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Four Seasons Hotel and Residences, 40 stories, 542', $400 million

markhollin

By markhollin
in Nashville

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PaulChinetti
PaulChinetti

Had a day off today, when out for some flying.

LA_TN
LA_TN

The Four Seasons: Spring

PaulChinetti
PaulChinetti

You can really see the little slice missing from this angle. Hopefully there is lots of activation along 1st ave. 

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nashvylle City

nashvylle

Posted
Posted
2 hours ago, SEsideguy said:

Northern Capital Investments in Grand Rapids, MI? They are a quiet company? I have not heard of them nor seen their name in the Grand Rapids thread?

Sometimes it matters who your friends are. Northern Capital Investments is friends with The Congress Group.. ergo this project has a good chance. 

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urbanplanet17 Whistle-Stop

urbanplanet17

Posted
Posted (edited)

Have there been any more updates on this project (financing, legal battle, drilling, etc.)?

It's a bit concerning to me that they still haven't purchased the necessary land (not including the tiny parking lot) nor has there been any word on trying to lock down a tenant for their hotel, which suggests any movement on this likely won't happen for a long time. But I hope I'm wrong.

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fxvol Unincorporated Area

fxvol

Posted
Posted

This is what Canuck87 posted in this thread back on 1/3/17...maybe he or she can research the matter and provide an update!?!

I was downtown this morning with some time on my hands, so I decided to stop by the courthouse and pull the case file for Second Avenue Partners v. Belle Meade Investments, which is pending in Davidson County Chancery Court. 

For those interested, the filings are public record and can be requested at the clerk’s office. The case number is 16-0775-I. Since I’m pretty sure most of you would prefer to avoid reading through pages and pages of pleadings, motions, and other filings, I thought I’d give you a somewhat brief summary:

The facts are fairly straightforward. Second Avenue Partners (the "Buyer") is the plaintiff, and Belle Meade Investments (the "Seller") is the defendant. The original purchase agreement executed between the parties provided that closing would take place in February 2016. The agreement also gave the Buyer an option to delay closing by providing an additional earnest money deposit that would be applied to the final purchase price. After being delayed twice, closing was set to take place on June 28.

On the morning of June 28, a representative of the Buyer contacted the Seller to ask about delaying the closing once more until sometime in August. This additional delay would allow the Buyer to comply with some unspecified requirements of the lender. The Buyer alleges that the Seller agreed to this extension, but there was nothing in the record evincing this claim.

On July 1, the Seller notified the Buyer by email of its intention to cancel the sale. This communication, however, did not comply with the notice provisions of the purchase agreement, which provided that all communications must be transmitted via mail. On July 7, the Seller sent a letter to the Buyer notifying the Buyer that it was cancelling the transaction. 

On July 19, the Buyer filed suit against the Seller in Chancery Court. The Buyer alleges that the Seller failed to deposit the closing documents with the escrow agent pursuant to the terms of the agreement, and that after the closing date, the Seller attempted to wrongfully repudiate the contract. The Seller has filed a counterclaim alleging that termination of the contract was valid and that it is entitled to the $106,000 earnest money deposit that is currently being held in escrow.

The parties have raised several arguments, but the crux of the dispute relates to the interaction between two provisions of the purchase agreement. The first important provision is the so-called "time is of the essence" clause. For many types of contracts (e.g., construction, real estate sales, loans, etc.) courts will often view minor deviations from a contract's schedule as being too insignificant to warrant damages or termination of the contract. Thus, where timing is crucial to a deal, lawyers may include a "time is of the essence" provision, making timeliness with respect to the parties' obligations essential. The agreement between the parties here contained such a provision. The Seller believes that the Buyer's request to extend the closing shows that it was unable or unwilling to consummate the transaction by the closing date of June 28. Accordingly, the Buyer did not comply with the agreement's schedule and was in breach of the contract. The Seller was thus entitled to terminate the agreement.

