Lawsuit probes inner dealings of power brokers

BMW, Clemson, Sanford embroiled in legal dispute over project

Allegations in a lawsuit involving Clemson University, automaker BMW and a millionaire Florida developer are opening a rare window into how some big higher education projects — fueled with millions in taxpayer dollars — get done in South Carolina these days.

It’s a little-seen world, where high-powered university officials interact with top politicians like Gov. Mark Sanford, business moguls from BMW and savvy lobbyists like Dwight Drake, a Columbia lawyer known for his access to the rich and powerful.

It’s a high-dollar world in South Carolina higher education, a world to which the General Assembly has begun to make available hundreds of millions in bond and lottery money to the state’s three largest public universities — Clemson, the University of South Carolina, and the Medical University of South Carolina.

To get the money — used to hire superstar professors and to improve old campuses or build new ones — these universities have to prove their new educational projects can produce jobs.

It’s an unpredictable world, one that can suddenly turn nasty with allegations of unethical conduct and broken promises, according to recent court filings and pretrial arguments last week in a federal courtroom in the Upstate.

“I did not participate in any clandestine, secret or improper meetings or contacts with Gov. Sanford, and I am not aware of anyone who did,” Clemson president James Barker swore in an affidavit filed in connection with the case.

Neither Clemson nor Barker is a defendant in the lawsuit that Miami developer Clifford Rosen brought last year in federal court against BMW, the Spartanburg-based American subsidiary of the German automaker, BMW AG.

But Clemson’s and Barker’s actions in setting up a $200-million-plus International Center for Automotive Research campus in Greenville are central to the case.

Rosen’s suit claims BMW wrongly disrupted ongoing contracts he had with Clemson to set up an ICAR campus.

These days, BMW — and not Rosen — is the lead player in Clemson’s ICAR campus.

Rosen, described in his court pleadings as “an experienced, multifaceted real estate developer,” claims BMW’s alleged interference with ICAR has cost him $132 million in lost fees and development opportunities.

BMW employs 4,500 Upstate workers and is one of South Carolina’s largest companies. It produces more than 550 high-end sports cars and SUVs each day and has a daily payroll of $1 million-plus. More than 35 auto suppliers employing some 12,000 workers support it, according to BMW.

A jury trial is scheduled for next year. Pretrial discovery in the case already has generated 500,000 documents, among them many confidential university, business, government and lawyers’ memos rarely glimpsed by the public. A deposition by Sanford has been postponed until after the Nov. 7 election.

No one connected with the case — not Clemson, Rosen, BMW, Sanford, Drake or Barker — will comment. Most of what is known comes from court filings and arguments in open court.

But other folks around the Upstate aren’t as reluctant to offer an opinion.

Rep. Bob Leach, R-Greenville, said most local people he knows believe that BMW is a better fit than Rosen for ICAR.

“All Rosen is trying to do is get a piece of the pie,” said Leach, “and he feels like there’s a lot of pie up here. I guess I can’t blame him for trying.”

ROSEN’S CASE

Rosen and Clemson began talks in 2001 to develop what became ICAR, his legal papers say.

Rosen was approached by Clemson initially because he knew how to develop land, his legal papers say. After numerous meetings, Clemson and Rosen began to work together.

They began to focus on 407 acres owned by the estate of the late industrialist John D. Hollingsworth. Initial plans for the site on I-85 near Greenville included a $50 million wind tunnel that Rosen hoped Charlotte-area NASCAR teams would use. The wind tunnel would be a money-making venture, earning $9 million a year, papers said.

By late 2002, Rosen says, he and Clemson were on track to announce their ICAR campus. Rosen was acquiring land, arranging financing, establishing the necessary controlling companies, and was being publicly touted by Clemson as the automotive campus developer.

Clemson even discussed giving Rosen an “honorary doctoral degree,” his legal papers say.

In September 2002, BMW announced it would give $10 million to Clemson and give $25 million to build a graduate auto engineering school facility.

At first, Rosen was “excited” about BMW’s willingness to play a part in the ICAR project, his lawyer, Jim Gilreath said in federal court last week.

But behind the scenes, BMW, Sanford, and BMW’s representatives, including Drake, were working to make BMW the leader in the ICAR project, Rosen’s legal papers say. BMW threatened it might invest its money elsewhere besides Clemson if the auto maker didn’t get its way, Rosen’s papers say.

