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Bank files suit against downtown developer

September 25, 2009|By ERIN JULIUS

HAGERSTOWN -- Sovereign Bank filed a lawsuit Friday against local developer Michael Deming and others claiming the bank is owed a total of $2,740,869.60 related to two loans made to Deming and his father, Clyde F. Deming III, on Jan. 25, 2006.

The loans were made to Baltimore Station LLC. Several other limited liability companies established by Michael Deming were listed as guarantors on the promissory notes. In addition to Michael Deming and Clyde F. Deming III, those companies are listed as defendants in the lawsuit.

Reached by phone Friday evening, Michael Deming, who has multiple business interests downtown, said he has been in discussions with Sovereign Bank but had not been aware that a confessed judgment would be filed.

"We have to negotiate with the bank in order to appease them. We've been in discussions, trying to do a number of things," he said.

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Contacted Friday by phone, Baltimore attorney Eric Schuster, who filed the confessed judgment, said he had "no comment whatsoever."

When a borrower signs a confessed judgment note, there is a clause that says any attorney for the plaintiff can determine that the borrower owes the money, Washington County Circuit Court Clerk Dennis J. Weaver said. When such a judgment is filed against the borrower, the creditor has already gotten an attorney to say the money is owed, Weaver said.

The judgment is entered against the borrower immediately when the confessed judgment is filed. Such a judgment is a money judgment and not tied to any particular property, Weaver said.

The borrower, in this case the Demings, has 30 days to file whatever their defense might be, moving to vacate the judgment, according to Weaver. Or the borrower may satisfy the judgment in some way.

"We have the ability to vacate the judgment," Deming said.

When asked to elaborate, Deming said there are a lot of ways the situation could be remedied.

Baltimore Station LLC, Car Wash Real Estate LLC, Antietam Paper Building LLC, Lohr Building LLC, Demcore Development LLC and Car Wash Business LLC are the limited liability companies listed as the loan guarantors.

All of the limited liability companies are headquartered at 6 W. Washington St. in Hagerstown.

The properties owned by the companies encompass a parcel with properties on West Antietam and West Baltimore streets in Hagerstown.

Another bank, the First National Bank of Mercersburg in Pennsylvania, on Aug. 6 filed to foreclose on 28 S. Potomac St., which housed Duffy's on Potomac, a restaurant that has since closed.

As of July 1, 2009, the Demings owed a combined $3,140,517, including principal, interest and late fees related to 28 S. Potomac St., court papers say. The bank also is also seeking nearly $100,000 in attorney fees.

Michael Deming, of Fairfield, Pa., discussed the future of the 28 S. Potomac St. property during an interview Friday. His company is in daily correspondence with the lender, he said.

"We've signed a number of leases in the 28 S. Potomac St. building and continue to work through that," Deming said.

"We've been fortunate to turn that building around," he said.

He intends to do the same with the properties listed as guaranteeing the loans at issue in Friday's filing, Deming said.

His company, Demcore Development, has been working on leasing the Antietam Building on West Antietam Street, he said.

Office space is one way the building could be used, he said.

"We've shown it quite a bit lately," Deming said.

He plans to sign a tenant first and then renovate the building, he said.

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