The second key provision of the purchase agreement relates to notice and cure. Typically in a large transaction like this one, a party will not be entitled to immediately terminate the transaction upon breach by the other party. The agreement at hand required that, before terminating the contract, the party seeking termination must provide notice to the other party. This notice must specifically describe the nature of the breach and provide the other party with an additional 10 days to cure the breach. Only upon the completion of the 10-day cure period could the transaction be cancelled. The Buyer's argument is that, even if it failed to meet its obligations by the closing date, it had the right to reasonably rely on the 10-day cure period provided in the agreement. Since the Seller did not provide the Buyer with time to cure, which was a condition precedent to termination, the termination was not effective.

There seems to be very little Tennessee case law cited by the parties that is directly on point, so it is hard to say who has superior legal arguments. I won't bore you with my personal prognosis regarding the case, but I will point out a couple things that I thought were notable.

First, the Buyer is not seeking money as damages. As a general rule, the default remedy for breach of a sales contract is monetary damages. Take for example a sales contract for the purchase of a commodity good. If the seller breaches, the buyer will have to mitigate its losses by buying substitute goods from another seller. If the buyer is required to pay more to "cover," then it will be able to recover the difference from the seller, but courts will not generally require the seller to perform the contract. That being said, there are circumstances where a party can sue for "specific performance." This equitable remedy is often available in land transactions, based upon the theory that land is unique and no other legal remedy will put the non-breaching party in the same position as if the contract been performed. Here, the only relief sought by the Buyer is that the Court declare that the contract remains in effect, set a closing date for the transaction, and compel the Seller to convey the property according to the original contract terms. The Buyer avers that it stands ready and willing to close the transaction and that it has the full amount of the purchase price secured. As of now, there is no indication that the Buyer is not fully intent on purchasing the property.

Second, throughout its filings, the Buyer repeatedly stresses the significance of this project-- the scale and value of the development, the 5 star hotel, the additional parking for the benefit SoBro and Ascend, increased property taxes, the impact on the skyline, etc. Though theoretically, these sorts of external considerations should have no bearing on a court's legal analysis, it would be naive to ignore the role they play. Judges are only human and are not ignorant of these sorts of factors.

Finally, judges rarely look favorably upon parties who try to play "gotcha" in cases like this one. It appears from the deal timeline that initially both the Buyer and Seller were perfectly intent on having the sale completed and were willing to cooperate with one another to facilitate its completion. Now, however, the Seller is seeking to receive the $106,000 deposit and cancel the transaction so it presumably can try to receive more money for the property down the road. In other words, the Buyer is only trying to receive the benefit of its original bargain, whereas the Seller is looking to receive a windfall. I don't want to insinuate that the Seller is acting in bad faith, only that the "equities of the case" seem to tilt in the Buyer's favor.

As for the case timeline and how it might progress, there has been no movement on the docket since October. The parties' motions to dismiss have been filed and denied. This is typically followed by a discovery period, where documents are exchanged and witnesses are deposed. Depending on the nature of the case, this process could last for a couple months or several years. Towards the end of discovery, parties will routinely move for summary judgment, and this would likely necessitate another hearing. Depending on how congested the Court's docket is, a ruling could take a few weeks or several months. I will say that there does not seem to be any material facts in dispute, so a trial in this case seems unlikely. I would not be surprised if the case is disposed of on summary judgment. Plus, it's important to keep in mind that 90%+ of cases like this end up settling. This is especially true when it appears that a case is unlikely to be resolved quickly in court. The longer the case takes, the greater the legal fees, and the greater incentive there is to resolve the dispute through settlement.

I will check in with the progress of the case periodically and report here if anything happens, assuming y'all are interested.

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BnaBreaker City

BnaBreaker

Posted
Posted
2 minutes ago, titanhog said:

Btw...question for those "in the know."  Is this project imminent...or are there still hoops to jump through?

Good point... we're all throwing a damn rave over here and we don't even know if it's actually at the finish line, or just 'moving in the right direction.' 

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