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LLC v. Sheppard

United States District Court, D. Maryland

April 9, 2014

LBCMT 2007-C3 URBANA PIKE, LLC, et al., Plaintiffs
v.
ERIC D. SHEPPARD et al., Defendants

MEMORANDUM

JAMES K. BREDAR, District Judge.

I. Allegations of the Complaint

Plaintiffs in this case are the following special-purpose entities ("SPEs"):

• LBCMT 2007-C3 Urbana Pike, LLC
• LBCMT 2007-C3 Valley Retail, LLC
• LBCMT 2007-C3 Patrick Street, LLC
• LBCMT 2007-C3 Pines Boulevard, LLC
• LBCMT 2007-C3 Treasure Coast, LLC
• LBCMT 2007-C3 Highway 59 North, LLC
• LBCMT 2007-C3 South Mason Road, LLC
• LBCMT 2007-C3 Gunbarrel Road, LLC

According to the complaint, each Plaintiff SPE is a secured lender on a specific real estate development project developed by other SPEs that were formed by Defendants Eric D. Sheppard and Philip Wolman. Plaintiffs claim Defendants breached the individual recourse guaranty they provided in connection with a portfolio of loans made by the Plaintiff SPEs to the SPEs controlled by Sheppard and Wolman. (Compl. ¶¶ 68-70, ECF No. 1.) The total debt under these loans is $14, 091, 139 plus interest. ( Id. ¶ 70.) The lawsuit also claims that Sheppard and Wolman breached an individual recourse guaranty for one particular SPE, WSG Gold Mile Two, LLC ("Gold Mile Borrower"), by failing to pay rents collected from tenants by Gold Mile Borrower after it had defaulted on its loan. ( Id. ¶¶ 74-79.) The last count makes a similar claim for misappropriated rents against Sheppard and Wolman in connection with another of their SPEs, WSG Riverview Two, LLC ("Riverview Borrower"). ( Id. ¶¶ 84-89.)

The real property at issue as to Gold Mile Borrower and Riverview Borrower is located in Frederick County, Maryland. ( Id. ¶¶ 14, 16.) The real property at issue as to the other Borrower SPEs is located in Virginia, Florida, Texas, and Tennessee. ( Id. ¶¶ 15, 17, 18, 19, 20, 21.)

For each of the portfolio loans, a promissory note was executed by the individual Borrower SPE and assigned to its corresponding Lender SPE. Thus, LBCMT 2007-C3 Urbana Pike, LLC ("Riverview Lender"), holds a promissory note executed by the Riverview Borrower with a principal sum of $1, 750, 000, and LBCMT 2007-C3 Patrick Street, LLC ("Gold Mile Lender"), holds a promissory note executed by the Gold Mile Borrower with a principal sum of $4, 160, 000. ( Id. ¶¶ 24, 38, Ex. 1 & Ex. 4.) The original lender on all of the loans was Lehman Brothers Bank, ...


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