Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Deng v. 278 Gramercy Park Group, LLC

United States District Court, S.D. New York

May 30, 2014

STEPHEN DENG, RUOHONG JIANG, ANN ZEMAITIS, MIGUEL SANTIAGO, Plaintiffs,
v.
278 GRAMERCY PARK GROUP, LLC; KAISH & TAUB DEVELOPMENT LLC; GRAMERCY PARK HOLDINGS LLC; GRAMERCY PARK LAND LLC; BLACK MOUNTAIN DEVELOPMENT, LLC; NORMAN KAISH, Defendants

Page 282

For the Plaintiffs: Kevin Kerveng Tung, Flushing, NY.

Norman Kaish, Defendant, Pro se, West Hempstead, NY.

Page 283

OPINION AND ORDER

DENISE COTE, United States District Judge.

Plaintiffs Stephen Deng (" Deng" ), Rouhong Jiang (" Jiang" ), Ann Zemaitis (" Zemaitis" ), and Miguel Santiago (" Santiago" ) bring this action against Norman Kaish (" Kaish" ) and related corporate entities (" corporate defendants" ), under Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (" Exchange Act" ); under Sections 12(a)(2), 15, and 17 of the Securities Act of 1933 (" Securities Act" ); under Rule 506 of Regulation D of the Securities Act; and under various common law theories. The corporate defendants defaulted, and the claims against them were referred for an inquest on damages. Plaintiffs have now moved for partial summary judgment against Kaish on the Section 10(b) and Rule 10b-5 claim only. For the reasons explained below, plaintiffs' partial summary judgment motion is granted.

BACKGROUND

The following facts are undisputed or taken in the light most favorable to the non-moving party, here the defendant. The plaintiffs consist of two couples who invested in a Manhattan real estate development project (" Project" ) at different times. The first couple, Zemaitis and Santiago, invested in 2006. The second couple, Deng and Jiang, invested in 2008.

The Project was organized by defendant Kaish and Leonard Taub (" Taub" ). The corporate defendants consist largely of corporate entities formed by Kaish and Taub to execute the Project. In July 2006, the Project issued a Private Placement Memorandum (" PPM" ). As relevant here, the PPM lays out the following description of the Project:

o The Project intends to purchase a piece of land in the Gramercy neighborhood of Manhattan, New York, in order to develop residential condominiums, exclusive triplex residences, and commercial space.
o The PPM offers Class B shares in the Project, at a price of $110,000 per unit, and constituting 1/200 membership interest in the Project.
o The cost of the Project will be approximately $94.1 million, which includes purchasing the land, the air rights, construction costs, and other costs and expenses.
o " $11 million of the project cost will be covered by the equity raised through this offering."
o The remaining costs will be covered by a mezzanine loan and a construction loan, in the amount of $14.6 and $70.6 million respectively.

Page 284

o " The Company believes it can rapidly obtain preliminary approval for a construction loan with a lien on the Property from commercial Banks (the 'Lender') in the amount of $70.6 million (the 'Loan')."
o The Development Group is entitled to an aggregate fee of 5% of the total cost of the Project.

The PPM also sets forth many risk factors, the most relevant of which are as follows:

o These securities " involve a high degree of risk, and should not be purchased by anyone who cannot afford a complete loss" of investment.
o " The Company requires substantial amounts of construction financing from banks to implement and complete the Project. The Company cannot be certain that such external financing will be available on favorable terms, or at all."
o " The availability and terms upon which financing of the Project may be obtained are material to the Company's operations and there can be no certainty that such financing, if available, will be on acceptable terms to the Company."
o " Changes in national economic conditions . . . may have a material adverse impact on the Company's results of operations or ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.