Tutor Perini Bldg. Corp. v. N.Y.C. Reg'l Ctr., LLC
| Decision Date | 15 March 2021 |
| Docket Number | 20 Civ. 731 (PAE) |
| Parties | TUTOR PERINI BUILDING CORP., individually and, as to Count I of the Complaint, on behalf of all others similarly situated, pursuant to Article 3-A of the N.Y. Lien Law, Plaintiff, v. NEW YORK CITY REGIONAL CENTER, LLC, George Washington Bridge Bus Station and Infrastructure Development Fund, LLC, GSNMF SUB-CDE 12 LLC, GSB NMTC Investor LLC, LIIF SUB-CDE XXVI, LLC, DVCI CDE XIII, LLC, GWB NMTC Investment Fund LLC, GWB Leverage Lender, LLC, George Washington Bridge Bus Station and Infrastructure Development Fund, Phase II, LLC, Upper Manhattan Empowerment Zone Development Corporation, Slayton Ventures, LLC, Slayton Equities, SJM Partners Inc., Paul Slayton, an individual, Stephen Garchik, an individual, William "Trey" Burke, an individual, Stephen McBride, an individual, and Does 1–300, inclusive, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Gabriel Henriquez, Steven M. Garber & Associates, P.C., Woodland Hills, CA, Robert Nida, Nida & Romyn, P.C., Los Angeles, CA, Emily Diane Anderson, Ira Martin Schulman, Sheppard, Mullin, Richter & Hampton LLP, New York, NY, for Plaintiff.
David B. Newman, Mark Steven Olinsky, James M. Hirschhorn, Matthew P. Canini, Sills Cummis & Gross PC, New York, NY, Mary Elissa Toscano, Sills Cummis & Gross P.C., Newark, NJ, for Defendants Slayton Ventures, LLC, Slayton Equities, SJM Partners Inc., Paul Slayton, Stephen Garchik, William "Trey" Burke, Stephen McBride.
Mary Elissa Toscano, Sills Cummis & Gross P.C., Newark, NJ, for Defendant Does 1-300.
This case involves claims that funds intended for the renovation of the George Washington Bridge Bus Station in upper Manhattan ("Project") were misappropriated. Plaintiff Tutor Perini Building Corp. ("TPBC") was hired by non-party George Washington Bridge Development Venture LLC ("Developer") to provide construction work on the Project. But, TPBC alleges, the Developer, which is now in bankruptcy proceedings and not a party here, defaulted on its payment obligations to TPBC and others. The Developer's inability to pay, TPBC alleges, resulted from its unlawful diversion of funds it had received from the Port Authority of New York and New Jersey ("Port Authority") and various lenders. TPBC now sues a score of entities involved in that alleged misappropriation, including the Developer's owners, several related entities, and the Developers’ lenders (but not the Developer itself, given its bankruptcy).
TPBC brings claims for wrongful diversion of trust assets under Article 3-A of the New York Lien Law, see N.Y. Lien Law § 70 et seq. , conversion, and constructive fraud against various individuals and entities associated with the Developer. Those are: Slayton Ventures, LLC ("Slayton Ventures"), Slayton Equities, SJM Partners Inc. ("SJM Partners"), Paul Slayton, Stephen Garchik, William "Trey" Burke, Stephen McBride, and 300 Doe defendants (together, "Developer Affiliates").
TPBC also sues nine lenders, who allegedly received some funds diverted by the Developer Affiliates, also under the New York Lien Law. It seeks a declaratory judgment against those lenders, too, declaring TPBC's interests in proceeds related to the Project superior to those of the lenders. Those lenders are: New York City Regional Center, LLC ("NYCRC"), George Washington Bridge Bus Station and Infrastructure Development Fund, LLC ("GW Bridge Fund I"), George Washington Bridge Bus Station and Infrastructure Development Fund, Phase II, LLC ("GW Bridge Fund II," and together with NYCRC and GW Bridge Fund I, "Senior Lenders"); GSNMF SUB-CDE 12 LLC ("GSNMF"), GSB NMTC Investor LLC ("NMTC Investor"), LIIF SUB-CDE XXVI, LLC ("LIIF"), DVCI CDE XIII, LLC ("DVCI"), GWB NMTC Investment Fund LLC ("NMTC Investment Fund"), and GWB Leverage Lender, LLC ("Leverage Lender," and together with GSNMF, NMTC Investor, LIIF, DVCI, and NMTC Investment Fund, "Co-Lenders"); and Upper Manhattan Empowerment Zone Development Corporation ("UMEZ," and collectively with the Senior Lenders and Co-Lenders, "Lender Defendants").
Defendants have filed four motions to dismiss—one by the Developer Affiliates, one by the Senior Lenders, one by the Co-Lenders, and another by UMEZ, although for the most part all Lender Defendants rely on arguments made by the Senior Lenders in their briefing. The Developer Affiliates move to dismiss for failure to state a claim under Rule 12(b)(6) and for lack of subject-matter jurisdiction under Rule 12(b)(1), for want of diversity jurisdiction. The other defendants move solely under Rule 12(b)(6).
For the following reasons, the Court grants the motion by the Developer Affiliates in part and denies it in part, and grants the motions filed by all three sets of Lender Defendants.
