Download - ENCLOSURE - Judiciary of New York
MSFMeister Seelig & Fein LLP
Stephen B. Meister
Partner
Direct (212) 655-3551Fax (646) [email protected]
November 15, 2018
VIA E-FILING AND FEDERAL EXPRESS
Justice Leonard Livote
Queens County Supreme Court, I.A.S. Part 33
Commercial Division Part A, Courtroom 122
88-11 Sutphin Boulevard
Jamaica, New York 11435
Re: Astoria Atlas Haldi::zs, LLC et al. v. Metic;:!it:: Pacific Properties, Inc. et al.,
Index No. 708932/2018
Dear Justice Livote:
As Your Honor will recall, we represent Plaintiffs in this derivative action.
I write in order to supplement the record before this Court. Mr. Jeffrey L. Nogee, counsel for the
Receiver, just e-filed a letter with this Court (Dkt. 269), dated today, that makes reference to a
letter that my firm e-filed earlier today with the Eastern District of New York, in the action
captioned Wells Fargo Bank, N.A. et ano. v. Acropolis Gardens Realty Corp., et al., Case No.
18-cv-5498-WFK-RLM (E.D.N.Y.).
I now enclose that letter, and its exhibits, for the Court's reference.
We appreciate Mr. Nogee bringing it to the Court's attention, and concur with his conclusion that
"any attemptedOSC"
by Acropolis Gardens Realty Corp. "to stay the shareholder meeting and
elections presently scheduled for this coming Monday, November19"
should be rejected.
Very truly yours,
Stephen B. Meister, Esq.
Enclosure
cc: All counsel of record (via NYSCEF)
125 Park Avenue, 7th Floor, New York, NY 10017 I Phone (212) 655-3500 I Fax (212) 655-3535 | meisterseelig.com
ENCLOSURE
Case 1:18-cv-05498-WFK-RLM Document 48 Filed 11/15/18 Page 1 of 3 PagelD #: 1750
MSFMeister Seelig & Fein LLP
Stephen B. Meister
Partner
Direct (212) 655-3551Fax (646) [email protected]
November 15, 2018
VIA E-MAIL
Steven R. Schlesinger, Esq.
Jeffrey D. Lebowitz, Esq.
Sophia A. Perna-Plank, Esq.
Jaspan Schlesinger LLP
300 Garden City Plaza, 5th Floor
Garden City, New York 11530
John S. Ciulla, Esq.
Peter J. Williams, Esq.
Rosenberg Calica & Birney LLP
100 Garden City Plaza, Suite 408
Garden City, New York 11530
Re: Astoria Atlas Holdings, LLC et al. v. Metropolitañ Pacific Properties, Inc. et al.,Index No. 708932/2018 (the "State Action"), and
and
Wells Fargo Bank, N.A. et ano. v. Acropolis Gardens Realty Corp., et al.,
Case No. 18-ev-5498-WFK-RLM (the "Federal Action")
Dear Counsel:
We are counsel to plaintiffs in the State Action and to defendant Acropolis Associates LLC in the
Federal Action. We write in response to the letter from Jaspan Schlesinger LLP dated today, and
circulated by e-mail at 10:35 a.m., providing notice of Acropolis Garden Realty Corporation's
("AGRC") intention to present an Order to Show Cause tomorrow (the"Notice;"
Exh. A) in the
State Action seeking, for a third time, to enjoin theshareholders'
meeting scheduled for Monday.
We hereby demand that the Jaspan firm withdraw the Notice. If the Jaspan firm does not do so,
we will be seeking sanctions in the State Action pursuant to 22 NYCRR § 130-1.1(c). The Jaspan
firm has no basis to seek a third bite at the apple on relief it sought twice before and which was
twice denied in the State Action - first on October 2, 2018 and again on October 30, 2018.
We have included Messrs. Ciulla and Williams on this letter because, in light of the Notice, the
statements made by Mr. Ciulla to Chief Magistrate Judge Mann in the Federal Action were
misleading, and for that reason we have copied the Magistrate Judge hereon.
. 125 Park Avenue, 7th Floor, New York, NY 10017 | Phone (212) 655-3500 | Fax (212) 655-3535 ] meisterseelig.com
Case 1:18-cv-05498-WFK-RLM Document 48 Filed 11/15/18 Page 2 of 3 PagelD #: 1751
Letter to Mr. Schlesinger, et al.Page 2
November 15, 2018
On October 2nd, in the State Action, Justice Livote struck from AGRC's Order to Show Cause on
Motion Sequence No. 005 its request to have "Plaintiffs and their agents ... temporarily restrained
and enjoined from conducting any shareholder meetings of AGRC including the one noticed for
November 19, 2018, special meetings, soliciting proxy votes with respect to such meetings, or
otherwise interfering with the duties of AGRC's board of directors as set forth in Section II of
AGRC's by-laws..."(State Action Dkt. 172 at 4.) On the record, Justice Livote also made clear
that even if the November 19thmeeting is an "improperly called meeting, it has no force and effect
then, right, so why should I stay [it] -- it's just a bunch of people meeting atplaintiffs'
office, theycan call it a
shareholders'meeting if they want but it's not, according to your interpretation, it's
just a bunch of people gettingtogether."
(State Action Dkt. 186 at 15:3-8.)
. At the October 30thappearance before Justice Livote, counsel for the Receiver, Jeffrey L. Nogee,
requested that AGRC's Motion Sequence No. 005 be adjourned until November 27th, so the
Receiver could determine whether he would intervene in the State Action. AGRC protested before
Justice Livote that such an adjournment would put argument beyond the date of the scheduled
shareholder meeting on November 19th, but Justice Livote was clear - the meeting would go
forward, and argument would nevertheless be adjourned until the 27th
Just two days ago, on November 13th, in an appearance in the Federal Action before Chief
Magistrate Judge Mann, the imminentshareholders'
meeting was mentioned by Magistrate Judge
Mann. In response, Mr. Ciulla - counsel for AGRC in that action - did not dispute that the
shareholder meeting would go forward on November 19th.
THE COURT: And [AGRC's property]'s not going to be foreclosed upon before
the shareholder's meeting on Monday.
MR. CIULLA: No doubt, Your Honor, that's correct.
Exh. B at 21:18-20. After Magistrate Judge Mann announced her interpretation of the
Receivership Order as requiring the Federal Court's consent to a refinancing, and in response to a
request for that consent from Mr. Ciulla, Her Honor said she was not "inclined togive"
Judge
Kuntz a recommendation to grant AGRC's counsel's request for permission to refinance its current
mortgage "when you have meetings scheduled for Monday to vote on a newboard."
Id at 26:6-7.
It is no answer for Mr. Ciulla to say he was unaware of the Jaspan firm's intention to file the
Notice. Magistrate Judge Mann made clear that the Federal Court would not countenance AGRC's
federal counsel's purported ignorance of state counsel's actions (id. at 18:10-20):
THE COURT: ... I find it hard to believe that you [Mr. Ciulla] come to this
proceeding today and you can't give me a straight answer when I
ask about the status of the refinancing efforts. And it's no answer
to say that Mr. Schlesinger is not available.
