Ex-Borders Site's Landlord Responds to Foreclosure Suit, Seeks Dismissal

The landlord for the former Borders Books & Music site in Mount Kisco has responded to a lawsuit seeking foreclosure of the property.

In a state supreme court filing dated May 29, Mt. Kisco Associates, LP denies that it has defaulted on a $6.3 million mortgage for the site, which was taken out in 2007. It is also seeking dismissal of the lawsuit and argues that the plaintiff, an entity called GCCFC 2007-GG11 Kisco Retail, LLC, does not have standing to sue, suggesting improper loan assignment as a reason.

The plaintiff is managed by LNR Partners, LLC, a Florida-based special servicer of the loan. The lawsuit claims that Mt. Kisco Associates stopped making payments for the mortgage and thus defaulted.

Other defenses given by the landlord include that the loan's terms bar the plaintiff's legal claim, that it failed to state a cause of action or mitigate damages. The response also invokes various legal doctrines, including “unclean hands,” which, legal sites note, means a plaintiff is accused of behaving badly; laches, which is defined as being related to delay for pursuing a claim; and estoppel.

Mt. Kisco Associates does confirm the validity of the loan agreement in general, the plaintiff's assertion that it still owed $6.3 million as of the suit's late-February filing – the agreement had an interest-only payment schedule until late 2012 – and that a notice of default was received last year.

The loan, which began in September 2007, was given by Greenwich Capital Financial Products, Inc., a subsidiary of the Royal Bank of Scotland Group, plc. According to Securities and Exchange Commission documents, later that fall, the loan was placed along with more than 100 other mortgages into a trust that served as a vehicle to issue certificates, which represented ownership stakes that investors could purchase. The trust, with about 122 loans of more than $2.6 billion in total value around the investment time, included a mix of mortgages initiated by both Greenwich and a commercial lending wing of Goldman Sachs.

The loan for the property, along with those held in the trust, were first assigned by LaSalle, a bank that was soon acquired by Bank of America, which then took assignment. U.S. Bank was then assigned the loan briefly last year before it was taken over by the plaintiff.

The terms of the loan include a 6.815-percent interest rate and a maturity date of Sept. 6, 2017. In recent years, albeit by varying sources of measurement, it appears that the property has seen a major loss in value. According to documentation filed with the SEC, a 2007 appraisal showed the site was worth $8.5 million, but Mount Kisco's estimated market value is just $5 million, a price that is lower than the loan's amount.

The building has been vacant since Borders closed in September 2011 as part of a company-wide liquidation. Local merchants believed that the loss of Borders, which had a lease for the property since 1997, hurt business.

The site is located at 154-162 E. Main St. and village tax records show that it is 1.03 acres. The building is about 22,500 square feet while the western portion of the property, which is adjacent to the Green Street firehouse, is leased by Mount Kisco for a portion of its municipal parking lot. The petition for the case makes no mention of what would happen to the lease if foreclosure is successful.

Mt. Kisco Associates, along with loan guarantor and fellow defendant Support One, LLC, are each connected to Property Group Parnters, a commercial real estate firm that was formerly part of the Louis Dreyfus Group. The entities each share the came Wilton, CT mailing address. Jeffrey Sussman, Property Group's CEO, has been confirmed to also have an ownership stake in Mt. Kisco Associates. William Louis-Dreyfus, who according to media reports was chairman of the former parent company, signed Support One's guarantor contract. Louis-Dreyfus, according to court documents from the plaintiff, was also listed as being an indirect owner in Mt. Kisco Associates at the time that the loan was signed, although it is unclear what role, if any, that he has now.

Sussman and attorneys for the landlord could not be reached for comment. Evelyn Seeler, an attorney for the plaintiff, declined to comment because the matter involves pending litigation.