The Real Deal New York

Judge denies motion to dismiss claims that Kuafu was deceitful in Hudson Rise loan deal

Siras' $50M lawsuit against developer over condo-hotel project is ongoing
By Mark Maurer and Kyna Doles | March 23, 2016 01:04PM

From left: Saif Sumaida, Ashwin Verma, rendering of Hudson Rise and Shang Dai

From left: Saif Sumaida, Ashwin Verma, rendering of Hudson Rise and Shang Dai

UPDATED, 2:54 p.m., March 23: A New York State Supreme Court judge on Tuesday denied a motion to dismiss several claims against Kuafu Properties, the latest chapter in an ongoing battle the Chinese developer and Siras Development are waging over their stalled Hudson Rise project.

The matter in question relates to a loan on the 47-story hotel-and-condominium project on the Far West Side that Kuafu purchased in July. Siras alleged that Kuafu bought the loan to wrest control of the stalled project. Though Kuafu CEO Shang Dai’s law firm moved to dismiss that allegation, Justice Jeffrey Oing, in a decision recorded March 22, wrote that there were “sufficient allegations” showing that an affiliate of Kuafu “purchased the UBS loan to ultimately gain control of the project and that such control was the result of collusion and/or deceit, particularly where Dai is both an attorney and investor.” Dai’s law firm, Dai & Associates, represented the original partnership of developers and had filed the motion to dismiss.

Siras had also alleged that Dai and his law firm breached their fiduciary duty to the partnership by committing acts specifically intended to harm the value of the property. The judge ruled that “sufficient allegations were made,” and denied the motion to dismiss them.

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The lawsuit is ongoing. Both parties are due back in court April 19, records show.

A spokesperson for Kuafu, a New York-based firm backed by Chinese private equity money, declined to comment. Representatives for Siras, which is led by Saif Sumaida and Ashwin Verma, did not respond to requests for comment by press time.

After a series of suits and countersuits filed among Kuafu, Siras and Sean Ludwick’s BlackHouse Development, Kuafu made moves to take control of the site at 462-470 11th Avenue. In August, Kuafu bought the $44.4 million construction loan from UBS and then filed to foreclose on the loan. The foreclosure could potentially force a public auction of the property, in which Kuafu could submit a bid to purchase the site outright.

In January, Oing granted Siras’ request to consolidate the lawsuit with the foreclosure auction.

Kuafu initially filed a petition to dissolve the partnership in February 2015, citing a “deadlock” between the sides with “no hope of reconciliation.” The petition was eventually dismissed by a judge in April.

Verma and Sumaida then brought their own suit against Kuafu, claiming the firm had plotted to boot them from the partnership for months. Kuafu filed a counterclaim in May 2015 against Siras, accusing the firm of treating it as “dumb money.”

Ludwick, who faces up to 32 years in prison after a fatal DWI crash last year, too filed a lawsuit against the Siras principals, accusing his former partners of closing the door on development deals they agreed to partner on. Ludwick is no longer affiliated with the Hudson Rise project.