As stores keep leaving DeSoto Square mall, legal fight heads towards foreclosure trial
The owners of Midtown DeSoto Square mall and Romspen U.S. Master Mortgage LP, the Cayman Islands lender that put up more than $25.5 million for the purchase of the mall in 2017, are headed to a November foreclosure trial.
Circuit Judge Charles Sniffen on Monday set a 9:30 a.m. Nov. 1 pretrial conference, when attorneys for the two sides in the foreclosure case are expected to reach agreement on a date from a two-week window starting Nov. 12.
“I am just happy to get a court date,” Murray Silverstein, attorney for Romspen, said afterward.
One full day will be set aside for the foreclosure trial, Sniffen said.
The owners of Midtown DeSoto Square mall have not made a payment since April 2018, and still owe $21,789,102, Silverstein said.
Ron Gache, attorney for the owners of Midtown DeSoto Square, repeated his claim that the “books were cooked” and that his clients were defrauded and misled by seller Namdar Realty Group.
Although Gache said he had no proof of collusion in the sale between Namdar Realty Group and Romspen, he asked for any documents and communications regarding due diligence in the sale.
“There is a lot to uncover here,” Gache said.
Silverstein objected to the request.
“We are still at the point where discovery hasn’t yielded anything. They don’t have a case,” Silverstein said, adding that Gache’s intent was to find more “rabbit holes” to explore.
Gache responded that the owners of the mall are in the throes of trying to redevelop the property, efforts that are being undercut by the foreclosure action.
“This property has significant value. It will be a very nice development,” Gache said.
Finally, Silverstein agreed to turn over any due diligence records, but said that he did not believe that there was any communication regarding due diligence between Namdar Realty Group and Romspen.
“I’ll go back and check again,” Silverstein said.
Sniffen overruled Silverstein’s initial objection to providing records of due diligence communication between Namdar Realty Group and Romspen.
“If they exist they should be turned over,” Sniffen said.
The foreclosure action has put the brakes on redevelopment of the mall, which has been losing businesses.
Long-time anchor Sears pulled out of the mall in January, and Victoria’s Secret left in mid-March.
Also shuttering their operations at the mall this year were Charlotte Russe and Payless Shoes, both of which filed for bankruptcy.
Meyer Leboviotz announced plans for redeveloping the 678,000-square-foot mall in a 2017 press release.
Among those plans were a $5.1 million investment to construct a state-of-the-art, 28,752-square-foot movie theater theater with seven screens that would show first-run movies.
Also being planned as a key anchor of the mall is an 18,000-square-foot restaurant complex, along with new paint, soft lighting, carpeted areas, new colors, and positive interaction with the community.
None of those big-ticket items became reality.
