Judge Paul A. Crotty
Belfonti controlled Aruba Hotel Enterprises N.V. (AHE), which owns a hotel on Aruba. To finance the purchase Belfonti arranged for a mortgage loan on AHE’s behalf, and a mezzanine loan to BCP Florin, which he controlled. AHE received additional funds through transfers from Belfonti-controlled entities. The mortgage and mezzanine loans were defaulted upon. AHE sought declaratory judgment that the funds advanced by Belfonti, Belfonti Holdings and Belfonti Capital Partners (BCP) were capital investments, not loans. In a related action by AHE against Belfonti and MCR Property Management Inc., a federal district court in Connecticut held that, because Connecticut’s Statute of Frauds was not satisfied, funds advanced by BCP and Belfonti Holdings to AHE were not loans subject to repayment. Giving collateral estoppel effect to the Connecticut ruling—wherein the ultimate issues in the present case had already been determined—district court granted AHE a declaration that the transactions at issue were not enforceable as loans. However, district court denied AHE an injunction barring Belfonti and his codefendants from bringing suit in Aruba so as to enforce the transactions as loans.