That's what you told Justice Livote back in, whenever, and unless
he's being held incommunicado, I would think that you would have
that information before today.
Meister Seelig & Fein LLP
125 Park Avenue, 7th Floor, New York, NY 10017 | Phone (212) 655-3500 | Fax (212) 655-3535 I meisterseelig.com
Case 1:18-cv-05498-WFK-RLM Document 48 Filed 11/15/18 Page 3 of 3 PagelD #: 1752
Letter to Mr. Schlesinger, et al.Page 3
November 15, 2018
MR. CIULLA: Your Honor, unfortunately I do not, and I'm being as frank with you
as I can be. I am not in possession of that information.
Magistrate Judge Mann's written ruling dated November 13, 2018 - which we sent to the Jaspan
firm yesterday (but which is re-enclosed as Exh. C)- admonished AGRC and noted the risks of
a contempt citation if it"persist[s]"
in "obstructionistconduct"
that includes "failing tocooperate"
with the Receiver (id. at 2). Yet, AGRC is again doing just that by trampling on the adjoumment
Mr. Nogee specifically sought - to consider the Receiver's right to intervene (guaranteed by the
Federal Court's Receivership Order)- which Justice Livote granted, and worse, by tactically
failing to copy Mr. Nogee on the Notice even though the proposed application is being made in an
action in which the Receiver is right now assessing his right to intervene prior to the adjourned
State Action hearing on November 27th. Accordingly, we demand that AGRC not go forward
tomorrow, and confirm immediately that its Notice is withdrawn.
Hundreds of shareholders are anxious to vote at the first meeting in eight years. As Mr. Ciulla
noted in Federal Court, default interest is accruing and the shareholders are anxious to refinance
with an institutional loan. The "hardmoney"
loan the existing illegitimate board proposes carries
regular interest far greater than the default rate interest now accruing, so it is no answer to say that
the existing board wants to end default rate interest.
Our clients reserve the right to hold the Jaspan firm members in contempt in the State Action and
Mr. Ciulla and Mr. Williams in contempt in the Federal Action, should AGRC's threatened
application move forward (and even if it does not, as to other contemptuous conduct).
Very truly yours,
Stephen B. Meister, Esq.
Enclosures
Cc: Via e-filing: EDNY Chief Magistrate Judge Roanne L. Mann
Via e-mail: Jeffrey L. Nogee, Esq.
Randall T. Eng, Esq.
Pui Chi Cheng, Esq.
Benjamin Y. Kaufman, Esq. and Daniel Tepper, Esq.
Joseph C. DeJesu, Esq.
Dennis M. Rothman, Esq. and Ellen Nimaroff, Esq.
Aaron M. Barham, Esq.
Mark L. Cortegiano, Esq. and Diana J. Demirdjan, Esq.
Lord Chester So, Esq.
George G. Coffinas, Esq.
David L. Berkey. Esq. and Adam J. Berkey, Esq.
Jason A. Nagi, Esq. and Amy E. Hatch, Esq.
Meister Seelig & Fein LLP
125 Park Avenue, 7th Floor, New York, NY 10017 | Phone (212) 655-3500 I Fax (212) 655-3535 | meisterseelig.com
EXHIBIT A
Case 1:18-cv-05498-WFK-RLM Document 48-1 Filed 11/15/18 Page 1 of 3 PagelD #: 1753
JASPAN --- Sophia Perna-Plank
Associate
-- SCHLESINGER.3163938²"
A T T O R N E Y S A T L A W REPLY TO GARDEN CITY OFFICE
November 15, 2018
VIA E-MAIL VIA E-MAIL
Stephen B. Meister, Esq. Benjamin Y. Kaufman, Esq.
Michael B. Sloan, Esq. Daniel Tepper, Esq.
Christina Vernaschi, Esq. Wolf Haldenstein Adler Freeman & Herz, LLP
Meister Seelig & Fein LLP 270 Madison Avenue
125 Park Avenue,7th Floor New York, New York 10016
New York, New York 10017 kaufman@whafh-com
[email protected] repper@wha thcom
Pui Chi Cheng, Esq. Randall T. Eng, Esq.
Law Offices of Cheng & Associates PLLC Meyer, Suozzi, English & Klein, P.C.
27-28 Thomson Avenue, Suite 447 990 Steward Avenue, Suite 300
Long Island City, New York 11101 P.O. Box 9194
[email protected] Garden City, New York 11530-9194
[email protected] [email protected]
Re: Astoria Atlas Holdings, LLC, et al. v. Metropolitan Pacific Properties, Inc.,
e-t-al_
Index No.: 708932/2018
Dear Counselors:
As you know, this firm represents defendants, Debbie Vazquez, Umair Sheikh,
Antoine (Tony) Marzouka, Elizabeth Ziangus, C. Anthony Shippam, Robert Bass, Michael
Bass, Andrew Bader and Brian McNamara (collectively, the "Individual Defendants"), and
nominal defendant, Acropolis Gardens Realty Corp.("AGRC"
and, together with the
Individual Defendants, collectively, "Defendants") in the above-referenced action (the
"Action").
Notice is hereby provided to you that, pursuant to Uniform Court Rules, 22 NYCRR §
202.7, on Friday, November 16, 2018, at 10:00 a.m., this firm, on behalf of Defendants, will
present an Order to Show Cause seeking, in.te.t alia: (1) a temporary restraining order
barring your clients and AGRC's other shareholders from voting as to (a) board
membership or (b) matters which affect the management o r control of AGRC, pending the
SAP/DI340064v2/M075425/C0183600
300Gorden C ev Ph::za Gord.9 Cdy NY jIS "I 5 o . EC. -w 5:03 8281 ev.w.·.rcarilr scrr
Case 1:18-cv-05498-WFK-RLM Document 48-1 Filed 11/15/18 Page 2 of 3 PagelD #: 1754
JASPAN ...Notice Letter to
Plaintiffs'Counsel
November 15, 2018--
SCHLESINGER, Page 2
Court's determination as to injunctive and declaratory relief; (2) a judgement pursuant to
CPLR 3001 declaring whether the meeting presently scheduled for November 19, 2018 (the
"Meeting") is valid or invalid; and (3) should the Meeting be declared valid, an order
pursuant to CPLR 6301 enjoining AGRC's shareholders from voting as to (a) board membership
or (b) matters which affect the management or control of AGRC. pending the resolution of the
Action. or, in the alternative. enjoining the newly elected members of AGRC's board of directors
from assuming office or exercising any duties associated therewith. pending the resolution of the
Action, to the Commercial Division Motion Support Office of the Supreme Court, Queens
County, located at 88-11 Sutphin Boulevard, Room 140, Jamaica, New York 11432.
Very truly yours,
Sophia A. Perna- lank
SAP/sap
cc: Steven R. Schlesinger, Esq.
Jeffrey D. Lebowitz, Esq.
