The heiress to the Carhartt Inc. fortune has pumped serious money into Detroit commercial real estate the last few years.
But now a new lawsuit filed in Wayne County Probate Court is claiming that one of the investments the former trustee of the Gretchen C. Valade Irrevocable Living Trust made in a stalled Detroit hotel redevelopment was not on the up and up.
That’s just one of the allegations in a new lawsuit, which says that without Valade’s knowledge, Grosse Pointe Farms attorney David Sutherland took millions from the fund, which was to benefit her business partner, Thomas Robinson, and charitable endeavors after life insurance benefits were paid.
Among the things current trustee, Southfield-based Plante Moran Trust, is suing Sutherland over is trust money he allegedly gave to the Temple Hotel and Residences project in the form of a loan. The hotel project is located west of the Masonic Temple and north of Cass Technical High School.
The lawsuit does not challenge Valade’s personal investment in the project, which is being spearheaded by Detroit developer and restaurateur Christos Moisides. Instead, it is questioning what is described as “millions” given to the development, via the loan from the trust fund that Sutherland oversaw until August 2020.
In some instances, the complaint says, Sutherland had the trust take out loans at market-rate interest rates so he could lend to himself and businesses in which he had a stake money at below-market rates.
None of those were reviewed by an independent co-trustee, the complaint alleges.
James Sullivan, an attorney for Sutherland, said “the allegations of wrongdoing against David are completely false” but declined further comment, citing pending litigation.
Through a spokesperson, Valade declined comment, as did her attorneys at Detroit-based Honigman LLP, also citing pending litigation.
Moisides, for his part, said: “I am not a party to the lawsuit and have no comment on the litigation. The Temple Hotel and Residence development is an extremely important project to me and I am currently working with Gretchen Valade’s management team and my own investment group to buy out Mrs. Valade’s interests. My new group and I are eager to bring this impressive project to completion.”
The case had been brought to Wayne County Circuit Court in March 2021 but was dismissed in September because Sutherland’s attorneys successfully argued that it was filed in the wrong court.
“The duty of loyalty that is owed to the trust and trust beneficiaries appear to be disregarded by what he allegedly did here,” said Jennifer Cupples, a Birmingham-based associate attorney for Altior Law specializing in trust issues.
“He should have had an independent co-trustee determine that what he was doing was not in violation of his duties or the trust.”
She cautioned that she had only reviewed the complaint, not the loan documents or the trust — which she said apparently requires the review and approval of an independent co-trustee related to actions of the trustee that appear to be a conflict of interest.
“Him doing any of these alleged significant financial transactions under the guise of trustee of the trust is questionable, especially without the prior approval of an independent co-trustee,” Cupples said.
Valade, who is in her 90s, is the granddaughter of Carhartt founder Hamilton Carhartt. Her son, Mark, is chairman and CEO, while she is chairman emeritus, according to the company’s website.