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Bnp Paribas Vpg Brookline Cre, LLC, A Delaware Limited Liability Company v. White Sands Estates

March 21, 2012

BNP PARIBAS VPG BROOKLINE CRE, LLC, A DELAWARE LIMITED LIABILITY COMPANY,
PLAINTIFF,
v.
WHITE SANDS ESTATES, LLC, A HAWAII LIMITED LIABILITY COMPANY;
DDI, LLC, A HAWAII LIMITED LIABILITY COMPANY;
JEFF CULVER, TRUSTEE OF THE JEFF CULVER REVOCABLE TRUST DATED AUGUST 23, 2006;
HENRY AMADO;
JOHN & MARY DOES 1- 20;
AND DOE PARTNERSHIPS, CORPORATIONS OR OTHER ENTITIES 1-20, DEFENDANTS.
DDI, LLC, COUNTERCLAIMANT,
v.
BNP PARIBAS VPG BROOKLINE CRE, LLC, COUNTERCLAIM DEFENDANT.



The opinion of the court was delivered by: J. Michael Seabright United States District Judge

ORDER (1) GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND INTERLOCUTORY DECREE OF FORECLOSUE; AND (2) GRANTING COUNTERCLAIM DEFENDANT BNP PARIBAS VPG BROOKLINE CRE, LLC AND COUNTERCLAIMANT DDI, LLC'S JOINT MOTION TO DISMISS COUNTERCLAIM WITH PREJUDICE I. INTRODUCTION

Two Motions are before the court in this diversity action seeking to foreclose on a mortgage. First, Plaintiff BNP Paribas VPG Brookline CRE, LLC ("Plaintiff" or "BNP") seeks summary judgment to establish default of the subject loan documents, and to obtain an interlocutory decree of foreclosure. Second, Defendant/Counterclaimant DDI, LLC ("DDI") and BNP (as Counterclaim Defendant) jointly move to dismiss DDI's Counterclaim against BNP. The matters were heard on March 12, 2012. Based on the following, both Motions are GRANTED.

II. BACKGROUND

A. Factual Background

The undisputed evidence in the record establishes the following facts: By promissory note ("Note") dated November 13, 2007, Defendant White Sands Estates LLC ("White Sands"), Defendant Jeff Culver, Trustee of the Jeff Culver Revocable Trust Dated August 23, 2006 ("Culver"), and former Defendant San Francisco Residence Club, Inc. ("SFRC") (collectively "Defendants") borrowed $7,000,000 (jointly and severally) from former Plaintiff Kennedy Funding, Inc. ("Kennedy Funding") as agent for certain lenders. Doc. No. 80-5, Pl.'s Mot. Ex. A; Doc. No. 96, Vacarella Supplemental Decl. ¶ 3, March 16, 2012. The Note, and the Loan Agreement referenced in the Note, are secured by a corresponding November 8, 2007 Mortgage (the "Mortgage"). The Mortgage (with White Sands, SFRC, and Culver as mortgagors, and Kennedy Funding as mortgagee) grants Kennedy Funding a mortgage lien and security interest on three parcels of real property located in Kailua-Kona, Hawaii. Doc. No. 80-6, Pl.'s Mot. Ex. B; Doc. No. 96, Vacarella Supplemental Decl. ¶ 4. The Mortgage was recorded in the Hawaii Bureau of Conveyances on November 15, 2007. Doc. No. 80-6, Pl.'s Mot. Ex. B.

Defendant Henry Amado ("Amado") as guaranty for the loan, executed and delivered to Kennedy Funding a Guaranty dated November 13, 2007. Doc. No. 80-7, Pl.'s Mot. Ex. C; Doc. No. 96, Vacarella Supplemental Decl. ¶ 5. The Note, Loan Agreement, Mortgage, and Guaranty are collectively referred to as "the Loan Documents."

Kennedy Funding instituted this action on April 1, 2009, alleging that Defendants have defaulted on performance of terms and conditions set forth in the Loan Documents. On December 13, 2010, Kennedy Funding (and non-party Brookline Financing LLC) assigned all rights in the Loan Documents to BNP, with the assignment recorded in the Hawaii Bureau of Conveyances on January 11, 2011. Doc. No. 80-8, Pl.'s Mot. Ex. D; Doc. No. 96, Vacarella Supplemental Decl. ¶ 7; Doc. No. 80-4, Nullet Decl. ¶¶ 3-5, Dec. 28, 2011. On November 22, 2011, SFRC conveyed all its rights and interests in the mortgaged property to DDI. Doc. No. 66-3. Accordingly, on December 21, 2011, BNP was substituted as Plaintiff for Kennedy Funding, and DDI was substituted as a Defendant for SFRC. Doc. Nos. 79 & 83.*fn1

BNP has established (and no Defendant has proffered any admissible evidence to the contrary) that Defendants are in default under the Loan Documents for failure to make required payments. Doc. No. 96, Vaccarella Supplemental Decl. ¶ 6; Doc. No. 80-4, Nullet Decl. ¶ 7. BNP has likewise established that, as of December 23, 2011, the amount of principal and accrued interest owed is $12,479,638.89 (principal of $7,000,000 and accrued interest of $5,479,638.89). Doc. No. 80-4, Nullet Decl. ¶ 9. Interest continues to accrue on a per diem basis of $4,861.11. Id. ¶ 8.

B. Procedural Background

Kennedy Funding filed this action on April 1, 2009 in the Circuit Court of the Third Circuit, State of Hawaii. The action was then removed on April 27, 2009 to this court under 28 U.S.C. § 1332, based upon diversity of citizenship. Doc. No. 1, Notice of Removal. On May 4, 2009, SFRC filed an Answer and Counterclaim against Kennedy Funding. Doc. No. 7. As set forth above, on December 21, 2011, the court (U.S. Magistrate Judge Barry M. Kurren) granted a Motion for Substitution of Parties, and BNP was substituted as Plaintiff and DDI was substituted as a Defendant for SFRC. Doc. No. 79.

On December 30, 2011, BNP filed its Motion for Summary Judgment and Interlocutory Decree of Foreclosure (the "Foreclosure Motion"). Doc. No. 80. Culver and DDI filed Statements of No Opposition to the Foreclosure Motion. Doc. Nos. 82, 89. Amado did not file a statement regarding the Foreclosure Motion (although he appeared at a status conference on February 6, 2012, Doc. No. 88). On February 17, 2012, White Sands filed its Opposition to the Foreclosure Motion, and BNP filed its Reply on February 27, 2012. Doc. No. 92.

Meanwhile, on January 27, 2012, BNP and DDI filed a Joint Motion to Dismiss Counterclaim with Prejudice (the "Joint Motion"). Doc. No. 84. No other party filed positions on the Joint Motion.

A hearing was held on both Motions on March 12, 2012. Neither Amado nor Culver appeared at the hearing (although Culver had filed a Statement of No Opposition to the Foreclosure Motion). At the hearing, White Sands affirmatively stated that it did not oppose the Joint Motion. Given concern regarding authentication of certain of Plaintiff's exhibits, BNP agreed to file a ...


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