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BANQUE ARABE ET INTERNATIONALE D'INVESTISSEMENT V.

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK


April 23, 1993

BANQUE ARABE ET INTERNATIONALE D'INVESTISSEMENT, Plaintiff,
v.
MARYLAND NATIONAL BANK, Defendant.

The opinion of the court was delivered by: ROBERT J. WARD

OPINION

 WARD, District Judge.

 Defendant Maryland National Bank ("MNB") has moved, pursuant to Rule 56, Fed. R. Civ. P., for summary judgment in the above-captioned action. Plaintiff Banque Arabe et Internationale d'Investissement ("Banque Arabe") opposes the motion. For the reasons that follow, the motion is granted in part and denied in part.

 This action arises in the aftermath of a real estate deal gone sour. In 1988, defendant arranged a $ 35 million package of loans to eight real estate partnerships, each owned or controlled by Robert K. Marceca. Plaintiff is the former beneficial owner of BAII Banking Corp. ("BAII"), *fn1" which purchased a $ 10 million participation interest in this $ 35 million loan package. The real estate partnerships ultimately defaulted on their loans and the collateral securing the loans was sold at a substantial loss, thereby virtually insuring that the real estate partnerships will be unable to repay the bulk of the $ 10 million loan purchased by BAII. The question now before this Court is whether the holder of the participation interest (Banque Arabe by way of BAII) or the packager of the participation interests (MNB) must bear the loss resulting from the unpaid loan.

 BACKGROUND

 The instant motion is made upon a set of stipulated facts. The undisputed facts which are relevant to a determination of the legal questions involved are as follows:

 The Marceca Loan and Participations

 On June 23, 1988, MNB made a mortgage loan ("the Marceca loan"), arranged by its merchant banking affiliate, MNC International Bank ("MNCIB"), in the principal amount of $ 35 million, to 1 East 93rd Associates, 36 East 64th Associates, 55 West 89th Associates, 57 West 89th Associates, 405 East 72nd Owners Corporation, 51st Owners Corporation, 107 East 63rd Owners Corporation and 342 East 67th Owners Corporation (collectively "the Marceca borrowers"). Each of these borrowers was owned or controlled by Robert K. Marceca. Repayment of the loan was secured by individual mortgages ("the Marceca mortgages") on eight rent-controlled or rent-stabilized apartment buildings located in Manhattan (collectively "the Marceca properties"). n2 The purpose of the Marceca loan was to finance the acquisition, renovation and conversion to cooperative or condominium ownership of the eight Marceca properties. n2 Each Marceca borrower owned a separate parcel of real property as follows: Marceca Borrower Marceca Property 1 East 93rd Associates 1 East 93rd Street 36 East 64th Associates 36 East 64th Street 55 West 89th Associates 55 West 89th Street 57 West 89th Associates 57 West 89th Street 405 East 72nd Owners 405-411 East 72nd Street Corporation 51st Owners Corporation 214 East 51st Street 107 East 63rd Owners 107 East 63rd Street Corporation 342 East 67th Owners 305-315 West 13th Street Corporation

19930423

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