Jaspan Schlesinger LLP
300 Garden City Plaza,5th Floor
Garden City, New York 11530
Joseph C. DeJesu, Esq.
Defesu Maio & Associates, P.C.
191New York Avenue
Huntington, New York 11743
Dennis M. Rothman, Esq.
Ellen Nimaroff, Esq.
Lester Schwab Katz & Dwyer, LLP
100 Wall Street
New York, New York 10005-3701
DROTHMAN@LSKDNYI,AW.com
Case 1:18-cv-05498-WFK-RLM Document 48-1 Filed 11/15/18 Page 3 of 3 PagelD #: 1755
JASPAN ... Notice Letter toPlaintiffs'
Counsel
November 15, 2018
Page 3
Aaron M. Barham, Esq.
Furman Kornfeld & Brennan LLP
61 Broadway, 26th Floor
New York, New York 10006
Mark L. Cortegiano, Esq.
Diana J. Demirdjan, Esq.
Law Office of Mark L. Cortegiano, Esq.
65-12 69th place
Middle Village, New York 11379
Lord Chester So, Esq.
Law Offices of Lord Chester So
521 Fifth Avenue,17th Floor
New York, New York 10175
George G. Coffinas, Esq.
The Coffinas Law Firm, PLLC
37 Congers Road
New City, New York 10956
David L. Berkey, Esq.
Adam J. Berkey, Esq.
Gallet Dreyer & Berkey, LLP
845 Third Avenue
New York, New York 10022
EXHIBIT B
UNITED STATES DISTRICT COURTEASTERN DISTRICT OF NEW YORK
WELLS FARGO BANK, NATIONAL * Case No. 18-CV-5498(WFK) ASSOCIATION, AS TRUSTEE, ON *BEHALF OF THE REGISTERED *HOLDERS OF CSAIL *2017-CX9 COMMERCIAL MORTGAGE *TRUST, COMMERCIAL MORTGAGE *PASS-THROUGH CERTIFICATES, *SERIES 2017-CX9, et al., *
**
Plaintiffs, * Brooklyn, New York* November 13, 2018
v. **
ACROPOLIS GARDENS REALTY *CORP., *
Defendant. **
* * * * * * * * * * * * * * * *
TRANSCRIPT OF CIVIL CAUSE FOR STATUS CONFERENCEBEFORE THE HONORABLE ROANNE L. MANN
UNITED STATES MAGISTRATE JUDGE
APPEARANCES:
For the Plaintiff: JASON A. NAGI, ESQ.Polsinelli Shughart PC600 Third Avenue42nd FloorNew York, NY 10016
For the Receiver: JEFFREY L. NOGEE, ESQ.Borah, Goldstein, Alstschulder, Nahins & Goidel, P.C.377 BroadwayNew York, NY 10013
Proceedings recorded by electronic sound recording,transcript produced by transcription service.
Fiore Reporting and Transcription Service, Inc.
4 Research Drive, Suite 402
Shelton, Connecticut 06484 (203)929-9992
Case 1:18-cv-05498-WFK-RLM Document 48-2 Filed 11/15/18 Page 1 of 34 PageID #: 1756
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APPEARANCES Cont'd:
For Acropolis Associates: STEPHEN B. MEISTER, ESQ.MICHAEL BARRY SLOAN, ESQ.Meister Seelilg & Fein LLP125 Park Avenue7th FloorNew York, NY 10017
PUI CHI CHENG, ESQ.Law Offices of Cheng & Associates27-28 Thomson AvenueSuite 447Long Island City, NY 11101
BENJAMIN J. KAUFMAN, ESQ.Wolf Haldenstein Adler Freeman & Herz, LLP270 Madison AvenueNew York, NY 10016
For Acropolis Gardens JOHN S. CIULLA, ESQ.Realty Corp.: PETER WILLIAMS, ESQ.
Rosenberg Calica & Birney, LLP.100 Garden City PlazaSuite 408Garden City, NY 11530
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1 (Proceedings commenced at 3:07 p.m.)
2 THE CLERK: Civil cause for a status conference,
3 Wells Fargo Bank v. Acropolis Gardens Realty Corp.
4 Counsel, please state your appearances for the
5 record.
6 MR. NAGI: Jason Nagi, Your Honor, from Polsinelli
7 P.C., on behalf of the plaintiff.
8 MR. NOGEE: Jeffrey Nogee, Borah, Goldstein,
9 Altshulder, Nahins & Goidel, on behalf of the receiver.
10 MR. MEISTER: Good afternoon, Your Honor --
11 THE COURT: Wait one moment.
12 MR. SORISE: David Sorise, receiver.
13 THE COURT: Welcome.
14 MR. MEISTER: Good afternoon, Your Honor. Stephen
15 Meister. Meister Seelilg for Acropolis Associates, a
16 defendant.
17 MS. CHANG: Good afternoon, Your Honor. Pui Chi
18 Cheng from law offices of Chang and Associates, on behalf of
19 Acropolis Associates.
20 MR. SLOAN: Michael Sloan of Meister Seelilg & Fein
21 for Acropolis Associates.
22 MR. KAUFMAN: Good afternoon, Your Honor. Benjamin
23 Kaufman, Wolf Haldenstein Adler Freeman & Herz, also for
24 Acropolis Associates.
25 MR. CIULLA: Good afternoon, Your Honor. John
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1 Ciulla, Rosenberg Calica & Birney, LLP., for defendant,
2 Acropolis Gardens Realty Corp.
3 MR. WILLIAMS: And, Your Honor, good afternoon.
4 Peter Williams, also with Rosenberg Calica & Birney for
5 Acropolis Gardens Realty Corp.
6 THE COURT: All right. Welcome to all of you.
7 Please be seated, and I encourage you to remain seated during
8 this proceeding so we'll be closer to the -- you'll be closer
9 to the microphones.
10 Before I hear any argument on the pending motion for
11 a TRO, I'd like to get some -- a status update. Let me hear
12 from Acrop counsel for Acropolis Gardens Realty. What is the
13 current status of the negotiations to refinance the mortgage?
14 MR. CIULLA: Your Honor, I have not been directly or
15 personally involved in that. Steven Schlesinger, from the law
16 firm of Jaspan Schlesinger LLP, has been involved. He
17 represents Acropolis Gardens Realty in the pending state court
18 actions, including the state derivative action as we've
19 defined it in our papers.
20 I am not entirely sure. I will say this. It's my
21 understanding that the --my client is ready to refinance. Of
22 course, if there's no TRO in place, but there's also an
23 impediment of a notice of pendency of action that was filed in
24 the state derivative action that has to be addressed before we
25 could proceed with any refinance.
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1 THE COURT: That was going to be my next question,
2 and that is what, if anything, would your client be able to do
3 in light of that notice of pendency?
4 MR. CIULLA: My understanding, and I'm sure Mr.
5 Meister will correct me if I'm wrong, is that Justice Livote,
6 who is presiding over the state court derivative action, has
7 adjourned that, among other issues and matters to the end of
8 this month. Is that correct?
