A Baton Rouge federal judge Tuesday dismissed the multimillion-dollar claims of more than 40 Perkins Rowe condo owners against an Ohio bank.
KeyBank National Association has been locked in litigation with Perkins Rowe developer J.T. “Tommy” Spinosa for two years over more than $170 million allegedly owed on the mixed-use project.
The condo owners contend KeyBank should have warned them that Spinosa was having financial problems before they purchased their homes in 2008.
Condo owners noted in their lawsuit that KeyBank received $10 million from those 2008 transactions. Each of their units cost between $193,000 and $488,000, according to the suit, and values have decreased since KeyBank sued Spinosa.
“KeyBank owed no duty to (condo owners) to disclose information about its borrower, Joseph T. Spinosa, or any of his related entities, who actually sold the condominiums,” KeyBank attorney F. Scott Kaiser told U.S. District Judge James J. Brady in May.
“Under Louisiana law, a lender can actually be held liable, in damages, for voluntarily disclosing such information,” Kaiser added.
In his ruling Tuesday, Brady agreed with KeyBank’s position and dismissed the case.
“To reach any other conclusion would mean that lenders tacitly promise the success of their customers’ projects, thereby exposing themselves to liability in the event they do not succeed,” the judge said.
Phillip W. Preis, attorney for the condo owners, said Tuesday he will ask the 5th U.S. Circuit Court of Appeals to overturn Brady’s decision.
“We believe that the 5th Circuit … will agree with the (condo) owners that a bank is like any other legal entity and does not have immunity from fraud claims when it is the primary beneficiary of the sale proceeds,” Preis added.
In Cleveland, Ohio, KeyBank spokeswoman Laura J. Mimura said: “We believe that the court’s ruling on our motion to dismiss is correct.”
In its foreclosure suit, KeyBank has alleged that fraud was committed at Perkins Rowe by Spinosa and some of his firms.
Spinosa has denied those allegations. He counterclaimed that KeyBank cost him and his firms approximately $11 million by interfering in his management of the Perkins Rowe project.
Brady, however, ruled last month that Spinosa and his firms improperly refused to turn over documents requested by KeyBank in its foreclosure suit. As punishment, the judge stripped Spinosa and his firms of all defenses and counterclaims.
Mark R. Beebe, lead attorney for Spinosa, said last month that Brady’s decision to cancel his client’s defenses and counterclaims will be appealed to the 5th Circuit.
Perkins Rowe is near the northeastern corner of Bluebonnet Boulevard and Perkins Road. It includes scores of condos, approximately 200 apartments, more than 60 shops and restaurants, a movie complex, pharmacy, grocery store and two parks.