Wade Park Land Holdings, LLC v. Kalikow
| Docket Number | 21-cv-1657 (LJL) |
| Decision Date | 23 March 2023 |
| Parties | WADE PARK LAND HOLDINGS, LLC et al., Plaintiffs, v. JONATHAN KALIKOW et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
On March 4, 2022, this Court issued an Order and Opinion granting Defendants motion to alter the judgment allowing Plaintiffs to replead their two claims for fraudulent transfer under federal law and Georgia law. Dkt No. 74. Plaintiffs timely filed their second amended complaint (“SAC”), Dkt. No. 75, and Defendants filed a renewed motion to dismiss the SAC, Dkt. No. 82. Plaintiffs subsequently filed a motion to retransfer the case back to the United States District Court for the Northern District of Georgia. Dkt. No. 88.
For the following reasons, the Court denies the motion to transfer and grants the motion to dismiss the SAC with prejudice.
Familiarity with the facts is presumed. For the purposes of these motions, the Court accepts as true the well-pleaded allegations of the SAC. The Court first describes the relevant and unchanged allegations from the SAC before describing its newly pleaded allegations.
Plaintiffs allege that a temporary bridge loan from one of the Defendants, Gamma Real Estate Capital, devolved into a fraudulent scheme by Defendants to take control of two parcels of land located outside of Dallas, Texas known as “Wade Park.” Dkt. No. 75 ¶¶ 1, 2.
Between 2012 and 2015, various entities associated with real estate developer Stanley Thomas acquired approximately 176 acres of land comprising Wade Park, which was eventually divided into northern and southern properties. Id. ¶¶ 37, 38. Thomas envisioned that the Wade Park project would entail eventual construction of office towers, retail space residential housing units, and hotels. Id. ¶ 35. Two Thomas-affiliated entities held title to the land Plaintiff WP Land held title to the southern parcel of Wade Park and plaintiff WPL Holdings held title to the northern parcel. Id. ¶¶ 7-8. The acquisitions were financed through funds held by the Trust, Thomas-affiliated entities, and purchase mortgages from Bridge Capital, LLC (“Bridge Capital”) and BAMCAP Partners, LP (“BAMCAP”). Id. ¶¶ 30-31, 37. By the spring of 2016, Lebanon 390WR, an entity affiliated with Thomas, owed approximately $45 million to Bridge Capital for the loan used to acquire and construct the northern parcel of Wade Park, and WP Land owed approximately $48 million to BAMCAP for the loan used to acquire and construct the southern parcel of Wade Park. Id. ¶ 43. Both sets of loans were set to mature in early 2017. Id. ¶ 44. During this time, Thomas sought additional financing for the project from other financial institutions (including JP Morgan, USAA, and others). Id. ¶¶ 44-46. Bridge Capital (but not BAMCAP), however, told Thomas that it could not extend the maturity date of its loans, and Thomas thus sought to obtain a bridge loan to pay back Bridge Capital and finance construction while the financial institutions completed their due diligence. Id. ¶ 46.
Eventually, Thomas met defendants Kalikow and Gamma Real Estate Capital in or around October 2016 and secured a bridge loan from them. Id. ¶¶ 27, 48-50. Following a series of negotiations, WP Land and WPL Holdings executed a loan agreement with Gamma Real Estate Capital on or around January 17, 2017, which included, inter alia, the following terms: The total amount of the loan was for approximately $83 million, which was insufficient for WP Land and WPL Holdings to both pay off the Bridge Capital loans and to fund construction. Id. ¶ 71. The initial four-month term of the loan could be extended three times, each time for three months, at the option of the borrowers, provided that the loan was not in default and that the borrowers had paid into an interest reserve account the amount of interest due for the ensuing three-month period. Dkt. No. 83-2, Ex. B §§ 3.13-3.15. Gamma Real Estate Capital was given a second priority lien on the southern Wade Park parcel behind BAMCAP, and BAMCAP entered into an intercreditor agreement cross-collateralizing and cross-defaulting the BAMCAP loans on the southern parcel with the Gamma Bridge Loan.[3] Dkt. No. 75 ¶ 64. Pursuant to the terms of the intercreditor agreement, Gamma Real Estate Capital had the option to purchase the BAMCAP loans if WP Land defaulted on the BAMCAP loans. Id. ¶ 93. WP Land and WPL Holdings also agreed to grant Gamma Real Estate Capital a first mortgage lien on the northern Wade Park parcel. Id. ¶ 82. Finally, the agreement included a term that Kalikow called “The Hammer.” Id. The Hammer gave Kalikow and the Gamma Defendants a 75% interest in the Wade Park project through WP Ventures, a bankruptcy-remote entity, and provided that they would retain that interest unless the Gamma Bridge Loan was repaid within sixty days of its maturity date. Id. ¶¶ 72-73. The Trust held the remaining 25% interest. Id. ¶ 82.