9 (No audible response.)
10 MR. CIULLA: But it's my understanding, Your Honor,
11 that certainly, if we could proceed with the refinancing, I
12 believe that counsel for my client in the state action would
13 seek to have Justice Livote cancel the lis pendens sooner
14 rather than later.
15 THE COURT: And let me ask either the receiver, or
16 counsel for the receiver, the status of the receiver's
17 undertakings pursuant to Judge Kuntz's order.
18 MR. NOGEE: Sure. We've secured the property
19 prospectively from the date of the order, both for receipts,
20 payables, and the physical property.
21 To date, we have not received many of the documents
22 necessary to look retrospectively, or to build up any sort of
23 arrears or financial statements prior to the date of the
24 receivership.
25 THE COURT: And why is that? Have you not been
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1 getting cooperation?
2 MR. NOGEE: Correct. In addition --
3 THE COURT: From Acropolis Gardens?
4 MR. NOGEE: And their agent, Metropolitan, who is
5 the property manager.
6 MR. CIULLA: Your Honor, if I may?
7 THE COURT: No.
8 MR. CIULLA: Okay.
9 THE COURT: Not yet.
10 MR. CIULLA: Sorry.
11 THE COURT: And as I read Judge Kuntz's order, you
12 as receiver, have been empowered to retain a manager who would
13 be taking over from the current management, correct?
14 MR. NOGEE: That's correct. Pinnacle City Living
15 has been retained as property manager.
16 THE COURT: Is there anything you want to add?
17 MR. CIULLA: Sure. As it relates to the property
18 management, they've communicated with over 900 shareholders,
19 posted notices, dealt with numerous issues, including lack of
20 heat due to no oil, pest control issues, leaks from facades
21 and roof, as well as intercom issues.
22 And I have a interim report that I've prepared that
23 outlines the services that Pinnacle has started to provide the
24 property.
25 THE COURT: There's some -- some allegations have
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1 been made by Acropolis Associates, the movant who brings us
2 here today, about the -- is it Metropolitan?
3 Is that the name of the prior manager, continuing to
4 take action in its capacity as manager? Is there anything you
5 want to opine, or information you want to give me with respect
6 to that?
7 MR. CIULLA: Yeah, sure. So, even after the order
8 was issued, there were communications that shareholders from
9 Metropolitan, specifically noting that payments and everything
10 would be as normal and no changes.
11 Additionally, agents on site, as well as some of the
12 venders. removed the notices of attornment that were posted
13 throughout the property.
14 We also had a notice posted at the property that was
15 not approved by me, but posted by Metropolitan called, Truth
16 About Our Co-op. And most recently, I've been notified by
17 shareholders that Metropolitan has been contacting them to
18 sign a proxy to act on their behalf.
19 Additionally, a mortgage broker was sent to the
20 property without prior notice to me, and tried to gain access
21 in order to bring a lender through the property.
22 I have also not received any funds, either in escrow
23 or delivered to the managing agent, Metropolitan, as noted by
24 some of the shareholders after the order was issued.
25 THE COURT: I'm sorry. Could you repeat that?
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1 MR. CIULLA: Sure. I haven't received any funds,
2 whether they be funds that were escrowed prior to the order,
3 nor have I received any funds that were delivered directly to
4 Metropolitan, vis-a-vis Click-Pay, which is their online
5 payment system.
6 THE COURT: All right. I will now hear from counsel
7 for Acropolis Gardens.
8 MR. MEISTER: Thank you, Your Honor. Stephen
9 Meister.
10 You just said Acropolis Gardens. I think you meant
11 Acropolis Associates, Your Honor.
12 THE COURT: No, because I want to hear the response
13 --no, I'm sorry, you're right. Acropolis Associates.
14 MR. MEISTER: Okay, Your Honor. Thank you.
15 So just to touch upon the practicalities that were
16 discussed by counsel to Acropolis Gardens a moment ago, we
17 were before Justice Livote on a motion by Acropolis Gardens
18 Realty Corp., the co-op corporation, and the borrower and
19 principal defendant here, on an emergency motion to cancel the
20 lis pendens and to enjoin the forthcoming shareholder's
21 meeting for the 19th of this month.
22 Justice Livote --
23 THE COURT: When was that --
24 MR. MEISTER: October 18th, Your Honor. Sorry.
25 Sorry.
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1 MS. CHANG: November the 2nd. Sorry. November.
2 MR. MEISTER: Sorry, I misspoke. November the 2nd,
3 Your Honor. Beg your pardon.
4 And at that time, Mr. Nogee, who is sitting, seated
5 next to Mr. Sorise, the receiver, as counsel for the receiver
6 appeared and asked Justice Livote for an adjournment so that
7 the receiver could consider whether to intervene in those
8 proceedings.
9 Justice Livote granted that application, and
10 although Mr. Schlesinger, counsel to AGRC, the Acropolis
11 Gardens in that proceeding, strenuously requested the
12 immediate cancellation of the lis pendens or notice of
13 pendency, it was not granted.
14 We are back before Justice Livote on, I believe
15 October 30th. Sorry, again I misspoke on a date. I
16 apologize. November 27th, on that application.
17 The lis pendens is associated with a claim, the
18 ninth cause of action in Acropolis Associate's amended
19 complaint in the state action, which in substance claims that
20 the existing board is conflicted and acting in a faithless way
21 and, therefore, should be adjudged and declared to be
22 unauthorized to engage in a mortgage refinancing transaction,
23 which is why that claim supports a notice of pendency, because
24 it would affect real title if the relief is granted.
25 So between that --
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1 THE COURT: Which relief are you talking about now?
2 There have been lots of motions for relief, so which specific
3 relief are you talking about?
4 MR. MEISTER: In the ninth cause of action of
5 Acropolis Associates amended complaint, we seek --
6 THE COURT: All right.
7 MR. MEISTER: -- declarator -- in the state action.
8 We seek declaratory relief and associated injunctive relief
9 effectively barring the present board from engaging in a
10 mortgage refinancing transaction, based on the fact that that
11 judgment, if granted, would affect title to property as
12 contemplated by Section 6501 of the New York CPLR. We filed
13 the notice of pendency.
14 Consistent with what Mr. Ciulla just said, as
15 counsel to Acropolis Gardens, Mr. Schlesinger, counsel to
16 Acropolis Gardens in the state action, implored Justice Livote
17 to cancel the lis pendens right then and there because he said
18 we can't refinance with the lis pendens on.
19 For that reason, after those proceedings we didn't
20 seek any further relief, thinking it was not possible to
21 refinance in light of the pendency of the notice of pendency.
22 Subsequent thereto we received correspondence from
23 Mr. Nogee's office, not Mr. Nogee individually, but someone
24 else at his office, that said in substance that Mr. Mayo,
25 another attorney acting for Acropolis Gardens, had asked for a
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1 payoff letter.
