Foreclosure proceedings against Perkins Rowe won’t close the shops, restaurants and other businesses available at the mixed-use development, officials at an Ohio lender said Friday.
On Monday, U.S. District Judge James J. Brady granted a summary judgment against developer J.T. “Tommy” Spinosa. The judgment authorized KeyBank National Association of Cleveland to begin foreclosure for more than $170 million in principal and interest the lender says is owed on construction loans.
“What is important for your readers to know is Perkins Rowe remains a vibrant property managed by Jones Lang LaSalle, a globally renowned firm with expertise in commercial property management,” said KeyBank spokeswoman Laura J. Mimura.
Brady appointed Chicago-based Jones Lang LaSalle Americas Inc. two years ago to manage the 23-acre property near the intersection of Bluebonnet Boulevard and Perkins Road. That was after KeyBank sued Spinosa and several of his firms. The lender said Spinosa personally guaranteed the debt, and his firms had not made any payments since October 2008.
The bustling development includes 229 apartments, 88 condominiums, more than 60 shops and restaurants, a movie complex, grocery store, pharmacy, office space and two parks.
Jones Lang LaSalle reported the development turned a profit of $888,791 during the first seven months of its management, Brady noted this week.
“The apartments are more than 90 percent occupied, and new restaurants (and) shops continue to get leased,” KeyBank’s Mimura said Friday.
“Most recently, Red Mango (frozen yogurt shop) opened, and Applebee’s (grill and bar) is coming soon,” Mimura added. She said Jones Lang LaSalle “continues to improve the experience for the tenants, customers and residents of Perkins Rowe.”
If Perkins Rowe eventually is the subject of a foreclosure sale, tenants someday would have to negotiate lease renewals with the new owners.
Mimura would not discuss such issues or others related to appeals filed by Spinosa.
She also would not discuss the time needed for completion of Spinosa’s appeals or when foreclosure proceedings could end.
“Despite the (foreclosure) ruling, there are still issues that need to be addressed, and (KeyBank) cannot speculate on the timing,” Mimura said.
Telephone and email requests for comment from Spinosa, his lead attorney and a spokesman did not result in a response.
Spinosa fought KeyBank in Brady’s court for more than two years. He alleged bank officials cost him and his firms about $11 million by interfering in the sale of dozens of condominiums prior to the nationwide real estate and stock market crash of late 2008.
The lender denied causing Spinosa any losses.
But KeyBank alleged that Spinosa and his firms fraudulently diverted loan proceeds from Perkins Rowe to other purposes.
Spinosa denied all fraud allegations.
But he repeatedly failed to comply with orders from both Brady and U.S. Magistrate Judge Stephen C. Riedlinger to turn over discovery documents to KeyBank, the judges said in court filings. Riedlinger presided over preliminary hearings in the case.
Opposing parties in civil suits have the right to “discover” what each other did in regard to disputes that eventually land in court. They do that, in part, by requesting copies of all documents related to relevant issues.
Each side, however, can withhold records that relate solely to a party’s strategy discussions with his or her attorney. But even those records must be listed on a document labeled as protected by attorney-client privilege.
Both Riedlinger and Brady ruled that Spinosa and his firms violated discovery rules by refusing to turn over relevant records requested by KeyBank. And the judges said Spinosa failed to identify documents subject to attorney-client privilege until after deadlines had expired.
On June 7, Brady cited Spinosa and his firms for contempt of court and dismissed their defenses and counterclaims against KeyBank.
Spinosa also had argued his personal guaranty for the construction loans should be voided because he signed under the pressure of financial problems caused, in part, by KeyBank.
But Brady ruled KeyBank “played no role in bringing about the budget shortfalls” and “played no role in causing the project to go over-budget.”
The judge said Spinosa is personally responsible for his firms’ debts to KeyBank.
Prior to Brady’s judgment, Spinosa filed a request with the 5th U.S. Circuit Court of Appeals in New Orleans. He asked for an immediate review of Brady’s decision to dismiss all his defenses and counterclaims
“This punishment comes not because Perkins Rowe’s counterclaims and defenses lack merit, but because Perkins Rowe, thrust upon the horns of a dilemma, elected to protect its clients’ attorney-client privilege,” Spinosa said in his appeal.
On Thursday, KeyBank asked the 5th Circuit to dismiss Spinosa’s appeal.
“Even if (Spinosa’s) assertions were true, which they are not, they do not change the fact that this appeal is untimely,” KeyBank told the 5th Circuit.
Noting that Spinosa alleged the contempt sanctions contained in Brady’s ruling should only be used in criminal cases, KeyBank argued: “The order in question, while it includes a ‘finding of contempt,’ is primarily not a ‘contempt order’ at all, but rather an order granting sanctions for discovery abuses.”