Under the loan agreement, Gamma Real Estate Capital also retained the right to approve any modifications to the BAMCAP loans encumbering the southern Wade Park parcel, provided that it could not unreasonably withhold its consent to a modification if the modification did not materially increase the amount of the borrowers' obligation to BAMCAP. Id. Modifications that increased the amount of the borrower's obligation to BAMCAP, which would thereby increase BAMCAP's interest in the property at the expense of Gamma Real Estate Capital, would thus require the consent of Gamma Real Estate Capital, even if the modifications were necessary to avoid a default on the BAMCAP loans. Id. ¶¶ 82, 97. Upon the occurrence of an event of default, Gamma Real Estate Capital was entitled to take a number of actions, including declaring the borrowers' obligations to be immediately due and payable and obtaining foreclosure of the security instrument encumbering the Wade Park property. Dkt. No. 83-2, Ex. B. § 9.2. As a part of this transaction, Gamma Real Estate Capital assigned all its interests in the Gamma Bridge Loan to Gamma Lending Omega. Dkt. No. 75 ¶ 84.
The Gamma Bridge Loan was scheduled to mature on May 17, 2017. Id. ¶ 109. WP Land and WPL Holdings signed a loan modification agreement on May 17, 2017, extending the term of the Gamma Bridge Loan by an additional three months, Dkt. No. 83-2, Ex. C, and then extended the term of the loan again on or about August 1, 2017, and once more on November 15, 2017, pushing Gamma Bridge Loan's term out to approximately February 17, 2018, Dkt. No. 75 ¶ 109. Thomas continued his efforts to secure a permanent financing partner for the Wade Park project during this time, but he was unable to complete negotiations. Id. ¶¶ 111-15.
On or around January 26, 2018, the Gamma Defendants declared WP Land and WPL Holdings to be in default on the Gamma Bridge Loan after Plaintiffs proposed a modification and extension of the BAMCAP loans and the Gamma Defendants declined to consent. Id. ¶¶ 128-30. The proposed modification and extension would have given Thomas a one-month extension to repay BAMCAP in exchange for a fee of approximately $530,000 that would be capitalized into the BAMCAP loans; in effect Defendants would be further subordinated to BAMCAP by $530,000. Id. ¶¶ 117-18. Following the Gamma Defendants' declarations of default, WP Land and WPL Holdings entered a total of six forbearance agreements with the Gamma Defendants. Id. ¶ 136. Each agreement gave WP Land and WPL Holdings additional time to pay off their debt to the Gamma Defendants. The first such agreement was dated March 5, 2018. It contained WP Land and WPL Holding's acknowledgement that Gamma Lending Omega was entitled to exercise its foreclosure rights under the loan documents and reflected Gamma Lending Omega's agreement to forbear from exercising its rights and remedies under the loan documents and from conducting a nonjudicial foreclosure of the Wade Park property until April 10, 2018. Dkt. No. 84-3. The second forbearance agreement was dated April 26, 2018, and extended the forbearance terms until June 17, 2018. Dkt. No. 84-4. The third forbearance agreement was dated July 2, 2018, and again extended the forbearance terms, this time until August 31, 2018. Dkt. No. 84-5. WP Land and WPL Holdings paid a fee to Gamma Lending Omega and executed broad releases in connection with each forbearance agreement. Dkt. Nos. 84-3, 84-4, 84-5. The Gamma Defendants also began advertising foreclosure of the Wade Park properties at this time, as permitted by those forbearance agreements. Dkt. No. 75 ¶ 139.
During July 2018, Gamma Lending Omega purchased the BAMCAP loans, which meant that Gamma Lending Omega owned all of the loans encumbering the Wade Park properties. Id. ¶ 176. Gamma Lending Omega then entered into three additional forbearance agreements with Plaintiffs on August 28, 2018, October 1, 2018, and December 31, 2018, each giving WP Land and WPL Holdings additional time to secure financing to satisfy their obligation to Gamma Lending Omega. Dkt. No. 83-3, Exs. G, H, I. WP Land and WPL Holdings paid fees to Gamma Lending Omega totaling approximately $38 million in connection with all of the forbearance agreements. Dkt. No. 75 ¶ 138. The sixth and final forbearance agreement obligated Gamma Lending Omega to forbear from exercising its remedies and conducting a nonjudicial foreclosure of the Wade Park property until February 4, 2019. Dkt. No. 83-3, Ex. I.
From January 2018 to January 2019, Thomas also engaged in efforts to secure financing to pay the Gamma Bridge Loan, but he...
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