2 So given that the notice of pendency is not a court
3 order prohibiting a refinancing, although it certainly in my
4 opinion would be a severe impediment to a refinancing
5 transaction, as a matter of caution, given how devastating we
6 believe the refinancing transaction would be, made this
7 application.
8 But I'm trying to --
9 THE COURT: You made this application to the state
10 court as well, and it was denied.
11 MR. MEISTER: No, Your Honor, I don't think that's a
12 fair statement.
13 What happened is in the state court, because Wells
14 Fargo is not a party to the state court proceedings, we sought
15 a preliminary injunction, first -- sorry.
16 We sought a receiver which we abandoned when
17 subsequently Wells Fargo brought this diversity-based
18 foreclosure action and sought a receiver.
19 THE COURT: And you sought an injunction to prohibit
20 the refinancing from going through.
21 MR. MEISTER: No. No, Your Honor. What we sought,
22 I was about to get to that. We sought an injunction that if
23 the receiver application were denied, this was a temporary
24 receiver, not a mortgage receiver, and if a refinancing
25 occurred, that the excess refinancing proceeds be placed in
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1 escrow. That was the application that we made to Justice
2 Livote.
3 That application is still pending and is, I believe
4 on for the 27th, along with Acropolis Garden's motion to
5 cancel the lis pendens.
6 And so we didn't believe we could, without Wells
7 Fargo present as a necessary party, outright seek to restrain
8 the refinancing. So we simply sought to protect the excess
9 refinancing proceeds.
10 They're trying to refinance for 52 million, and the
11 current loan balance is 45 million. So putting aside whatever
12 the cost of the transaction might be, there's upwards of $7
13 million of excess refinancing proceeds. The object of our
14 application was to secure those funds from diversion, okay?
15 Now, after we made that application, and I want to
16 give a complete answer, after we made that application, we
17 acquired, through discovery of related books and records
18 proceeding, I believe, a term sheet from a hard money lender
19 called Millbrook.
20 Based on that new evidence, we filed a reargument
21 motion before Justice Livote seeking to obtain the restraint;
22 the escrow related restraint that I just described.
23 Pending in that reargument motion, which was based
24 on the production of the Millbrook term sheet, which is 52
25 million at nine percent, we sought on a very short-term
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1 temporary basis, pending the hearing on the reargument motion,
2 of a general restraint on refinancing.
3 So that's the full picture, Your Honor, on the state
4 court proceedings.
5 Just to wrap up here, our -- as I think Your Honor
6 knows, our contention is that there has been -- we made
7 serious allegations of financial improprieties amounting to
8 millions of dollars.
9 I understand from Mr. Sorise, the receiver, that no
10 records have been turned over, forgetting about funds for a
11 minute, by Mr. Osman.
12 We believe that the value of the property is a
13 significant multiple of the existing debt and there won't be
14 any problem securing an institutional loan at closer to the --
15 think it's about a 3.7 percent rate that's currently absent
16 default, payable to Wells Fargo, and there's no urgent need to
17 close a nine percent loan other than, in our view, Acropolis
18 Associate's view, Mr. Osman's desire and his board's desire to
19 essentially get rid of the receiver and avoid the forensic
20 examination that presumably would ensue and reveal the
21 financial improprieties.
22 So, obviously, the interest rate, the interest money
23 would be taken from something like 1.6 million to 4.6 million,
24 which would be devastating to the shareholders.
25 There actually is a shareholder in court today, Your
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1 Honor, who did want to address the Court. Angie Shabbat (ph).
2 And so we're concerned that there may be, somehow, a
3 closing over the lis pendens. We have a shareholder's meeting
4 on October --sorry, November 19th, which is Monday.
5 THE COURT: That was going to be my next question.
6 MR. MEISTER: Right. There has not been a
7 shareholder's meeting at this co-op since 2010.
8 The bylaws essentially provide for one-year terms,
9 so there hasn't been a meeting or an election in eight years.
10 The shareholders are very desirous of having this election.
11 I think 78 of them have signed affidavits in strong support of
12 the election. The election is occurring at my offices on
13 Monday, November 19th. I've invited the receiver and his
14 counsel, Wells Fargo, everyone is welcome to attend.
15 And we expect there to be a new board in place as of
16 that evening of November 19th, and it would be a terrible
17 shame, in our view, if somehow a lender were to close a loan
18 that tripled the interest payable by the shareholders and
19 resulted in another $7 million in Mr. Osman's hands.
20 So that's --although, I do think it would be a
21 difficult thing to do, as Mr. Ciulla said, and as Mr.
22 Schlesinger said, which then sort of raises the question, why
23 is anyone fighting about this relief? Why not simply consent
24 to it.
25 We're going to be having a vote on the 19th, and
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1 we're going to be in front of Judge Justice Livote on the
2 27th. And if Justice Livote is persuaded to cancel, then the
3 board can do what it would like to do.
4 And by the way, away from refinancing with an
5 institutional lender at significantly less than half the rate
6 of nine percent, I think there's a possibility that Wells
7 Fargo would be interested. I can't make any warrantees,
8 obviously, but I've been told we should have conversations
9 with Wells Fargo about that.
10 THE COURT: Well, let me hear from counsel for Wells
11 Fargo.
12 MR. NAGI: Your Honor, we really are trying hard to
13 not take a position in this dispute between shareholders and
14 board members, so one of the reasons we haven't filed anything
15 is because we don't really think that it's our place as the
16 lender to do that.
17 I would note that there is a side issue. There's
18 around $125,000 that's been held on, was provided to counsel,
19 I believe, at Jaspan Schlesinger, that is the lender's
20 collateral.
21 And my understanding is that they're talking with
22 receiver but the funds haven't been turned over and there has
23 been some discussion about it, and if that doesn't get handled
24 soon, one of us will be making a premotion conference letter
25 to Your Honor about turning over that amount in dispute.
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1 And one other thing to say is that we did send a
2 payoff letter to borrower's counsel Friday afternoon, and I do
3 know that --my understanding is there's talk of the lender
4 has been approached about loan sales as well as refinancing,
5 so there seems to be activity, but I don't really know on
6 whose behalf and it's consistent with what the Court has heard
7 today.
8 THE COURT: Well, as I understand it, the current
9 board is seeking to refinance because they are -- on account
10 of the foreclosure action, they sought, apparently sought
11 before because they wanted to avoid a foreclosure action. Now
12 I presume they're going to say they want to avoid foreclosure.
13 Does Wells Fargo have any objection to staying the
14 case for a short period of time while these issues get sorted
15 out as to who is -- whether or not the board is going to be
16 replaced?
17 MR. NAGI: Wells Fargo has not particularly pushed
18 hard.
19 Aside from getting a receiver in place to stabilize
20 the property on moving to any conclusion, we haven't drafted -
21 - we've given time -- extensions of time for answers.
22 So we're not -- it's not particularly aggressively
23 pushing a resolution of this case, and it's been letting the
24 parties talk and try and work things out now that there's a
25 receiver in place, and you know, as lender it's concerned
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1 about making sure that the property is not decreasing in
2 value, that its collateral is safe and it's being managed
3 properly.
