Karmely v. Wertheimer, 1:11-cv-00541

Background

Plaintiffs SK Greenwich LLC and Shahab Karmely sue Defendants including W-D Group entities over 443 Greenwich Partners and a $20 million Mezzanine Loan; six claims alleged (breach of Mezzanine Loan, tortious interference, breach of Operating Agreement, account stated, breach of fiduciary duty, promissory estoppel).
443 Partners bought 443 Greenwich Street for $113 million, funded by an $85 million Anglo Irish Bank senior loan and a $20 million Mezzanine Loan from W-D Lender, with SKG and W-D Partner contributing capital and receiving ownership interests.
Operating Agreement gave 80% to W-D Partner and 20% to SKG, with SKG as Operations Member responsible for day-to-day development work.
Intercreditor Agreement defined senior rights of Anglo Irish Bank and Mezzanine Lender, including that Mezzanine Lender would not be paid until the Anglo Senior Loan was paid in full.
From 2008 to 2010, Anglo Irish Bank extended the senior loan; SKG alleges W-D Defendants promised funding for completion, and SKG contributed funds and guarantees relying on those promises; Mezzanine loan maturity passed without extension discussions.
On September 30, 2010, W-D Lender notified default on the Mezzanine Loan; October 2010 foreclosure sale sold SKG’s 20% interest; in January 2011 Anglo Irish Bank declared default on the senior loan and W-D Family 1 Ltd. purchased the senior loan; Plaintiffs filed amended complaint in August 2011 and Defendants moved to dismiss in October 2011; the court granted the motion to dismiss in August 2012.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Mezzanine Loan default and foreclosure were proper.	Mezzanine payment due postponed by Intercreditor terms; no default under Mezzanine Loan Documents.	Default under Section 3.1(c) caused foreclosure; Intercreditor allows enforcement.	Mezzanine default upheld; foreclosure authorized under Mezzanine Loan Documents.
Whether Intercreditor Agreement relieves Mezzanine Borrower of payment obligation.	Incorporation by reference means intercreditor terms affect Mezzanine obligations.	Intercreditor governs rights between lenders; does not alter borrowers’ unconditional obligation to pay.	Intercreditor does not relieve payment obligation; borrowers remain in default.
Whether tortious interference claim against non‑lender defendants survives.	Non‑lenders knowingly induced Lender to breach Mezzanine Loan.	No credible facts show strangers to contract; related parties merely in interaffiliated roles.	Tortious interference claim dismissed.
Whether Operating Agreement breach claim against W-D Partner survives.	Removal of SKG as Operations Member and failure to reimburse costs breaches the Operating Agreement.	Foreclosure and removal authorized by Mezzanine Loan Documents; operating rights limited after default.	Operating Agreement claim dismissed.
Whether promissory estoppel claim is ripe and pled with injury.	Oral promises to fund redevelopment induced guarantees and extensions.	No ripe injury; no alleged enforcement action or imminent collection against guaranties; lack of injury.	Promissory estoppel claim not ripe; declaratory relief denied.

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading must state plausible claim; avoid bare conclusions)
LaSalle Bank Nat’l Ass’n v. Nomura Asset Capital Corp., 424 F.3d 195 (2d Cir. 2005) (contract interpretation guided by plain meaning; plausibility standard)
Bailey v. Fish & Neave, LLP, 8 N.Y.3d 523 (N.Y. 2007) (courts may not rewrite clear contract terms)
Koret, Inc. v. Christian Dior, S.A., 554 N.Y.S.2d 867 (N.Y. App. Div. 1990) (corporate interrelations and fiduciary considerations clarified)
Maser v. Primetime 24 Joint Venture v. Echostar Communications Corp., 2002 WL 44133 (S.D.N.Y. 2002) (note: focus on stranger-to-contract principle in tortious interference)
Kassover v. Prism Venture Partners, LLC, 862 N.Y.S.2d 493 (N.Y. App. Div. 2008) (control and status of related entities affecting fiduciary duties)