Two men who spearheaded tens of millions of dollars in commercial development along Interstate 64 in O'Fallon and Shiloh are now at odds with each other.
The partnership Darwin Miles' Miles Properties of O'Fallon and Darrell Shelton's Shelton Investments in O'Fallon formed 25 years ago is headed toward litigation.
On Dec. 27, Shelton filed a foreclosure in St. Clair County Circuit Court against Miles and a limited liability corporation the two men operate called Parkway Land Development. The lawsuit claims that Miles, and Parkway Land Development defaulted on a $1.8 million note that Shelton Investments purchased from Community First Bank in Fairview Heights on Oct. 31 and was acquired through a mortgage on an O'Fallon retail development, Shoppes at Green Mount.
A month later, on Jan. 28, Miles counter sued Shelton and Shelton's business partner Wayne Schmidt as well as Atlanta-based Alliance Hospitality Management, the management company for the Hilton Garden Inn in O'Fallon. Miles is pursuing an injunction to stop the foreclosure and to disband two of the LLCs the two men owned.
Miles' counter suit seeks $1.4 million in damages and claims that Miles approached Shelton about negotiating a partnership split in March 2011, but the two were unable to agree to the terms. The counter suit further claims that the legal dealings have complicated attempts to renegotiate millions of dollars in loans held by the Parkway Land Development. To avoid foreclosure, the loan was paid off last month.
The counter suit also states that Shelton and Schmidt inserted a clause without Miles' knowledge in the management agreement with Alliance Hospitality Management that excluded Miles from any input on the operation of D&D Lodging, another LLC the two men operate. D&D Lodging owns the Hilton Garden Inn and the lease on the Regency Conference Center in O'Fallon.
Miles said he and Shelton owned eight LLCs at one point. Miles said he and Shelton still operate three of them and their assets. He said this recent litigation between them should not affect the businesses they have built.
"All I can say is our businesses are financially healthy, very healthy, and unfortunately this is a situation that happened and is unfolding," Miles said. "It's not due to a financial problem."
Shelton and his attorneys could not be reached for comment.
Together, Miles and Shelton helped give rise to commercial expansion highlighted by developments like the Regency Conference Center and the Hilton Garden Inn. The two also developed new retail and restaurants in O'Fallon and Shiloh such as Central Park Drive in O'Fallon and Green Mount Crossing in Shiloh and O'Fallon.
Miles said it will be "business as usual" at these businesses, but he never thought his partnership with Shelton would end up like this.
"I did not think I'd ever have to be in this conversation," he said. "But that's where we're at."
Contact reporter Will Buss at email@example.com or 239-2526.