4 It doesn't strike me that we would necessarily need
5 to have a formal stay in place in light of the way that things
6 are moving forward. But if Your Honor would like, I can
7 certainly talk to my client and ask them that question, to the
8 extent that there is some parameters that the Court would like
9 to have in place.
10 Primarily, what they're concerned about at the
11 moment was making sure the property is stabilized and that the
12 receiver can do what it needs to do in order to have
13 transparency, because we had issues from a transparency basis
14 and from a payment basis, up until the receiver was put in
15 place, Your Honor.
16 THE COURT: All right. I will hear from Acropolis
17 Gardens.
18 MR. CIULLA: Thank you, Your Honor.
19 The words speak for themselves and, unfortunately,
20 Mr. Meister is not correct in what he presented to Your Honor
21 a few minutes ago.
22 It's very clear from Exhibit A to our November 5
23 letter, where we attach two orders signed by Justice Livote,
24 that indeed Acropolis Associates sought a temporary
25 restraining order to prohibit and enjoin the refinancing of
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1 the property.
2 And if Your Honor will indulge me, we've --
3 THE COURT: I won't, since I've read the
4 transcripts --
5 MR. CIULLA: Okay.
6 THE COURT: -- to those two proceedings.
7 MR. CIULLA: Okay. So then Your Honor knows that --
8 THE COURT: But let me ask you.
9 MR. CIULLA: Sure. Sure.
10 THE COURT: What is going to -- I find it hard to
11 believe that you come to this proceeding today and you can't
12 give me a straight answer when I ask about the status of the
13 refinancing efforts. And it's no answer to say that Mr.
14 Schlesinger is not available.
15 That's what you told Justice Livote back in,
16 whenever, and unless he's being held incommunicado, I would
17 think that you would have that information before today.
18 MR. CIULLA: Your Honor, unfortunately I do not, and
19 I'm being as frank with you as I can be. I am not in
20 possession of that information.
21 I do know that they are working very hard to obtain
22 refinancing, because as Mr. Meister mentions in his letter,
23 you have default interest accruing at $6,500 a day.
24 Now any delay hurts my client. Now, Mr. Meister has
25 said several times in his papers that perhaps we could obtain
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1 refinancing from an institutional lender, or perhaps Wells
2 Fargo would be interested in staying on and working out the
3 situation. Yet, nothing has been done on that side to make
4 any of that happen.
5 The only efforts have been on my client's side to
6 obtain a refinance. Mr. Meister is shaking his head. If he
7 wants to inform me of those efforts that have been made, then
8 he can do that. But he talks about an institutional lender.
9 We haven't been given any proposal in that regard.
10 THE COURT: Well, has your -- you represent the
11 board. Before the receiver was in place was any effort made
12 to approach Wells Fargo about any kind of refinancing?
13 MR. CIULLA: I don't know, Your Honor. I don't
14 know. Perhaps Mr. Nogee can respond to that. I don't know.
15 But I know efforts are being made now, and I know
16 that Mr. Meister objects, and his client objects to the fact
17 that perhaps the interest rate is higher than he would like.
18 But no other efforts that we know about, certainly
19 no proposals that have been presented to either myself or Mr.
20 Schlesinger, or to the Board, about an institutional lender or
21 any potential to work out the situation with Wells Fargo has
22 been indicated to us. At this point, we do want to go forward
23 with the refinancing.
24 THE COURT: When?
25 MR. CIULLA: As soon as possible.
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1 THE COURT: When is as soon as possible, when
2 there's going to be a shareholder's meeting and an election on
3 Monday?
4 Are you telling me that your client is intending to
5 move forward and close on a transaction before a shareholder's
6 meeting?
7 MR. CIULLA: Well, Your Honor, it seems that it's
8 unlikely that we could close before Monday.
9 Having said that, as I said to Your Honor a few
10 minutes ago, if in fact there were no restraints in place by
11 this court, and Mr. Schlesinger will make whatever application
12 he deems appropriate before Justice Livote, if the lis pendens
13 was canceled, then every effort would be made to refinance as
14 soon as possible. It may not be possible by next Monday.
15 That is correct, Your Honor.
16 I don't know. But maybe it is possible. I don't
17 know how quickly Mr. Schlesinger or Mr. Meister can go before
18 Justice Livote and revisit that issue. I don't know.
19 THE COURT: Now you say unless this court has a
20 restraint in place.
21 Isn't there already a restraint in place by virtue
22 of the order appointing the receiver on October 19th, signed
23 by Judge Kuntz?
24 MR. CIULLA: I don't believe the receiver is now in
25 charge of making decisions as to whether or not the mortgage
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1 loan can be refinanced.
2 THE COURT: The last page of that document says, "In
3 order to promote judicial efficiency, all persons who receive
4 actful or constructive notice of this order are enjoined in
5 any way from disturbing the receivership assets or from
6 commencing any new proceedings that involve the receiver, the
7 receivership assets, or the property, unless such person or
8 persons first obtains the permission of the court."
9 MR. CIULLA: I don't think that covers a refinance,
10 Your Honor. I don't.
11 We're not affecting the receivership's assets.
12 We're not affecting the ability of the receiver to collect
13 rents, in this case, maintenance payments. What we're trying
14 to do, however, is get everybody out of a very bad situation.
15 There's a foreclosure action. This loan needs to be
16 refinanced. This property can't be foreclosed upon for many
17 of the reasons that Mr. Meister lists in his letter.
18 THE COURT: And it's not going to be foreclosed upon
19 before the shareholder's meeting on Monday.
20 MR. CIULLA: No doubt, Your Honor, that's correct.
21 But the real question, Your Honor, if I --
22 THE COURT: So shouldn't the decision be made after
23 the shareholders have an opportunity to decide who they want
24 making the decisions?
25 MR. CIULLA: Your Honor, perhaps, but by the same
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1 token, when Acropolis Associates comes before this Court to,
2 in this situation to report and recommend as to whether or not
3 a TRO should be issued, the law should be followed.
4 And they haven't presented any claims that they're
5 likely to succeed on the merits, or raise sufficiently serious
6 questions. They have not established in any way, shape, or
7 form, irreparable harm if the property is refinanced at an
8 interest rate of nine percent, or something higher than a --
9 THE COURT: You're addressing another issue now.
10 I'm not addressing directly, their TRO. I am saying there is
11 already in place a restraint.
12 Whether they would be able to carry their burden or
13 not, I read this order as requiring that your client obtain
14 the permission of the court before any refinancing is done.
15 Let me ask the receiver or the receiver's counsel
16 how they read that provision.
17 MR. NOGEE: Yes. Thank you, Your Honor.
18 In view of the breadth of Judge Kuntz's order, which
19 Judge Livote even pointed out at our meeting back in beginning
20 of this month, and the conflicting arguments in the letters
21 from counsel between November 5th, November 13th, November
22 1st, it seems to me that the whole point of having a receiver
23 is to maintain the status quo, until those arguments get
24 sorted out.
