Garg v. Albany Industrial Development Agency

899 F. Supp. 961, 1995 U.S. Dist. LEXIS 15100, 1995 WL 608163
CourtDistrict Court, N.D. New York
DecidedOctober 12, 1995
Docket1:94-cv-01371
StatusPublished
Cited by12 cases

This text of 899 F. Supp. 961 (Garg v. Albany Industrial Development Agency) is published on Counsel Stack Legal Research, covering District Court, N.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Garg v. Albany Industrial Development Agency, 899 F. Supp. 961, 1995 U.S. Dist. LEXIS 15100, 1995 WL 608163 (N.D.N.Y. 1995).

Opinion

MEMORANDUM, DECISION & ORDER

McAVOY, Chief Judge.

Plaintiffs bring a sizeable collection of civil rights claims against defendants, all of which, appear to stem from plaintiffs’ contention that defendants discriminated against them on the basis of their race and national origin, and seek $10,000,000 in actual and punitive damages. Defendants move for summary judgment pursuant to Fed.R.Civ.Pro. 56(c) or, in the alternative, dismissal of plaintiffs’ complaint pursuant to Fed.R.Civ.Pro. 12(b)(6). Defendants’ motions are granted.

I. Background

A. Factual Allegations

Plaintiffs’ claims pertain to a series of business and legal dealings with the defendants. In short, plaintiffs claim that defendants discriminated against them in the course of negotiating a mortgage of the plaintiffs’ hotel, opposing plaintiffs’ Chapter 11 reorganization plan, trying to recover a debt from plaintiffs after waiving all claims to it, discussing the assumption of the mortgage with potential buyers of the hotel, assessing the hotel for property tax purposes, and transferring title to the hotel after a bankruptcy sale.

1. The Plaintiffs and Their Businesses

Plaintiffs are American citizens of Asian Indian descent. They are the general partners of Thruway Investments (“TI”), a limited partnership formed in 1983. Plaintiffs also formed P. & J.G. Enterprises (“PJG”), a close corporation, to operate and manage property owned by TI. The Thruway House (the “Hotel”), an Albany Hotel, was among the property owned by TI and managed by PJG. TI also owned a long-term lease on the real property where the hotel is situated.

2. The Mortgage

Although plaintiffs’ complaint mentions loan and mortgage negotiations with Defendant AIDA separately, these transactions appear to be closely related. It appears that at some point in 1987 or early 1988, plaintiffs decided to renovate their hotel in an attempt to obtain a franchise from a national hotel chain. To secure the necessary funds, they *965 applied for a mortgage loan from Defendant AIDA. According to plaintiffs, they informed Defendant AIDA that because they needed to complete repairs by a certain date in order to attract a franchise, time was of the essence. After what plaintiffs describe as a “long loan application process[] and unexcusable delays,” Defendant AIDA issued a loan commitment letter to them on April 7, 1988. Plaintiffs and Defendant AIDA eventually settled on a closing date of July 17, 1989. On that day, plaintiffs, on behalf of TI, secured a $500,000 mortgage on the Hotel from Defendant AIDA. Additional security for the $500,000 mortgage consisted of TI’s leasehold interest in the land surrounding the Hotel, plaintiffs’ personal guarantee, and PJG’s corporate guarantee.

Aso on July 17, 1989, Defendant AIDA made an initial loan disbursement to TI of $340,000. Either at that time or at some later date, Defendant AIDA allegedly told plaintiffs that it would not disburse all of the loan funds until plaintiffs completed the Hotel renovations. Plaintiffs claim that they' then tried and failed to secure a bridge loan. On November 6, 1989, Defendant AIDA made a second disbursement of $100,000. A few months later, it made a final disbursement of $30,000. Plaintiffs claim that Defendant AIDA never disbursed the remaining $30,000. They also claim that because of Defendant AIDA’s delays in disbursing the loan funds, despite plaintiffs’ request for speedy payment, they failed to complete the renovations on time. Failure to complete the renovations on time allegedly led to a national hotel chain’s denial of plaintiffs’ franchise bid. Plaintiffs then defaulted on their mortgage payments.

According to plaintiffs, Defendant AIDA’s discriminatory conduct caused all of the delays that interfered with the smooth and timely completion of these transactions.

3. Bankruptcy

Plaintiffs filed for bankruptcy on October 26, 1990. They claim that although they submitted a workable Chapter 11 reorganization plan to the bankruptcy court, defendants successfully opposed it on March 28, 1992, with an affirmation containing deliberately false statements. Four months later, the bankruptcy court allegedly converted plaintiffs’ bankruptcy case into a Chapter 7 case and appointed Philip Danaher as trustee of the debtors’ estate.

On August 18, 1992, the trustee put all of TI’s assets, including the Hotel, up for public auction. Plaintiffs suggest that at the time of the auction, the Hotel had a fair market value of $4.85 million. Compl. ¶ 43. According to plaintiffs, representatives of Defendant AIDA and two other “mortgage holders of TI’s debt, Bank of Baroda and Jack Schlief-fer” attended the auction and purchased the Hotel for $25,000 plus an amount equal to the balance of the mortgage, for a total of roughly $3.3 million. Plaintiffs and Defendant ADA disagree over whether the sale was conditional upon the buyers’ release the mortgage and waiver of all claims against the debtors. Compl. ¶¶ 44-45; Ds’ Mem. 16. The bankruptcy judge allegedly approved the sale of the Hotel, on these conditions, to the buyers on August 24, 1992.

Plaintiffs further allege that despite Defendant ADA’s waiver of all of its claims against plaintiffs, and in violation of the bankruptcy provisions in 11 U.S.C. § 723, Defendant ADA brought suit against plaintiffs in New York State court to recover the debt. The state lawsuit, plaintiffs claim, was motivated by Defendant ADA’s “malice, invidious] intent and bad faith to harm the plaintiff and thus to deprive them’ of their civil rights and privileges guaranteed under the U.S. Constitution.” Compl. ¶49.

4. Assumption of the Mortgage

Plaintiffs allege that on at least two occasions after they filed for bankruptcy and before the sale of the Hotel at public auction, defendants interfered with sales contracts plaintiffs executed with parties who had agreed to buy the Hotel and to assume the Hotel mortgage. On one occasion, plaintiffs claim, they executed a sale contract with the Friendship Hotel of Abany and received the bankruptcy court’s approval for the sale. Plaintiffs allege that during meetings between Friendship and ADA officers in 1991 and 1992, which plaintiffs were forbidden to attend, Defendant ADA revealed information to the buyers that led eventually to their *966 refusal to complete the sale. The disclosure of this information was, according to plaintiffs, “unconscionable, unreasonable, and discriminatory.” Compl. ¶ 87.

5. Assessments

Plaintiffs allege that prior to the bankruptcy filing, they made several requests to Defendant City of Albany (the “City”) to reduce the property assessment of the Hotel. The City refused. During the bankruptcy hearings, one of the defendants allegedly testified that the Hotel was worth significantly less than $5 million. Plaintiffs claim that after the bankruptcy filing, they again asked the City for a reduction, but the City refused, in apparent deference to its assessor’s claim that the Hotel was worth $5 million.

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Bluebook (online)
899 F. Supp. 961, 1995 U.S. Dist. LEXIS 15100, 1995 WL 608163, Counsel Stack Legal Research, https://law.counselstack.com/opinion/garg-v-albany-industrial-development-agency-nynd-1995.