A five-judge appellate court panel ruled unanimously in favor of Maverick Real Estate Partners, which fought a three-year legal battle to foreclose on DAB Group’s stalled Allen Street hotel project on the Lower East Side, according to lawyers for the plaintiff.
Maverick, a distressed asset specialist led by David Aviram and Ted Martell, originally acquired a defaulted $5.5 million loan from Brooklyn Federal Savings Bank in 2011, and filed the suit to foreclose after brokers were unable to sell the stalled 16-story project.
Lawyers for DAB won an earlier ruling from Manhattan Supreme Court Judge Charles Ramos after successfully arguing that lenders reneged on a promise to extend the loan deadline. But the appellate court ruled that the extension was only mentioned in an internal ’workout committee memo,’ and the developer failed to secure a promise in writing.
“The record indicates that the document on which DAB relied to change the prior determination, an action plan, dated Feb. 15, 2011, was unenforceable because it was an internal bank document that the Office of Thrift Supervision, the federal oversight agency, never approved — an unfulfilled condition precedent,” Associate Justice John Sweeny wrote for the panel.
Lawyers for Maverick said the ruling will move the case back to Judge Charles Ramos, who would then move the foreclosure case towards a conclusion, possibly by March.
“There was no bad conduct,” said Morrison Cohen partner Y. David Scharf, representing Maverick. “The court said we’re on the path to foreclosure as there are no counterclaims that are viable.”
Neither DAB owner Ben Zhavian, nor attorney William Wallace, was immediately available for comment. Aviram declined to comment.
The project involved a 98 room hotel located at 139 Orchard Street, at the corner of Rivington Street, the site of a major boom in hotel, restaurant and residential development up through the real estate crash in 2008.
The loan was initially due in December 2008. The borrower subsequently received a extension to pay $19 million by September 2009, followed by three six-month extensions, until March 2011. After the foreclosure, the property was taken over by Simon Miller, court appointed receiver and a partner at Thompson Hine, and was litigated before Manhattan Supreme Court Judge Bernard Fried, who then retired. After that, the case was transferred to Ramos.
In January, the case took an apparent nasty turn when Zhavian allegedly made death threats against the new developers. In an article in the New York Post, however, Zhavian denied making any threats.
The receiver, Miller, has retained Manhattan-based builder Richter + Ratner to develop the property once it gets through the court system.