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U.S. Bank National Association v. Mobile Associates National Network Systems

October 13, 2011

U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE, SUCCESSOR-IN-INTEREST TO BANK OF AMERICA, N.A., AS TRUSTEE, SUCCESSOR BY MERGER TO LASALLE BANK NATIONAL ASSOCIATION, IN ITS CAPACITY AS TRUSTEE FOR THE REGISTERED HOLDERS OF LB-UBS COMMERCIAL MORTGAGE TRUST 2006-C7, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-C7, BY ITS SPECIAL SERVICER CW CAPITAL ASSET MANAGEMENT LLC, PLAINTIFF-APPELLEE,
v.
MOBILE ASSOCIATES NATIONAL NETWORK SYSTEMS, INC. ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Franklin County Court of Common Pleas (C.P.C. No. 09CVE-2460)

The opinion of the court was delivered by: Tyack, J.

Cite as

U.S. Bank Natl. Assn. v. Mobile Assoc. Natl. Network Sys., Inc.,

(REGULAR CALENDAR)

DECISION

{¶1} This is a commercial foreclosure appeal involving four manufactured housing parks located in Franklin and Pickaway Counties. Plaintiff-appellee is Bank of America, N.A., as successor by merger to LaSalle Bank National Association, in its capacity as trustee for the registered holders of LB-UBS Commercial Mortgage Trust 2006-C7, Commercial Mortgage Pass-Through Certificates, Series 2006-C7 ("Bank"). Defendants-appellants are Mobile Associates National Network Systems, Inc., Gregory Park Ashville, LLC, Westbrook Park Columbus, LLC, and Byway Park Columbus, LLC (collectively "Parks").

{¶2} The Parks entered into a commercial mortgage loan with UBS Real Estate Investments, Inc., in the amount of $8 million on June 7, 2006. The Parks made regular monthly payments on the note through September 2008. Then the Parks failed to make payments in October and November 2008.

{¶3} On September 29, 2008, Justin Mann, the self-described chief operating officer of the Parks, sent an e-mail to Wachovia Bank, the servicer of the loan, to request a forbearance of four-to-six months. (Defendants' exhibit C.) Ten minutes later, Crystal Edwards at Wachovia Bank (who serviced the loan) replied by e-mail that she needed documentation and a letter outlining the reason for the forbearance and how he planned to keep the loan current. Id. Mann testified that he was led to believe that a forbearance would be negotiated and granted, and formal paperwork would follow. Mann admitted that he had not actually obtained a forbearance before he failed to make the payments for October and November 2008. After the second missed payment, the loan was transferred to CW Capital Asset Management LLC ("CW Capital"), for servicing on November 13, 2008. On November 17, Monique Holland, Senior Asset Manager for CW Capital, attempted to reach Mann by telephone. (Defendants' exhibit G.) This was followed by an e-mail on November 18, 2008, asking Mann to speak to her right away as she was in the process of retaining counsel.

{¶4} In a letter dated November 21, 2008, the Parks and CW Capital entered into an agreement in which the parties agreed to commence negotiations concerning the obligations owed to the lender by the borrower. (Plaintiff's exhibit No. 9, executed on December 4, 2008.) In the written agreement, the Parks acknowledged that they had defaulted on the loan by virtue of the missed payments in October and November. The parties agreed that the loan documents were in full force and effect, and that the lender was under no obligation to modify any of the loan documents or enter into any form of agreement with the borrower. Further, the agreement stated that "[n]othing contained herein shall limit [the lender from] initiating, continuing or otherwise proceeding to exercise any right or remedy available to [the lender] under the Loan Documents." (Plaintiff's exhibit No. 9, at ¶4.) The parties also agreed that there had been no modifications to the loan documents and that "no agreement reached with respect to any matter (whether prior to the date hereof or hereafter * * *) shall have any effect whatsoever unless such agreement is reduced to writing." Id. at ¶3. The Parks also agreed to produce certain financial documents relating to the properties. Additionally, the original note and mortgage also contained clear language that they could not be modified except by a signed writing.

{¶5} The parties never reached a written agreement for a loan modification or a forbearance on the monthly payments. Holland testified that she did not agree to forbear or otherwise modify the terms of payment, in part, because Mann had told her that cash flow from the Parks had been diverted for use for other properties, and because she never received the documents she needed to consider a request for forbearance. Although Mann disagreed that he made any such statement regarding diversion of property funds, the trial court found Holland to be a very credible witness.

{¶6} On or about December 4, 2008, the Parks made a monthly payment of $69,026.63. On December 17, 2008, the Bank accelerated the maturity of the loan and demanded full payment in ten days. In January and February 2009, the Parks made payments of $71,531.27 that were also cashed.

{¶7} On February 18, 2009, the Bank filed its complaint and a request for the appointment of a receiver. The Parks contested the foreclosure, claiming that the Bank should be estopped from proceeding to foreclosure because the note and mortgage were modified by an oral agreement for forbearance. At trial, Mann testified that he was led to believe there would be negotiations in the future.

{¶8} Even as late as May 21, 2009, Mann was communicating to Holland that:

I am trying to line up investors to partner with me to solve this problem, but I need some cooperation on the part of CW Capital and or it's [sic] legal Counsel. That is all we are asking for. With that said, it would help if we could see monthly financial reports and the property condition report.

(Defendants' exhibit O.)

{¶9} Holland replied in pertinent part as follows:

* * * To set the record straight, we are proceeding with foreclosure. * * * If you have a new proposal or a request, we can surely consider it[,] but at this point you should be submitting any requests through your attorney to my attorney.

Id.

{ΒΆ10} On July 6, 2009, counsel for the Parks filed a motion for leave to file their answer to the foreclosure complaint instanter. In the memorandum in ...


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