A judge declined to issue a temporary restraining order Friday to a group of East Waco residents challenging the sale of an Eastern Waco Development Corp. building to a fitness club and attempting to reverse the transaction.
Judge Jim Meyer of Waco’s 170th State District Court met with attorneys on both sides of the dispute in his chambers Friday morning. When they emerged, the parties left the courtroom and said Meyer denied the motion and set a hearing for Sept. 6 to consider the group’s request for a temporary injunction.
The plaintiffs in the suit are former members of the East Waco Development Corp., who say they held a community meeting Aug. 2 and voted to dissolve the current nonprofit corporation board and replace it with a new president and board members.
At the heart of the dispute is the sale of a 13,000-square-foot building at 713 Elm Ave. to CrossFit Waco founders Brandon Hancock and Jonathon Shelton.
The building, a former Safeway built in 1953, was given to the Eastern Waco Development Corp. by Waco businessman Tom Salome in 1998 and has since been used as a gathering hall and temporary office space for a variety of ventures.
Thelma Evans, Wannika Muhammad, Virginia Bowie-Green and Cecil McDowell filed the lawsuit last week against the development corporation, its president, Linda Jann Lewis, and board members Lucious New, C.W. McKethan, Wanda George Green and JSPF, which owns the CrossFit Waco health club.
Waco attorney Rick Bostwick, who represents the defendants, said a key issue in the conflict is whether the former board members have standing to bring the lawsuit. Also, he said, the motion for temporary restraining order sought to block the new owners from making any alterations to the building. CrossFit Waco, a health club, opened its doors to members Tuesday after an extensive renovation.
Bostwick said the former board members’ claims that they dissolved the board by community vote and installed new officers is “impossible under the law in the state of Texas.”
“Simply being a member of the community, like you or me, does not entitle you to file a lawsuit or take any action,” Bostwick said. “As far as I know, these guys bailed out six or seven years ago. They waited around, they knew the property sold in April, they waited until now to intervene, after the place has been remodeled and opened for business Tuesday, knowing there is $300,000 in the bank. You can try to figure out what the deal is there.”
Dallas attorney Frank Fleming, who represents the former board members, said the judge did not rule on the merits of the lawsuit Friday but denied the motion on the basis that no imminent or irreparable harm would come to the plaintiffs without the restraining order.
Fleming said his clients think the restraining order was necessary because of “the history of financial mismanagement of the board of directors of the corporation over the past 10 years.”
“They are questioning our legal standing, and that will all be flushed out at the next hearing,” Fleming said. “But if you look at the articles of incorporation, it says the members are the East Waco community. It says is is owned by members of the East Waco community. Who is the East Waco Development Corporation? Is it the five people who have been in office for five years? Who do they answer to? We think they answer to members of the East Waco community.”
While the courtroom battle continues, CrossFit Waco is open for its customers and should become an East Waco community asset, said Mexia attorney Justin Reed, who represents CrossFit owners Hancock and Shelton.
“As far as CrossFit’s position, they 100 percent are bona fide purchasers of the property,” Reed said. “They are working with the East Waco community. They are bringing over 150 cars per day into East Waco that would have probably never gone into East Waco.
“When more businesses come into East Waco, they are going to benefit from CrossFit being there. CrossFit hopes that all of this can be resolved and they can become ingrained in East Waco. They have a lot of money invested and they are going to be there for a long time.”
Muhammad, who attended Friday’s hearing, said the conflict is not over the money from the sale of the building. She said the board had no authority to sell it and did not inform the community of its intent to do so.
“It was never about the money,” she said. “That is what everybody is being told. No no no. The building belongs to the community and it should not have been sold. The community had no knowledge about it.”
The lawsuit alleges the sale should be voided because “EWDC had no actual or legal authority to sell the property and in fact was prevented from selling the property by provisions in the organization’s articles of incorporation and/or by-laws.”
The corporation forfeited its charter in May 2008 and 2011 and was delinquent in filing tax returns in May 2011, the suit alleges. The board allowed its charter to lapse again as of December 2017 and was without authority to sell the building, the suit alleges.
“The decision to sell the property was made by a fraudulent ‘board of directors’ that was not properly elected or selected and therefore could not serve as members of the Board of Directors of EWDC,” the suit claims. “The present makeup of the board of directors of EWDC is invalid, unauthorized and lacks authority to act on behalf of EWDC.”