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Denials Omitted
by Ron Davis

An Ohio company with shopping center ties has worked against odds for a cause. That cause is to defend against charges of failure to stand by the commitments made when borrowing money.

Accused along with those with shopping center ties are Pt. Dume Shopping Center, LLC, Jerry L. Preston, as Trustee of the Preston Family Trust and Jerry L. Preston, individually.

Problems over borrowed money have focused on a local bank loan for the principal amount of $4,175,000. To secure payment, the bank required that the borrower execute a mortgage on the center premises. And for security, the bank also demanded an interest in personal property. (The lender later became the holder of the mortgage.)

The bank later alleged that the recipient of the loan defaulted. Plus, the bank added, that the borrower breached “some or all” of the various agreements that the two parties made. In all, the accusations covered six “causes of action.” They were mortgage foreclosure, breach of promissory notes, breach of lockbox agreement, breach of assignment of leases, and rents for termination payment, breach of assignment of leases covering loss of property value, and last but not least, fraud and misrepresentation.

The issues became more problematic when, without the owner’s knowledge or consent, a tenant decided to terminate its lease for Petco, one of the tenants at the shopping center. The termination of the Petco lease was not scheduled till October, 2018.

Complicating the situation, the rent due for the Petco lease was $2,129.870.96, which remained due and payable under the Petco lease. To that problem, an agreement was worked out so that the accepted sum by the shopping center owners was only $1,000,000 as a so-called “termination payment.”

As part of the termination agreement, the defendant also was suspected of falsely and with malice “misrepresenting as well as falsely and with malice aforethought” represented and warranted to Petco, that there is no trust deed or mortgage encumbering the property; there is no party with any lien or other interest in the termination of the lease; no other parties consent is required before terminating the Lease.

The defendants have uniformly denied all these allegations.

That discovery did explain to some extent the fact that the plaintiff had only shed light on the complaint and completely ignored the denials that were made and were construed in its favor. As pointed out by the court, “It is not, as plaintiff seems to argue, a simple matter of giving legal effect to the various contracts and agreements attached to the complaint. There are disputed factual matters in … the complaint that must be established by way of evidence”. “It is premature on the record currently before this Court to conclude that plaintiff is entitled to judgment on the pleadings”.

The plaintiff motion was denied but the court added that the plaintiff will not be precluded from seeking a different judgment in all other aspects of the dispute.

( (Wells Fargo Bank, N.A., as Trustee, et al. vs. Pt. Dume Shopping, LLC, et, and others.) 014-KA-007)

Decision: March 2017
Published: March 2017



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