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Crossland v. Oppenheimer Multifamily Housing & Healthcare Finance Inc.

United States District Court, W.D. Oklahoma

June 28, 2018

IVAN CROSSLAND, JR., an individual, Plaintiff/Counter Defendant,
v.
OPPENHEIMER MULTIFAMILY HOUSING & HEALTHCARE FINANCE, INC., a Pennsylvania corporation, Defendant/Third-Party Plaintiff/ Counter Claimant,
v.
PETE PATRICK MARRONE, an individual, Third-Party Defendant.

          ORDER

          VICKI MILES-LaGRANGE UNITED STATES DISTRICT JUDGE.

         This case is scheduled for trial on the Court's September 2018 trial docket.

         Before the Court is defendant/third-party plaintiff Oppenheimer Multifamily Housing & Healthcare Finance, Inc.'s (“Oppenheimer”) Motion for Summary Judgment, filed January 2, 2018. On February 6, 2018, plaintiff Ivan Crossland, Jr. (“Crossland”) filed his Counter-Motion for Summary Judgment and Response in Opposition to Oppenheimer's Motion for Summary Judgment. On March 9, 2018, Oppenheimer filed its response to Crossland's Counter-Motion for Summary Judgment and reply in support of its Motion for Summary Judgment, and on March 30, 2018, Crossland filed its reply. Based upon the parties' submissions, the Court makes its determination.

         I. Introduction

         Crossland and third-party defendant Pete Patrick Marrone (“Marrone”) formed Wesley Village, LP, to carry out the rehabilitation of a retirement community apartment complex in Oklahoma City. On or around November 18, 2013, Oppenheimer conditionally agreed to make a mortgage loan to Wesley Village, LP, in the principal amount of $4, 950, 000 for the rehabilitation of an apartment complex known as Wesley Village Retirement Community (the “Project”). Oppenheimer's loan was to be evidenced by, among other things, a Mortgage Note (the “Note”). The Note was secured by, among other things, a deed of trust on the Project and was insured by the United States Department of Housing and Urban Development (“HUD”).

         Oppenheimer's Financial Commitment Letter for the Project required that HUD's initial endorsement on the Note take place on or before December 18, 2013. The Financial Commitment Letter further provided that HUD's final endorsement must “occur on or before the 15th day of the 20th month following the month in which occurs the earlier of (a) approval of an Early Start or (b) Initial Endorsement.” Financial Commitment Letter, attached as Exhibit 1 to Oppenheimer's Motion for Summary Judgment and Brief in Support [docket no. 21], at 4. Additionally, the Financial Commitment Letter provided:

Monthly Final Endorsement Extension Fee: One-eighth of one percent of the Insured Mortgage Amount per month (or any portion thereof) for each of the first three monthly extensions and then one-quarter of one percent for each month thereafter following the above-defined Required Final Endorsement Date until Final Endorsement occurs.
Borrower is responsible for payment of all Initial Endorsement Extension fees and Final Endorsement Extension fee and acknowledges that such fees will not be affected by any extensions that FHA may grant in such dates or in the date for completion of the Project. All extension fees are non-refundable. It is expressly understood and agreed that extension fees retained by the Lender shall not constitute liquidated damages and the Borrower shall be additionally and fully liable for all actual damages sustained by the Lender.
Because the Insured Mortgage Amount does not include funds for extension fees and Surplus Cash may not be available for their payment, Final Endorsement Extension fees shall be guaranteed by Ivan Crossland and Pete Marrone, personally in a form acceptable to [Oppenheimer].

Id.

         HUD provided its initial endorsement on the Note on February 13, 2014.[1] On that same day, Oppenheimer, Crossland, and Marrone entered into an Extension Discount Agreement.

Under the Extension Discount Agreement, [Crossland and Marrone] have agreed that, in the event that Final Endorsement for Mortgage Insurance of the Note for the Project by HUD (hereinafter referred to as “Final Endorsement”) does not occur on or before the Required Final Endorsement Date, which is defined as the 15th day of the 20th month following the month in which occurs the earlier of (a) approval of an Early Start or (b) Initial Endorsement (which date will not be affected by any extension by FHA of the required completion date), then [Crossland and Marrone] shall be obligated to pay and shall pay to [Oppenheimer], on or before the first day of the month in which such extension period commences, a monthly extension discount equal to one-eighth of one percent of the Insured Mortgage Amount per month (or any portion thereof) for each of the first three monthly extensions and then one-quarter of one percent for each month thereafter following the above-defined Required Final Endorsement Date until Final Endorsement occurs. [Crossland and Marrone] shall pay each such monthly extension discount in advance of the first day of the month in which such extension period commences.

         Extension Discount Agreement, attached as Exhibit 3 to Oppenheimer's Motion for Summary Judgment and Brief in Support, at 1-2. As of March 25, 2015, construction on the Project was complete. HUD provided its final endorsement on the Note on October 5, 2016.

         Wesley Village, LP made all principal and interest payments on the Note between October 15, 2015 and October 5, 2016, paying Oppenheimer $247, 882.90 in interest and $40, 225.75 in principal on the Note. Further, between October 15, 2015 and October 5, 2016, a total of $134, 130.45 in extension fees were ...


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