TCA said it soon learned its revenue did not cover the monthly debt obligation and the monthly operating expenses. It then found out, TCA said in the complaint, that the structure of the loan prioritized payments in a way unfavorable to TCA and denied TCA access to any shortfall reserve funds.
The company said it became impossible for it to operate Girard Square and TCA had to relinquish its rights on unfavorable terms. It claimed damages in the complaint of more than $5 million in expenditures plus loss of the opportunity to realize future profits.
In its initial motion for summary judgment filed in December 2011, Morgan Lewis argued TCA could not prove their actions were a direct cause of any damages TCA might have suffered. They argued TCA couldn't prove UBS would have agreed to the financing terms TCA wanted.
Morgan Lewis further argued there was no evidence TCA would have walked away from the deal had UBS not agreed to give TCA access to a reserve fund. The defendants also noted that getting the deal signed by UBS's imposed June 18 deadline was important because TCA would have otherwise lost its $2 million deposit and other costs, according to their motion.
Morgan Lewis argued there was no evidence, other than the plaintiffs' statements, to link Morgan Lewis' conduct with the plaintiffs' damages. According to its summary judgment motion, Morgan Lewis said Goodman could only proffer that TCA would have been able to obtain a second-year option on the loan had it had access to the reserve fund.
The law firm said Goodman's report ignored market realities at the time and was void of any discussion of whether TCA would have lost the property at the end of the second year.
"He never even mentions the issue or the unprecedented decline in the commercial real estate market and its devastating effect on attempts to refinance by developers like [TCA]," Morgan Lewis said in its motion.
Morgan Lewis said TCA leveraged the deal over 100 percent and had no equity to fall back on. Morgan Lewis said TCA would have lost the property regardless of whether it had access to a reserve fund, particularly given the "rapidly deteriorating" commercial real estate market.
Morgan Lewis further argued TCA was the one to negotiate the deal and Morgan Lewis lawyers simply documented it. The firm said TCA understood the terms of the loan.
"Certainly, plaintiffs could not expect that defendants were going to analyze such things as the projected parking revenue and expenses before finalizing the loan documents," Morgan Lewis said in its motion. "At some point, a lawyer must rely on what he or she is being told by the client and here, defendants were told prior to the June 2007 closing that the transaction, as documented, worked from an economic standpoint."