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One of the Jackson Town Square's oldest historic buildings, formerly occupied by Jackson Drug, is scheduled for a foreclosure sale. NEWS&GUIDE PHOTO / PRICE CHAMBERS

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Bank of America has scheduled a foreclosure auction for one of the iconic buildings in the heart of Jackson.

The former Jackson Drug building, now home to Davies-Reid, is scheduled for sale Dec. 29. The opening bid is $2.76 million for the building on the Town Square, at the intersection of Cache Street and Deloney Avenue, according to the Teton County Sheriff’s Office.

Meanwhile, the owners of the building, Terrel Reid and Sharon Davies, have filed for an injunction in 9th District Court to prevent the forced bank sale. An Idaho attorney representing the couple said Reid and Davies stopped paying their loan upon his advice.

“We tried negotiating the terms of the loan with Bank of America to resolve some of the concerns we had about the economy and our cash flow,” T.J. Angstman said in a telephone interview. “Because we could not come to terms with Bank of America on how to resolve these technical defaults, I advised my clients to stop paying until we’re able to reach an agreement.”

Angstman also said the couple disputes about $709,500 the bank alleges is owed for the loan. Moreover, Davies-Reid has $2.5 million in equity in the property, which likely would not be recovered through a foreclosure sale.

The injunction would allow the couple to resolve that matter with the bank, he said. It also would allow business to proceed during one of the best sales periods of the year.

“The time surrounding the Christmas and New Year’s holiday is among the busiest and most productive annual sales periods for Davies-Reid’s business,” the court filing states. “These sales cannot be recovered if lost as a consequence of the proposed sale.

“Additionally, sales made during this holiday season may enable Davies-Reid to complete its substantial efforts to cure its loans with Bank of America and/or finance its redemption of the Davies-Reid property,” the filing says.

Davies-Reid is a purveyor of fine rugs, antiques, home furnishings and jewelry. The couple purchased the building July 1, 2005, according to county records, but have occupied the building since October 2001.

Though not listed on the National Register of Historic Buildings, the old Jackson Drug building has a storied past in the valley. It is considered a Teton County Building of Historical Significance as recognized by the Historical Preservation Board.

Bruce Porter, a young pharmacist from Nebraska, moved to Jackson in 1914 to work at the first Jackson Drug on the east side of the Town Square and, in 1922, bought the pharmacy.

In the 1920s, the Cache and Deloney site had been dug for a foundation, but it was later abandoned. In 1936, Porter deepened the foundation into a basement, hauling rocks with a team of horses.

In 1937, Porter opened the new store, fashioned out of stone quarried in Idaho. He moved the legendary soda fountain across the Town Square from its original location, a building that now houses Leslie and Hines Goldsmiths.

It became, figuratively and literally, a cornerstone of Jackson’s Town Square. Jackson Drug remained a drugstore until 2001, when Davies-Reid moved in.

Four years later, Davies-Reid purchased the building.

Davies-Reid also faces the forced sale of another building in Park City, Utah, Angstman said. The family-run business also has locations in Boise and Ketchum, Idaho, and Maui, Hawaii.

Angstman said Davies-Reid trusted Bank of America with a “global banking relationship” for all its real estate locations as well as other business lending. The Jackson store is part of a comprehensive loan package.

Because of the economy, the couple were trying to renegotiate that loan with the bank.

“Although they have lots of equity in their stores, the economy has slowed down business in all of their locations until recently,” Angstman said. “Jackson Hole really had an upsurge since August. Before August, it was horrible everywhere.”

Since August, the Town Square location has been the business’ most successful store.

Bank of America was making unreasonable demands in the negotiations, Angstman said. So he advised the couple to stop making payments to the bank.

He also filed the request for an injunction because the couple disputes the balance owed to the bank, Angstman said. An injunction would stop the sale scheduled in two weeks if granted by the court

According to the injunction request, Bank of America notified Davies-Reid that it was accelerating all loan payments and that it planned to commence foreclosure proceedings.

The notice contended that about $2.04 million was owed to the bank. But with a “swap termination fee,” the bank alleged that the final amount owed is $2.76 million, the injunction states.

The court filing is requesting that the sale be stayed because, it alleges, Bank of America failed to account for a $48,000 “setoff withdrawal” it made from Davies-Reid’s checking account.

Bank of America also included in its calculation costs and fees that are “unreasonable and/or not related” to this loan, the filing claims. Finally, the “swap termination fee’ is unenforceable, it states.

“In short, Davies-Reid contends that the foreclosure sale should not be conducted until the dispute over the amount of the secure obligations [is] resolved,” the court filing states.

Moreover, the injunction states that the fair-market value of the Davies-Reid property exceeds the amount that Bank of America contends it is owed. Bank of America’s own appraiser recently concluded that the Davies-Reid property was worth about $3.8 million, more than $1 million more than the bank argues it is owed, the court document states.

Meanwhile, Davies-Reid is soliciting and receiving offers from buyers and investor groups for the potential sale or refinancing of the property, the document states.

The uncertainty of the amount of debt secured and the scheduled sale “has made the successful closure of such negotiations difficult or impossible,” the suit states

Because Bank of America has no offices in Wyoming, only ATMs, the dispute cannot be resolved before the scheduled auction, the suit states.

“If Bank of America is permitted to conduct the sale ... Davies-Reid will suffer immediate and irreparable injury by the loss of the Davies-Reid property, its substantial equity therein and goodwill represented by its relationships and reputation with supplies and customers,” it states.

A representative for Bank of America did not return a phone call by press time.