An investment group led by developer Peter Moore is facing a $2.25 million lawsuit in connection with a stalled hotel site in the Gowanus section of Brooklyn.
Brooklyn-based Square One Holding filed suit Feb. 27 in New York state Supreme Court alleging that Team Gowanus, which includes Moore and investors John Sutter and Peter Kovacs, defaulted on the loan by failing to make monthly payments starting in May 2009.
The senior lender, United Central Bank, previously filed suit in U.S. District Court in Brooklyn in August 2010, alleging the investors defaulted on a $9 million senior loan backed by the property. The site, located at 92 3rd Street, was the former home of greeting card publishing house Abigail Press, and after buying the property for $12 million, Moore planned to convert the site to a hotel with studio space for artists.
Lawyers for the investors claimed in the federal suit that the original senior lender, Harvey, Ill.-based Mutual Bank, had agreed to restructure the loan, and claimed that the United Central, which acquired Mutual in August 2009, was bound by that agreement.
According to documents filed in U.S. District Court, Moore and his investors claim that lenders had agreed to break up the $9 million mortgage loan into seven smaller loans that were backed by subdivided parcels of the property. They argued that if the agreement was done, they would have been able to obtain additional financing and made a $23 million profit on the project.
But lawyers for United Central argued that Moore and his investors refused to hand over documents to show the bank what their overall financial condition was, and noted that the investors were in default on other loans involving the same bank.
“Team Gowanus and some or all of its member/investors and guarantors were in desperate financial condition beginning in 2008 and were hardly in any position to obtain additional financing to complete the project, never mind realize millions of dollars in profits,” attorney Kevin Kostyn, representing United Central, wrote in a November 2011 letter filed with the court.
Moore has faced litigation at several locations, including a $4.7 million foreclosure suit in at a loft at 465 Washington Street in Tribeca.
and a $40 million foreclosure case at 250 Bowery, in connection with a 63-unit hotel project.
Moore was not available for comment and nor were his attorneys and investors. Lawyers for Square One said their loan is secondary to the senior mortgage and could not remark on what would happen to the site. Lawyers for the lenders were not available to comment.