its asking price in the middle of negotiations at the behest of, and in concert with, Farm Bureau and/or Williams Mullen in an effort to prevent Mini-USA from acquiring the State Fair so that Farm Bureau could obtain the Fair for itself,” the lawsuit alleges.
The Farm Bureau subsequently ended discussions with Stephens about investing in Mini-USA’s effort to acquire the fair, according to the lawsuit. In July 2013, the bureau partnered with Universal Fairs to create a new entity, Commonwealth Fairs & Events, and close on the $5.6 million deal, the suit states. Records show that Williams Mullen attorneys registered the entity with the Virginia State Corporation Commission 16 days after Farm Bureau-Mini-USA negotiations ended and while other attorneys for the firm were still assisting Stephens in his negotiations to acquire the fair, according to the lawsuit.
The Farm Bureau bought out Universal Fairs in March 2013, gaining complete ownership of the State Fair.
The lawsuit alleges that Williams Mullen attorney R. Brian Ball and possibly other lawyers in the firm used information that the firm gained access to through Mini-USA to benefit the efforts of the Farm Bureau in its own pursuit to purchase the fair. Ball is a member of the State Fair’s Board of Directors, according to the firm's website as well as the lawsuit. “We feel like this case has no merit, but given that it is pending litigation, we cannot comment any further,” says Kristin Richardson, a Williams Mullen spokeswoman.
Greg Hicks, vice president of communications for the Virginia Farm Bureau Federation, said he is aware of the suit, but also could not comment.