Case: 4:12-cv-00372-JAR Doc.

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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION BANK OF AMERICA, N.A., Plaintiff, v. JEWISH COMMUNITY CENTER, Defendant. ) ) ) ) ) ) ) ) )

Case No.

COMPLAINT Plaintiff Bank of America, N.A. (“Bank of America”) for its Complaint against Defendant Jewish Community Center (“JCC”) alleges as follows: INTRODUCTION 1. This action arises out of JCC’s continuing refusal to make more than $4 million in

payments currently payable under two separate agreements between the parties. Although JCC has sufficient resources and the present ability to make these payments, it has steadfastly refused to do so. The reason for this refusal is simple. JCC is withholding these payments in a calculated effort to force Bank of America either to restructure a $45 million loan to JCC on terms far more advantageous to JCC than originally negotiated, accepted, and agreed upon by the parties or to accept a substantial discount on this $45 million loan. 2. Even though JCC may profess concerns over future financial uncertainties, it

unquestionably has the ability to live up to its current obligations to Bank of America. JCC has simply chosen not to do so. In short, JCC is using the specter of future financial uncertainty to shirk its current obligations to Bank of America, with the goal of forcing Bank of America to

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accept either an unacceptable restructuring of the $45 million loan or a substantial discount on the $45 million loan. 3. The refusal of JCC to meet its current obligations ignores the simple fact that it

requested, received, and spent all of the monies at issue. The commitments JCC made in exchange for the money have not changed. Even if JCC’s capital campaign contributions, sales of properties, and operational cash flow may not have kept up with internal JCC projections, the proper response is not to simply breach its obligations to Bank of America when JCC is capable of making all current payments. The fact that JCC is now unwilling to meet its obligations (despite its unquestioned present financial resources) must not be countenanced. 4. Although under no obligation to do so, Bank of America has attempted on several

occasions to reach an acceptable resolution of these issues with JCC, but to no avail. Accordingly, as a result of JCC’s continuing refusal to meet its contractual obligations under the parties’ agreements, Bank of America seeks enforcement from this Court. THE PARTIES, JURISDICTION AND VENUE 5. Bank of America is a national banking association with its main office in

Charlotte, North Carolina. At all times relevant herein, Bank of America was authorized to do business in the State of Missouri. 6. JCC is a nonprofit corporation incorporated and existing under the laws of the

State of Missouri. 7. This Court has subject matter jurisdiction of this action pursuant to 28 U.S.C.

§1332(a)(1) as complete diversity exists between the parties and the amount in controversy exceeds $75,000, exclusive of interest and costs.

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8.

Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(a) because

JCC resides in this judicial district, and a substantial part of the events giving rise to the claim occurred in this judicial district. In addition, pursuant to the express terms of the various loan agreements at issue in this case (discussed in detail below), JCC has submitted to venue in this judicial district. GENERAL ALLEGATIONS Bank of America’s $2.5 Million Loan to JCC 9. On or about September 18, 2006, Bank of America and JCC entered into that

certain Loan Agreement dated September 18, 2006 (the “$2.5 Million Loan Agreement”), whereby, among other things, Bank of America agreed to provide a $2,500,000 revolving line of credit to JCC (the “$2.5 Million Loan”), and JCC agreed to repay the $2.5 Million Loan, together with interest, fees, costs and expenses as more fully set forth in the $2.5 Million Loan Agreement. 10. Following its execution, Bank of America and JCC entered into several

amendments to the $2.5 Million Loan Agreement, which, among other things, extended the maturity date for the $2.5 Million Loan. 11. On or about June 15, 2011, Bank of America and JCC entered into that certain

Loan Agreement dated June 15, 2011 (the “Amended $2.5 Million Loan Agreement”), which superseded the $2.5 Million Loan Agreement and provided, among other things, that the $2.5 Million Loan was due and payable in full on September 30, 2011. A true and correct copy of the Amended $2.5 Million Loan Agreement is attached hereto as Exhibit A.

