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CP III Rincon Towers, Inc. v. Cohen

United States District Court, S.D. New York

April 7, 2014

CP III RINCON TOWERS, INC., Plaintiff,
v.
RICHARD COHEN, Defendant

Page 308

For CP III Rincon Towers, Inc., Plaintiff: Elizabeth Kelly Murray, Joanna Ruth Helferich, Ronald Gustav Blum, LEAD ATTORNEYS, Manatt, Phelps & Phillips, LLP(NYC), New York, NY; Kimo S. Peluso, LEAD ATTORNEY, Manatt, Phelps & Phillips, LLP(TimesSq), New York, NY; Ann M. Heimberger, Barry W. Lee, Lenard G. Weiss, PRO HAC VICE, Manatt, Phelps & Phillips, LLP, San Francisco, CA.

For Richard D. Cohen, Defendant: Janice Mac Avoy, Joshua Daniel Roth, Fried, Frank, Harris, Shriver & Jacobson, New York, NY; Justin Joseph Santolli, Fried, Frank, Harris, Shriver & Jacobson LLP, New York, NY.

OPINION

Page 309

Deborah A. Batts, United States District Judge.

Plaintiff CP III Rincon Towers, Inc. (" CP III" or " Plaintiff" ) filed this action against Defendant Richard Cohen (" Cohen" or " Defendant" ) seeking recovery from Defendant under a guaranty (the " Guaranty" ) he signed. Plaintiff now moves for summary judgment on the issue of Defendant's liability under the Guaranty. Defendant cross-moves for summary judgment on Plaintiff's claims. For the reasons set forth herein, Plaintiff's Motion for Summary Judgment is DENIED, and Defendant's Motion for Summary Judgment is GRANTED.

Page 310

I. BACKGROUND

A. The Loan

1. The Property and the Loan's Successors

In 2005, Beacon Capital Partners (" Beacon" ) purchased a mixed-use development project in San Francisco (" the Project" ). (Def.'s 56.1 Stmt. ¶ ¶ 6-8.) The Project included a high-rise apartment building (" the Property" ) with 320 units that Beacon intended to convert into condominium units. (Id. ¶ ¶ 6-7.) The Property owner was a part of the Project's real estate owners' association (" REOA" ), which required payment of association fees. (Pl.'s 56.1 Stmt. ¶ 22.)

Defendant serves as president of Rincon EV Realty LLC, Rincon ET Realty LLC, and Rincon Residential Towers LLC (collectively, " Rincon" or " Borrower" ). (Id. ¶ ¶ 3-4.) In 2007, Beacon awarded Rincon the right to purchase the Property. (Def.'s 56.1 Stmt. ¶ 11.) Cohen then requested that Ben Milde (" Milde" ), a senior managing director at Bear Stearns Commercial Mortgage, Inc. (" Bear Stearns" or, together with its successors in interest, " Lender" ), send him a preliminary quote for financing the Property with a $110 million loan; Milde did so on May 17, 2007. (Id. ¶ 16.) The next day Defendant stated he would finance with Bear Stearns if it could close by the end of the month. (Id. ¶ 16.)

On June 8, 2007, Rincon and Bear Stearns entered into a $110 million Loan Agreement (" Loan" or " Loan Agreement" ). (Pl.'s 56.1 Stmt. ¶ 7.) The final purchase price of the Property was $143 million with Rincon paying approximately $153.6 million, including closing costs. (Def.'s 56.1 Stmt. ¶ ¶ 12-13.) Borrower fulfilled payment using the $110 million Loan as well as its own reserves. (Id. ¶ 13.) To effectuate the transfer of the Property and the Loan, Rincon also executed a Deed of Trust, Promissory Note, Security Agreement and Allonge on June 8, 2007.[1] (Id. ¶ 57; Pl.'s 56.1 Stmt. ¶ 8.) That same day, Defendant, in his individual capacity, entered into the Guaranty with Bear Stearns in which he assumed liability for payment of the Loan Agreement under certain circumstances. (Pl.'s 56.1 Stmt. ¶ 8.)

In early 2008, the Federal Reserve agreed to facilitate a merger between Bear Stearns and JP Morgan & Chase Co. (Def.'s 56.1 Stmt. ¶ 61.) In connection with the merger, the Federal Reserve created Maiden Lane LLC (" Maiden Lane" ), which acquired the Property at issue here. (Id. ¶ ¶ 62-63.) BlackRock Financial Management Inc. (" BlackRock" ) ...


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