Thursday, June 19, 2003

Historic Cape house now part of bank suit

Published in the Current

A historic Shore Road house that has been under construction for some time is now at the center of a dispute between its owner, Darrell Mayeux, and Fleet Bank, which is requesting a judge put an additional lien on the property to cover money Fleet says Mayeux owes the bank.

The house, at 878 Shore Road, is mortgaged for $1.7 million to Fleet, but the mortgage itself is not part of the dispute.

Instead, Fleet and Mayeux are arguing over the terms of a $4 million loan Mayeux took out in August 2000 at the recommendation of a Fleet personal financial advisor.

At the time, Mayeux had a Fleet-handled investment portfolio worth more than $20 million, according to documents filed in Cumberland County Superior Court June 13. The loan was offered as a way for Mayeux to diversify his holdings, which were mostly stock in Fairchild Semiconductor, where Mayeux was a senior executive. He retired in August 2001.

According to court documents, Mayeux borrowed the money in August 2000, using his existing stock as collateral, but ran into trouble as the stock market tumbled, dramatically reducing the stock’s value.

To help cover the loan, Fleet sold – with Mayeux’s permission – 200,000 of Mayeux’s shares of Fairchild stock in late 2002.

Mayeux filed suit to stop a second sale, of 200,000 shares, in April 2003, but was unsuccessful, the documents state. The bank sold the shares, raising $2.2 million.

Now the bank is claiming that the sale of those 400,000 shares did not raise enough to pay off the loan, and wants liens placed on the Shore Road house, as well as Mayeux’s primary residence on Highland Road in South Portland, to cover the remaining $240,000 outstanding balance, plus $30,000 in attorneys’ fees and collection costs.

The bank is doing so for fear Mayeux will sell the two properties, and possibly other homes he owns in Falmouth and California, leaving Fleet with no way to recover its money.

Mayeux, for his part, filed a counter-suit claiming the bank mishandled his finances and botched its attempt to cover its losses. The counter-suit alleges Fleet failed to tell Mayeux when the value of his investment portfolio was dropping precipitously, sold shares it was not authorized to sell and incurred both unnecessary bank charges and capital gains tax on Mayeux’s behalf.

Mayeux’s filing also requests that a lien only be placed on the Shore Road house, because Fleet’s own assessment is that the property is worth as much as $3.5 million. The suit says the house is on the market for $3.8 million and is expected to sell for $3.6 million.

It also says “an informal offer of $3 million has been made” by an unnamed potential buyer.

The house, thought by many to be a John Calvin Stevens design, was originally designed by prominent local architect Austin W. Pease and built sometime before 1910, according to Earle G. Shettleworth Jr., director of the Maine Historic Preservation Commission, who spoke to the Current in October. It was almost original as recently as 1998, but recent renovations have dramatically altered the historic character of the house, Shettleworth said.

The counter-suit also claims Mayeux does not have enough cash to pay as much as $1 million in capital gains tax owed as a result of Fleet’s sales of the Fairchild shares, and may have to “restructure” his finances.