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The Collegiate Churches of New York Secures Dismissal of Real Estate Investor Complaint
- Client News
- April 25, 2022
Practices
Paul, Weiss secured the dismissal of a complaint against the Collegiate Churches of New York by a consortium of foreign real estate investors. Ruling from the bench immediately following oral argument by litigation partner Dan Kramer, Justice Joel M. Cohen of the New York Supreme Court, Commercial Division, adopted many of the church’s arguments and granted the motion to dismiss in its entirety.
The suit arose out of a real estate development joint venture between the church and developer H F Z Capital Group. A consortium of participants in the EB-5 visa program were also investors. The EB-5 visa program allows eligible foreign investors to become lawful permanent residents by investing capital in a U.S. business.
After the development project went into default on a bridge loan with lender Vanbarton Group, Vanbarton foreclosed and took possession of the project properties after an auction in which it was the only bidder. The EB-5 investors sued both Vanbarton and the church, alleging, among other things, that they had colluded to chase away other bidders by having the church make a claim that title to certain properties the church had contributed to the project was uncertain due to provisions in New York’s Religious Corporations Law. The EB-5 investors charged that the properties sold for $100 million less than they should have and made claims against the church for, among other things, unjust enrichment and tortious interference with contract.
In his ruling, Justice Cohen rejected all of the EB-5 investors’ arguments against the church, finding that the church had not acted wrongfully in any way and that many of the investors’ claims were speculative. Justice Cohen explicitly adopted the church’s arguments with respect to the tortious interference claims. The court, however, denied Vanbarton’s motion to dismiss the claims against it.
The Paul, Weiss team representing the church in this matter and other related matters includes, among others, restructuring partner Brian Bolin; litigation partners Daniel Kramer, Michele Hirshman and William Clareman; and real estate partner Salvatore Gogliormella.