TPBC is an Arizona corporation with a principal place of business in Nevada. SAC ¶ 7. It is a "leading building construction firm," which has built "some of the most complex and high-profile projects in New York and throughout the country, including major sports facilities, hotels, health care centers, residential and retail facilities." Id. ¶ 27.
Paul Slayton is the principal executive of Slayton Ventures. He is a citizen of New York. Id. ¶ 21.
Stephen Garchik is the chief executive of SJM Partners. He is a citizen of Florida. Id. ¶ 22.
Stephen McBride is the Managing Principal for Development of SJM Partners. He is a citizen of Virginia. Id. ¶ 24.
William "Trey" Burke is the Senior Vice President for Development of SJM Partners. He is a citizen of Virginia. Id. ¶ 23.
Slayton Ventures is a New York LLC whose only member is a citizen of New York. Id. ¶ 18; Nida Decl. ¶ 18.
Slayton Equities is a New York corporation with its principal place of business in New York. SAC ¶ 19.
SJM Partners is a Florida corporation with its principal place of business in Florida. Id. ¶ 20.
The SAC alleges that Slayton, Garchik, and McBride each own or operate the Developer and Slayton Ventures, Slayton Equities, and SJM Partners ("Related Developer Entities"), and that each is in some way related to the Developer or entities that directly own it. Id. ¶ 30. The SAC alleges Burke is an employee of SJM Partners; it does not allege that Burke owns or controls any of the above entities. Id.
TPBC alleges that each Lender Defendant lent money to the Developer for use on the Project, and later improperly received trust funds from the Developer as repayment for the principal on those loans, as interest, and as payment of fees or costs. Id. ¶¶ 72–76, 79.
NYCRC is a New York LLC, whose members are citizens of New York, Florida, or South Korea. Id. ¶ 8; Nida Decl. ¶ 10. TPBC alleges that it both agreed to lend money to the Project in 2011, and received payments from the Developer in 2018. SAC ¶¶ 92, 123.
GW Bridge Funds I and II are LLCs, whose members all are citizens of China. Id. ¶¶ 9, 16; Nida Decl. ¶¶ 11–12. TPBC alleges that GW Bridge Fund I lent $72 million to the Developer in 2011 and that GW Bridge Fund II contributed a portion of a $19 million loan to the Developer in 2013. SAC ¶¶ 72–73. It also alleges that each later improperly received funds comprising repayment of those loans, interest, and other fees from the Developer. Id. ¶¶ 76, 79.
GSNMF is a Delaware LLC whose members are all citizens of either New York or Delaware. Id. ¶ 10; Nida Decl. ¶ 13.
NMTC Investor is a Delaware LLC whose members are all citizens of New York or Delaware. SAC ¶ 11; Nida Decl. ¶ 14.
LIIF is a Delaware LLC whose members are all citizens of New York, California, or Delaware. SAC ¶ 12; Nida Decl. ¶ 15.
NMTC Investment Fund is a Delaware LLC whose members are all citizens of New York or Delaware. SAC ¶ 14; Nida Decl. ¶ 16.
DVCI is a Delaware LLC whose members are citizens of New York, Delaware, and Arizona. SAC ¶ 13; Nida Decl. ¶ 19. DVCI has two members: NMTC Investment Fund and DV Community Investment LLC ("DV"). As stated, NMTC Investment Fund is a citizen of New York and Delaware. DV has three members: Dudley Ventures LLC, James D. Howard, and Johanna G. Kato. Canini Decl., Ex. A at 7. Howard and Kato are "full-time residents of Arizona." Id. ; see Nida Decl. ¶ 19.
GSNMF, NMTC Investor, LIIF, NMTC Investment Fund, and DVCI are each alleged to have contributed, along with GW Bridge Fund II, a portion of the 2013 $19 million loan to the Developer. SAC ¶ 73. Each also allegedly improperly received from the Developer repayment of that loan's principal, interest, and related fees. Id. ¶¶ 76, 79.
Leverage Lender is a Delaware LLC whose members are citizens of New York, Virginia, Colorado, Maryland, and Washington DC. Id. ¶ 15; Nida Decl. ¶ 17. TPBC alleges that it lent the Developer $9 million in 2014, and later improperly received from the Developer repayment of that loan's principal, interest, and related fees. SAC ¶¶ 74, 76, 79.
UMEZ is a New York corporation with its principal place of business in New York. Id. ¶ 17. TPBC alleges that it lent the Developer $5 million in 2018, for use in connection with the Project. Id. ¶ 75. Like the other Lender Defendants, UMEZ allegedly received improper payments from the Developer. Id. ¶¶ 76, 79.
Aside from DVCI, each LLC defendant has stated that none of its members, nor any of the members of its sub-entity owners, is a citizen of Arizona or Nevada. See generally Nida Decl. ¶¶ 10–20. Thus, with the exception of DVCI, all defendants are citizens of different states than is TPBC.
The SAC names 300 "Doe" defendants, some allegedly affiliated with the Developer, and the rest, investors who made contributions to the Project through the Co-Lender entities. SAC ¶¶ 80–81.
The George Washington Bridge Bus Station ("Station") is a transit facility operated by the Port Authority. Id. ¶ 28. It is located over the Trans-Manhattan Expressway, between 178th...
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