25 So from the receiver's standpoint, I believe whether
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1 there's an order of this court to further maintain the status
2 quo, or Your Honor simply directs the assembled group here,
3 that the appointing order already provides for the status quo
4 to be maintained, I think that really is the proper course of
5 action.
6 MR. CIULLA: Your Honor, if I may briefly?
7 There's no doubt the receiver has been appointed on
8 the property. There's no doubt that the receiver makes
9 decisions regarding the property. There's no doubt that the
10 receiver collects maintenance payments, pays expenses, and
11 oversees the financial situation regarding the property.
12 However, when it comes to whether or not a -- the
13 mortgage loan should be refinanced, then what you're saying,
14 Your Honor, is that the receiver is taking control of the
15 board of managers. That can't possibly be what the receiver's
16 role is here.
17 The receiver's role is with respect to the property.
18 This has no effect on the receiver's powers regarding the
19 property, except to the extent, Your Honor, that if the
20 mortgage loan is refinanced, there won't be any need for a
21 receiver because there won't be a foreclosure action anymore.
22 And isn't that where we want to end up? Who would
23 want to resist that? Certainly not bank's counsel. I don't
24 think the receiver would care.
25 THE COURT: The order appointing the receiver also
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1 states at page 5, that effectively the borrower and all
2 persons acting under its direction, including Metropolitan
3 Pacific Properties Incorporated and any other manager of
4 property. are enjoined from in any matter, disturbing the
5 receiver's possession of the property or any other properties
6 that is the subject of the Court's order, and are prohibited
7 and restrained from one, disposing of dissipating this
8 handling, or misappropriating any of the property or such
9 other property; two, taking any actions that would directly or
10 indirectly have an adverse impact on the value of the
11 property.
12 MR. CIULLA: If I may address it briefly?
13 I understand what Your Honor has read from the
14 order. I don't see how refinancing the mortgage loan so that
15 there's no longer a foreclosure action, no longer a threat of
16 people losing the apartments where they live, has any impact
17 on that provision.
18 THE COURT: You are proposing to triple the interest
19 rate. You think that won't have any impact on adverse impact
20 on the value of the property?
21 MR. CIULLA: Your Honor, if there's a refinance,
22 there is no need for a receiver. There is no longer a
23 foreclosure action. The receiver hasn't been appointed for
24 all time. That would have -- that certainly would affect the
25 shareholders.
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1 It certainly would affect the shareholders. But
2 we're talking about if this occurs, this is post-foreclosure
3 then. There's no longer a foreclosure action. Therefore, it
4 is no longer a receiver.
5 What you're saying, Your Honor, if I may say
6 respectfully, is that the receiver has been appointed and now
7 he's in control of the property forever? No, that's not the
8 case.
9 If an institutional lender, as Mr. Meister refers
10 to, comes in and refinances the mortgage loan, then that's not
11 allowed either? That affects the receiver's obligations and
12 duties under the order?
13 THE COURT: It's not a question of whether it would
14 be allowed. It's that such person or persons must first
15 obtain the permission of the court. That's what page 13 says.
16 MR. CIULLA: Your Honor, then perhaps this is a
17 forum to do that. They're asking for a TRO to restrain the
18 refinancing. We're asking Your Honor not to grant the TRO so
19 that we can go forward with the refinancing.
20 So I guess that's permission, then, because if you
21 don't grant the TRO then we can move forward with the
22 refinancing sooner rather than later.
23 THE COURT: I don't have to grant the TRO. First of
24 all, I don't have the authority to grant it. I can only
25 report and recommend. But what I'm saying is that even if
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1 there were no motion for a TRO, as I read this order and as
2 Judge Kuntz reads it, because I've discussed it with him,
3 before you could go forward with the refinancing, you would
4 first have to obtain the permission of the Court.
5 You do not have it, nor am I empowered to give it to
6 you, nor am I inclined to give it to you when you have
7 meetings scheduled for Monday to vote on a new board.
8 And what I've heard, and you haven't addressed, is
9 that your clients have not been cooperating with the receiver.
10 And I think your client should understand that they do not
11 want to be before Judge Kuntz in connection with a contempt
12 proceeding.
13 MR. CIULLA: Could I speak briefly to that issue?
14 I did not find out until yesterday, I think late
15 afternoon, from the bank's counsel that there was a lack of
16 cooperation from Mr. Osman and Met Pac. I was aware --
17 THE COURT: But I assume you know from the letters
18 that have been submitted to the Court that the -- that your
19 clients have been taking over the responsibilities that were
20 specifically entrusted to the receivers, with respect --
21 MR. CIULLA: Your Honor, I'll speak to that --
22 THE COURT: -- to management.
23 MR. CIULLA: I'll speak to that briefly as well.
24 I am aware that the board of managers' president
25 sent out a notice that said just the opposite of what Your
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1 Honor heard today.
2 Now, that does not mean that there may have been
3 other activities that I'm not aware of, that the receiver has
4 indicated today, but I can tell you that as soon as I spoke to
5 the president of the board, I made it very clear that she was
6 to send out a notification to all of the owners telling them
7 that all payments, all maintenance payments should be made to
8 the receiver, and that a notice of attornment would be going
9 out to the owners, telling them exactly where those payments
10 should be made.
11 I am not personally aware of anything else that's
12 occurred, but I can only tell Your Honor that I directed the
13 president of the board of managers to do that, and that was
14 done.
15 And I only found out last night that, in fact, Med
16 Pac was not being cooperative. I was aware of a couple of
17 emails that were sent by Mr. Sorise, who I've spoken to and
18 I've communicated with, where he asked for certain documents
19 and certain materials and information to be produced.
20 I was not aware that there was a lack of
21 cooperation. The first time I found out about that was
22 yesterday afternoon by Mr. Nogee's colleagues at his firm.
23 And since that time, I've communicated with both the
24 board and Med Pac's lawyer to, party needs to get on the ball
25 and do what they have to do to give the receiver everything
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1 that he's requested.
2 MR. MEISTER: May I respond, Your Honor?
3 THE COURT: Yes.
4 MR. MEISTER: Thank you. I just want to make sure
5 the Court is clear on a few facts.
6 With regard to the statements that no other mortgage
7 refinancing efforts have been made, please understand, Your
8 Honor, that I represent a company that, together with related
9 companies, is perhaps the largest single shareholder, but is
10 not on the board and doesn't control the entity.
11 So I have reached out to participants in the
12 refinancing market, but I can't tell those participants yet,
13 that we speak for the corporation. That may change Monday
14 night. I believe it will.
15 But I want the Court to understand that the market
16 perception is simply this, the units on a co-op basis have
17 been trading for four to $500,000 a unit. It's above the
18 existing $45 million of debt. There are over 600 of those
19 units. That translates into a free and clear value of
20 somewhere around $300 million. The debt is 45 million.
21 I'm assured by market participants there are no
22 issues with an institutional refinancing on those values.
