The Dakota Building on Ann Arbor's west side is a 20,000-square-foot, two-story office building.

Melanie Maxwell | AnnArbor.com

An unpaid landscaping bill from 2008 is forcing the court-ordered sale of a newer office building on Ann Arbor’s west side.

The Dakota Building - built in 2006 by Ann Arbor developer Michael Concannon - has been ordered to auction at 11 a.m. Sept. 16 in Washtenaw County Circuit Court.

The reason, according to court files, is an unpaid $26,000 landscaping bill and total debt of $58,000 following a trial and a judgment ordering the building’s owners to pay the plaintiff’s attorney fees.

The case is unusual, said Dan Barrett, the West Bloomfield-based attorney for Twin Oaks Landscape Inc. of Ann Arbor.

“We tried to settle the case from day one,” he said. “There was never any money or opportunity (to do that).”

Concannon, a developer who also faces litigation over his stake in other commercial property in Washtenaw County - including The Gallery on North Main and an office building on East Washington - did not provide details on the situation.

However, he said in a brief conversation about The Dakota, “We’re going to buy the building.”

The property is a 20,000-square-foot, two-story office building at 1785 W. Stadium. Concannon bought the two-acre property in 2005 for $1 million, then developed the building, which has an assessed value of just under $1.9 million.

In June 2007, according to court documents, Twin Oaks started its landscaping work on the property, finishing the labor on Aug. 29, 2007.

“They were quite hopeful that they’d have a good relationship with Mr. Concannon and that he’d be impressed with the quality of the work,” Barrett said.

However, after a few payments were made, they stopped. Documents in the court file show communication between Twin Oaks and management staff of The Dakota that illustrate a dispute over aspects of the landscaping - such as trees that later died - and who bore the responsibility.

The dispute escalated into a lien that was filed for $26,952 in unpaid bills for the work, and eventually a lawsuit that was filed Jan. 31, 2008, against The Dakota Co. LLC, Red Capital Funding LLC of Columbus, 5th 3rd Bank and NA Mans Lumber Co.

In the filing, Barrett asked for the Twin Oaks lien to take priority and to either sell the property to sell the debt or appoint a receiver.

In March, Judge Melinda Morris ruled in favor of Twin Oaks and ordered the sale of the property after reducing the debt by 2 percent. After all appeals were exhausted, the auction date was set.

Complicating the sale is the default of a $3.7 million mortgage on the property, now held by Bank of America. According to county records, the lender filed a notice of default in August 2009.

Whether an office property with an estimated market value - based on its assessment - of $3.7 million will head to auction over an unpaid bill that represents less than 1 percent of its overall value remains to be seen.

Barrett said the bank may step in and cover the debt before the Sept. 16 scheduled sale date.

“Bankers that I talk to say that if they had a loan portfolio with that asset in it, they’d be obliged (to pay the debt),” Barrett said. “I’m hopeful that’s what happens.”

However, the lien filing already went beyond a simple payment solution, he added.

Two other liens filed on The Dakota have been settled for a total of almost $40,000, and now he just wants payment for his clients.

“This is one of those things that’s gone downhill,” Barrett said, “and become a bad experience for everyone.”

Paula Gardner is Business News Director of AnnArbor.com. Contact her at 734-623-2586 or by e-mail. Sign up for the weekly Business Review newsletter, distributed every Thursday, here.