A federal judge ruled Monday that an Ohio bank can proceed with foreclosing on developer Tommy Spinosa’s $170 million Perkins Rowe development.
In a summary judgment ruling, U.S. District Judge James J. Brady said KeyBank National Association of Cleveland has the right to foreclose on the mixed-use development and to enforce payment of a personal guarantee by Spinosa on the project.
“The court finds that there are no issues of material fact,” Brady wrote. “Neither party disputes the principal amount owed ($161,432,275), the late fees or the amount of interest at the default rate.”
Mark Beebe, an attorney for Spinosa, said the decision was expected in light of Brady’s previous decision to “dismiss our defenses and counter-claims.”
Beebe said the developer, Perkins Rowe Associates, LLC, disagreed with the decision and has appealed to the 5th Circuit Court of Appeal in New Orleans. He said Monday’s decision will be appealed as well.
In his opinion on Monday, Brady wrote that the developer “engaged in a pattern of refusing to cooperate with discovery and in the process, lost a number of discovery motions and were sanctioned multiple times for discovery misconduct.”
The judge also noted that on June 7, he granted KeyBank’s motion “for contempt for refusing to comply with an order compelling discovery.”
Beebe said the developers “disagree 100 percent with that part of the order.”
The documents at issue, Beebe said, were privileged attorney-client communications that KeyBank was not legally entitled to see.
Beebe said that is among the items already on appeal with the 5th Circuit Court.
Asked about the significance of Monday’s ruling, Beebe said, “This is obviously the first step towards foreclosure. They’ve secured a judgment that allows them to begin the foreclosure process.”
He said he is “cautiously optimistic” the developer will get a favorable ruling from the appellate court that would stop the foreclosure process from moving forward.
“We’re going to have to wait for the 5th Circuit to review the earlier decision and this decision before we get the appropriate results,” Beebe said.
If the developer fails to win on appeal, Beebe said, Perkins Rowe would be auctioned off at a judicial or marshal’s sale to satisfy the debt.
“Essentially there would be a new owner, but that’s probably a little ways off,” Beebe said.
Perkins Rowe is at the intersection of Bluebonnet Boulevard and Perkins Road. It includes dozens of condos, approximately 200 apartments, more than 60 shops and restaurants, a movie complex, grocery store and two parks.