23 That's point one.
24 Point two is, there has been deliberate and active
25 resistance to the receiver. Mr. Osman directed security
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1 guards after -- well after the appointment of the receiver, to
2 tear down signs or posters that had been put up informally by
3 shareholders saying there's a receiver, his name is Mr.
4 Sorise, here is his address. That's who you pay maintenance
5 to, because the notices to attorn had been removed or weren't
6 sent, or just weren't there. I think they were removed.
7 Those notices were torn down.
8 The Acropolis Gardens Realty Corp. has not paid
9 Wells Fargo since July. That's five months, Your Honor.
10 The payments come to about $330,000, including a tax
11 impound. That's $1.6 million. The maintenance is 580,000, or
12 thereabouts, for the entire project.
13 And historically, that has been sufficient to pay
14 Wells Fargo. That's how they were paid through June, and to
15 pay the other expenses.
16 There should be, if there hasn't been diversion of
17 funds, about a million-six in the corporate account. Now, I'm
18 not saying that's there. I am very concerned it's not there,
19 but that's what should be there. Not a penny, I asked Mr.
20 Sorise just before these proceedings started.
21 My understanding is not a penny has been turned over
22 by AGRC or Med Pac to the receiver, and no records have been
23 turned over; the banking records. So there's deliberate and
24 active resistance to the receiver.
25 And last point is, Your Honor, as I had mentioned a
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1 moment ago, we had a temporary cooperative receiver, a motion
2 pending in state court before this diversity-based foreclosure
3 action was commenced.
4 We abandoned that application at the request of
5 Wells Fargo so as to yield priority to Wells Fargo, which
6 makes sense to us. They're the lender. They have an obvious
7 entitlement to a receiver under law and the mortgage
8 documents.
9 It was in that context, in my opinion, Your Honor,
10 that Judge Kuntz granted this broad based order with Acropolis
11 Associate's strong support based on allegations of financial
12 impropriety.
13 So it strikes me as a reasonable interpretation,
14 although we separately moved for relief, we actually discussed
15 internally whether we should simply ask for an interpretation
16 of this order.
17 And as Your Honor said, all it requires -- it's not
18 a bar, is that the court be -- that permission be sought from
19 the Court to a refinancing transaction.
20 MR. CIULLA: Just briefly, Your Honor.
21 Mr. Meister keeps on referring to a $45 million
22 figure.
23 We just received a payoff statement from Wells
24 Fargo's counsel, and the amount that's owed is $48,239,582.87.
25 I believe that's as of November 15th.
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1 I have not seen the payoff statement because it's
2 not been given to me, but I understand that a significant part
3 of the difference between the 48 and the 45 is an alleged
4 prepayment penalty. I just wanted the Court to be aware that
5 that is my understanding.
6 THE COURT: Is the receiver going to be intervening
7 in the state court action?
8 MR. NOGEE: Your Honor, we haven't made that
9 decision yet. We will be responding with papers to take a
10 position on that, but as a formal intervener, we haven't made
11 that decision.
12 THE COURT: Because it seems to me that there's a
13 lot of duplication in this court of what's been transpiring in
14 state court, and it makes absolutely no sense for this court
15 to be hearing the same motions.
16 And with all due respect, I've read the transcripts
17 of the proceeding in state court and I think the motion for a
18 TRO for the same kind of relief, perhaps additional relief or
19 alternative relief, was sought in that case as is now being
20 sought here.
21 And I really question whether or not the dispute
22 between the co-defendants ought to be played out here with a
23 dozen lawyers appearing here on issues that have been before
24 the state court on multiple cases.
25 We're dealing here with a foreclosure action, and
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1 all these other issues ought to be addressed in state court,
2 and not here, and there certainly is case law to suggest that
3 the cross claims that Acropolis Associates has asserted, that
4 the district court would be well within its discretion in
5 declining to exercise supplemental jurisdiction over those
6 issues here.
7 But meanwhile, we do have -- we do have a receiver
8 that's been appointed by Judge Kuntz. And as I said, as I
9 read that order, absent further order of the Court, this
10 refinancing cannot go through; whether it's refinancing by
11 Acropolis Gardens, or if there's -- and the current board, or
12 if there's a new board in place. It requires an order of the
13 court.
14 And I'm sure that Judge Kuntz would be delighted to
15 grant permission to refinancing on reasonable conditions that
16 would avoid foreclosure by Wells Fargo and that would conclude
17 this case.
18 Does anyone else want to be heard?
19 MR. MEISTER: Would it be possible for the
20 shareholder to address the Court briefly, Your Honor?
21 THE COURT: I don't know that it really-- I've
22 already-- I don't know that I need information from the
23 shareholder. It's not going to be a legal argument. I
24 understand the concerns that some shareholders have.
25 This is -- there are shareholder disputes, and those
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1 ought to be played out at the shareholder meeting. And unless
2 and until -- and in the interim, Judge Kuntz's order precludes
3 any further refinancing, absent his approval.
4 MR. MEISTER: Understood. Thank you, Your Honor.
5 MR. CIULLA: Thank you, Your Honor.
6 MS. CHANG: Thank you, Your Honor.
7 THE COURT: Okay. Thank you.
8 (Proceedings concluded at 3:57 p.m.)
9 I, CHRISTINE FIORE, Certified Electronic Court Reporter
10 and Transcriber, certify that the foregoing is a correct
11 transcript from the official electronic sound recording of the
12 proceedings in the above-entitled matter.
13
14
15 November 14, 2018
16 Christine Fiore, CERT
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EXHIBIT C
Casse11128eev06E|4998WWBKFRAM 0Doannaeiht44B63 RiMelttl11 17RELB8 122RhigMD##1TL90
ROANNE L. MANN DATE: h1/4#JAt A.er/3/ 2-©/ ÎUNITED STATES MAGISTRATE JUDGE START:½ ; () f)
END:
DOCKET NO: 18-ev-05498
CASE: Wells Fargo Bank, National Asseciation, as Trustee, on behalf of the registered holders
of CSAIL 2017-CX9 Comrñêrcial Mortgage Trust, Conunercial Mortgage Pass-Through
Certificates.Series 2017-CX9 et al v. Acropolis Gardens Realty Corp., et al
Assigned to: Judge
INITIAL CONFERENCE O OTHER/ORDER TO SHOW CAUSE
DISCOVERY CONFERENCE FINAL/PRETRIAL CONFERENCE
SETTLEMENT CONFERENCE TELEPHONE CONFERENCE
MOTION HEARING INFANT COMPROMISE HEARING
PLAINTIFF ATTORNEY
DEFENDANT ATTORNEY
DISCOVERY TO BE COMPLETED BY
NEXT CONFERENCE SCHEDULED FOR
JOINT PRE-TRIAL ORDER TO BE FILED VIA ECF BY
PL. TO SERVE DEF. BY: DEF. TO SERVE PL. BY:
RULINGS: PLEASE TYPE THE FOLLOWING ON DOCKET SHEET
Casse11128e - ODo,annestit44B63 RRdetti 1171EJ-B8 1T151
of