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Yidi, L.L.C. v. JHB Hotel, L.L.C.

Court of Appeals of Ohio, Eighth District, Cuyahoga

April 6, 2017

YIDI, L.L.C. PLAINTIFF-APPELLEE
v.
JHB HOTEL, L.L.C., ET AL. DEFENDANTS-APPELLANTS

         Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-15-850496

          ATTORNEYS FOR APPELLANTS Jeffery D. Rengel Thomas R. Lucas Rengel

          ATTORNEYS FOR APPELLEE FOR MARK E. DOTTORE, RECEIVER Harvey Labovitz Elizabeth E. Collins Tim L. Collins Joseph Gutkoski Collins & Scanlon, L.L.P.

          FOR YIDI, L.L.C. Robert T. Glickman Robert R. Kracht Charles A. Nemer Danielle G. Garson McCarthy, Lebit, Crystal & Liffman Co.

          BEFORE: Keough, A.J., Kilbane, J., and Blackmon, J.

          JOURNAL ENTRY AND OPINION

          KATHLEEN ANN KEOUGH, ADMINISTRATIVE JUDGE

         {¶1} Defendants-appellants, JHB Hotel L.L.C., 3M Realty L.L.C., 3M Development L.L.C., and Hickory Court L.L.C. (collectively "appellants"), appeal from the trial court's judgment approving the receiver's motion to sell real property (the "sale order"). Finding no merit to the appeal, we affirm.

         I. Background and Procedural History

         {¶2} This case originated in August 2015, when plaintiff-appellee, Yidi, L.L.C. ("Yidi"), filed a breach of contract and foreclosure action against appellants seeking repayment for a series of loans guaranteed by three properties located on Euclid Avenue in Cleveland (the "property").

         {¶3} The trial court, upon Yidi's request and pursuant to an agreed order, appointed Mark Dottore as receiver (the "receiver"). The court subsequently granted the receiver's unopposed motion to approve (1) the retention of Hanna Commercial and David Wagner to market the property, and (2) the procedures for the marketing of the property and the submission of sealed bids on the property.

         {¶4} After vetting several potential buyers, the receiver ultimately determined that a $9.1 million bid from Alto Partners, L.L.C. ("Alto") was the highest and best offer for the property. On July 20, 2016, he filed a motion seeking a court order authorizing him to sell the property to Alto. The court set a hearing on the receiver's motion for August 2, 2016. The day before the hearing, appellants filed a "notice of filing competing offer to purchase receivership property" with the trial court. The offer was for $9.5 million by SRI, L.L.C., the equity investor in JHB Hotel, L.L.C., the fee simple title holder to the property. (Thus, the offer was essentially by appellants.)

         {¶5} The trial court held the scheduled hearing on August 2, 2016. Wagner, the receiver, and Michael Sabracos, president of U.S. operations for Alto, testified at the hearing. The receiver testified that the Alto offer was the highest and best offer for the property because Alto had submitted documentation demonstrating that it had the financial ability to purchase the property, had experience in developing similar commercial properties, and had committed $450, 000 in nonrefundable monies if the deal ultimately did not go forward. He testified that although SRI's offer was higher, it had not been submitted in accordance with the sealed bidding procedures and that SRI, unlike Alto, had not submitted any documentation regarding its financial ability to close on the transaction and complete the project. Further, SRI's bid contained a 30-day contingency and a $100, 000 refundable deposit. He admitted, however, that he had not fully vetted SRI's offer.

         {¶6} After the hearing, on August 4, 2016, the trial court granted the receiver's motion and issued the sale order authorizing the receiver to sell the property to Alto. As part of the sale order, the trial court granted appellants three days to exercise their equity of redemption. This appeal followed.

         II. Law and Analysis

          A. ...


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