BMW also pressured Clemson to drop its wind tunnel plans and distance itself from NASCAR, Rosen’s legal papers say.

“BMW had no intent to deal with Clemson unless BMW had control of the ICAR campus, which Rosen had successfully developed to that point in time,” Rosen’s legal papers say. BMW also loaned Clemson’s Barker a new BMW X5 SUV to drive, the papers say.

Meanwhile, in early 2003, the newly elected Sanford requested that Clemson delay a formal announcement of the Rosen-Clemson ICAR campus, Rosen’s papers say.

Rosen was a financial contributor and supporter of former Gov. Jim Hodges, whom Sanford ousted in 2002.

In early 2003, Sanford let it be known he would block state money from going to ICAR if Rosen continued to be the lead developer, Rosen’s legal papers say.

Later in 2003, Rosen was edged out of being the main player, his papers say.

Today, BMW is one of Clemson’s major ICAR players, along with tire company Michelin and bearing manufacturer Timken. The state has kicked in more than $100 million in bond and lottery money for superstar professors, buildings and infrastructure at the ICAR center.

Rosen has no ICAR role. Under pressure from Clemson in 2003, he claims, he gave up most of his claims. He is now trying to develop adjacent tracts.

BMW’S CASE

In arguments last week before U.S. Judge G. Ross Anderson, BMW lawyer Don Sellers said Rosen’s claims are “ridiculous.”

Rosen failed to live up to his promises about developing the ICAR campus, Sellers said.

Clemson did nothing wrong, because under the terms of its agreements with Rosen, it could terminate the agreements when it did, Sellers said. “Either party had the right to walk away without liability,” Sellers said.

Meanwhile, Clemson had an independent, long-standing relationship with BMW that naturally grew into today’s ICAR campus once Rosen didn’t live up to his agreements, Sellers said.

After being elected to office, Sanford had a right to look into the Clemson-Rosen ICAR deal, Sellers said. State leaders had pledged an initial $12 million in bond money to build access roads.

Sanford, a former real estate developer, became concerned in December 2002 when Rosen couldn’t answer basic questions about the deal, Sellers said. Other officials also became concerned for legitimate — not political — reasons, Sellers said.

Sellers called attention to Sanford’s reputation as an unpredictable libertarian, saying that once he took office, no one “knew what Governor Sanford was going to do.”

At that remark, Judge Anderson prompted titters from the audience when he quipped, “And nobody still knows.”

Sellers replied to more laughter, “That’s absolute gospel.”

In any case, Sellers said, Rosen’s efforts to depict Clemson’s Barker and other state officials as secretly scheming to deprive him of profits are “unbelievable.”

“Mr. Rosen is charging that virtually every public official in this state is corrupt,” Sellers said.

Anderson ruled in favor of BMW on four counts, including not allowing BMW’s German parent company to become a named defendant in the case.

CLEMSON NOT NAMED

Clemson is not a named defendant in the lawsuit. Only BMW stands to pay Rosen damages if the jury finds the automaker liable.

However, it is not unusual in complex cases for plaintiffs to name only one defendant, said University of South Carolina law professor Gregory Adams, who teaches contract law.

In this case, ““Clemson may well have more sympathy or support among the average juror than BMW would,” said Adams, noting that Clemson is a popular Upstate public institution. (The trial will likely be in the Upstate.)

Other reasons not to name Clemson as a defendant, he said:

• Clemson may have strong defenses as to why it didn’t go forward with its agreements with Rosen. Allowing Clemson, as a co-defendant, to make forceful points, might confuse a jury that otherwise would focus on BMW’s alleged wrongdoing and liability.

• Jurors, as taxpayers, may be reluctant to stick Clemson, a public institution, with a $100 million damage award, whereas a jury “filled with people who you wouldn’t expect to own BMWs wouldn’t be adverse to handing up a big verdict” against the German automaker.

Adams also said that the plaintiff’s lawyers should be ready to explain to the jury why they didn’t make Clemson a defendant — or BMW’s attorneys could underscore that omission in an effort to raise doubts about the plaintiff’s case. This is known as “the empty chair defense,” Adams said.

Despite losing four pretrial motions last week, Rosen lead lawyer Gilreath was optimistic.

“We’re just getting started,” Gilreath said.