Akerman partners Brian T. West and Joseph L. Rebak (J. Albert Diaz)
When a $109 million mortgage deal between four would-be Florida hoteliers unraveled, the partners turned on each other, alleging concealment, unscrupulous business practices and “unclean hands.”
The case lasted four years and left litigators to unravel a web of corporations and behind-the-scenes deals.
In the end, the judge faulted one of the partners and Regions Bank.
It started well enough when Basil Street Partners LLC partners Jack Antaramian, Iraj Zand, Fred Pezeshkan, Raymond Sehayek and Ali Ebrahimi borrowed $109 million from Regions for Naples Bay Resort.
They defaulted on the loan in 2008, triggering a series of events that would lead to lawsuits by two lenders, countersuits, a switch in plaintiffs, a dispute about collateral and claims that one partner bought the debt before turning on his former associates.
“Like most commercial cases, this has a long and tortured history,” said Basil Street attorney Joseph Rebak, a partner in Akerman’s Miami office. “There was a web of ownership structures, and it’s pretty complex.”
First there was the slew of companies created by the partners for the large Collier County project, where they planned a hotel, condominiums, conference space and a clubhouse or recreation area. There were Antaramian Capital Partners LLC, Basil Street Partners LLC, Knightsbridge Partners of Naples LLC, NBR Manager LLC, Antaramian Family LLC and two parent companies, Antaramian Partners LP LLLP and Naples Bay Resort Holdings LLC.
Then there were the varied ownership structures. All five principals once had stakes in Knightsbridge, Basil Street and Antaramian Capital. But only Antaramian, Pezeshkan and Ebrahimi were on Knightsbridge’s management committee until 2008 when Zand replaced Ebrahimi.
It took a 41-page final judgment dated May 30 for Collier Circuit Judge Lauren L. Brodie to summarize the facts, following a bench trial in April. During four years of legal wrangling, the case pitted the partners’ companies against each other, with Antaramian Properties LLC suing Knightsbridge Partners of Naples LLC, Basil Street Partners LLC and others.
The deal started with Antaramian Capital Partners serving as the developer of the clubhouse, while Basil Street Partners worked on a resort on the waterfront property’s west parcel. Both companies had five principals—Antaramian, Zand, Pezeshkan, Sehayek and Ebrahimi.
The companies obtained a $30 million loan from Regions Bank to develop the clubhouse and a $109 million mortgage for the resort. They repaid the smaller mortgage, but things got dicey in 2008 when the larger mortgage went into foreclosure with $36 million outstanding.
“What happened was that Regions Bank attempted to cross-collaterize the two loans. They decided that the club parcel was collateral for the resort, and the resort parcel was collateral for the club,” Rebak said. “The club was paid in full, but Regions took the position that the club was collateral for the resort. The partners disagreed with that position.”
In 2010, the bank filed a foreclosure case against the developers and other stakeholders, including Fifth Third Bank, which made a $4 million loan on the project.
But in one of many twists, Antaramian successfully filed a stipulation for dismissal and escaped the litigation.
Court documents show Antaramian moved to put the Naples property into receivership without informing his partners when he was president of Knightsbridge. He’d also taken a $2.5 million loan, using the clubhouse as collateral, to pay off interest on the Regions debt.
Then in what first seemed like a move to rescue the other developers from foreclosure, Antaramian successfully negotiated with Regions to pay $8 million to cover the balance on the resort loan.
But what he did next took his former partners by surprise, court documents show.
“Our partners thought they had a deal, but it turns out the deal was not what they thought. Antaramian substituted himself for Regions Bank and continued the foreclosure against the club,” Rebak said. “Then what he did was change direction and said the club was collateral. He sued his partners on their guarantee of the resort loan, but he didn’t just sue them for $8 million. He sued them for the full amount of the debt, which was $36 million, despite the fact that they had a deal among themselves that he would buy the loans and free everybody of their debt.”
As Antaramian pressed forward with the suit, he wanted about six times his purchase price, saying interest and fees had caused the debt to balloon to $50 million.
Fifth Third Loan
Meanwhile, a third plaintiff entered the picture.
While Antaramian Properties v. Basil Street Partners et al was winding its way through the court system, a new lender sued the partners.
Fifth Third Bank, which gave the developers a $4 million loan, charged them with defaulting on that debt.
The bank said it made the loans based on the belief that the developers owned the clubhouse outright. When it learned the property was mired in litigation, Fifth Third moved to recover on its loan.
The court sided with the bank in March and awarded nearly $5.33 million plus interest, attorney fees and costs.
The partners blamed Antaramian’s new stance for the outcome, claiming he had damaged their standing with Fifth Third Bank. Their countersuit charged him with breach of fiduciary duty and argued they would not have sought the Fifth Third loan if Regions had the clubhouse as collateral.
A day before Antaramian Properties and Basil Street Partners were set to square off at a foreclosure trial in April, Antaramian paid $3.4 million to satisfy Fifth Third Bank’s claims against the group.
Antaramian would lose millions more by the end of the trial.
While the court found Antaramian Properties had standing to pursue the foreclosure, it found the plaintiff had “unclean hands” and allowed Knightsbridge to assert defenses based on the conduct of Regions Bank and Antaramian Properties.
Knightsbridge and the other defendants claimed equitable estoppel to prevent Regions Bank from using the clubhouse as collateral and to bar Antaramian from switching positions and moving to foreclose on the mortgage.
The judge ruled in their favor, finding Regions led the borrowers to believe it had released the clubhouse parcel, which in turn allowed them to enter the detrimental $4 million deal with Fifth Third Bank. She awarded Knightsbridge nominal damages of $1 plus 4.75 percent interest, most likely because Antaramian had previously settled Fifth Third Bank’s claim.
“The evidence in this case indicated that both Antaramian Properties LLC, through Antaramian, and Regions Bank engaged in unscrupulous practices, overreaching, concealment and/or other unconscientious conduct related to the issues that directly impact the attempt to foreclose this case,” Brodie wrote.
The judge barred Antaramian’s lien on the property and freed the partners from the mortgage.
She found Antaramian offered Regions the clubhouse as collateral without telling his partners but also allowed the group to tell Fifth Third that the property was free of liens.
In wiping out the mortgage, Brodie also barred Antaramian from foreclosing on any other title, lien or interest against the partners or clubhouse.
“We are disappointed and disagree with the judge’s decision,” said Antaramian Properties’ attorney Raul Valles Jr. of Rocke McLean Sbar in Tampa. “We plan to appeal.”
Valles and colleague Jonathan Prockop represented Antaramian.
Rebak and Bryan West of Akerman represented the defendants.