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Bank of America’s Involvement in $45 Million Bond Loan Provided to JCC 12. In 2007, JCC approached Bank of America to secure additional financing to

complete the renovation, improvement, equipping and furnishing of JCC’s facilities, including facilities located at 2 Millstone Campus Drive, St. Louis, Missouri 63146 and at 16801 Baxter Road, Chesterfield, Missouri 63005. 13. Subsequently, Bank of America and JCC structured a transaction that involved the

following: (a) the issuance of $45,000,000 Missouri Development Finance Board Variable Rate Revenue Bonds (Jewish Community Center Project) Series 2007 (the “$45 Million Bonds”) by Missouri Development Finance Board (the “Bond Issuer”); (b) Bank of America’s purchase of the $45 Million Bonds from the Bond Issuer for $45,000,000; and (c) the Bond Issuer’s loan to JCC of the $45,000,000 proceeds from Bank of America’s purchase of the $45 Million Bonds (the “$45 Million Bond Loan”). 14. In order to implement this transaction: (a) the Bond Issuer and UMB Bank, N.A.

the (“Bond Trustee”) entered into that certain Trust Indenture dated December 1, 2007 (the “Bond Indenture”), establishing the terms and conditions for the issuance of the $45 Million Bonds; (b) the Bond Issuer and JCC entered into that certain Loan Agreement dated December 1, 2007 (the “Bond Loan Agreement”), establishing the terms and conditions under which the Bond Issuer provided the $45 Million Bond Loan to JCC; and (c) Bank of America and JCC entered into that certain Supplement Loan Agreement dated December 1, 2007, as amended and restated by that certain Amended and Restated Supplemental Loan Agreement dated May 1, 2009 (as amended and restated, the “Supplemental Bond Loan Agreement), providing the terms and conditions under which Bank of America would purchase the $45 Million Bonds from the Bond

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Issuer. True and correct copies of the Bond Indenture, the Bond Loan Agreement, and the Supplemental Bond Loan Agreement are attached hereto as Exhibits B, C and D, respectively. 15. Bank of America required JCC to enter into the Supplemental Bond Loan

Agreement as a condition to Bank of America’s purchase of the $45 Million Bonds. 16. Among other things, the Supplemental Bond Loan Agreement obligates JCC to

undertake certain actions designed to protect Bank of America’s interest in receiving payment in full under the $45 Million Bonds. 17. For example, JCC agreed to redeem $785,000 of the $45 Million Bonds on

December 1, 2010, and agreed to redeem $825,000 of the $45 Million Bonds on December 1, 2011 (see Supplemental Bond Loan Agreement, Section 2.7 and Schedule 10). 18. JCC’s obligation to partially redeem the $45 Million Bonds on a periodic basis is

critically important to Bank of America because such partial redemption helps ensure repayment of the $45 Million Bonds on a structured basis and ensures that specified amounts of JCC’s funds are not used for payments to others. As such, JCC’s obligation to partially redeem the $45 Million Bonds in specified amounts and at specified times preserves and protects Bank of America’s investment in the $45 Million Bonds. JCC’s Refusal to Pay Amounts Due under Amended $2.5 Million Loan Agreement 19. By letter dated December 7, 2011 (as supplemented by letter dated December 8,

2011) (collectively, the “$2.5 Million Loan Default Letters”), Bank of America notified JCC that the $2.5 Million Loan matured on September 30, 2011, and entire amount due and owing under the Amended $2.5 Million Loan Agreement was due and payable. True and correct copies of the $2.5 Million Loan Default Letters are attached hereto as Exhibit E.

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20.

As of February 17, 2012, the amount due and owing under the Amended $2.5

Million Loan Agreement totaled $2,464,389.03, comprised of $2,452,914.00 in principal and $11,475.03 in accrued interest. This amount does not include attorneys’ fees and other costs, fees, and expenses which JCC is obligated to pay under the Amended $2.5 Million Loan Agreement. JCC’s Refusal to Redeem Bonds in Accordance with Supplemental Bond Loan Agreement 21. By letter dated December 7, 2011 (the “Supplemental Bond Loan Agreement

Default Letter”), Bank of America notified JCC that it was in default under the Supplemental Bond Loan Agreement based upon, among other things, its failure to redeem $1,610,000 of the $45 Million Bonds ($785,000 on December 1, 2010, and $825,000 on December 1, 2011), as required under Section 2.7 and Schedule 10 of the Supplemental Bond Loan Agreement. A true and correct copy of the Supplemental Bond Loan Agreement Default Letter is attached hereto as Exhibit F. JCC’s Refusal to Pay Amounts Required under Amended $2.5 Million Loan Agreement and Supplemental Bond Loan Agreement is an Attempt to Extract Concessions From Bank of America 22. JCC’s refusal to pay amounts required under the Amended $2.5 Million Loan

Agreement and the Supplemental Bond Loan Agreement is particularly troubling in light of the fact that JCC admittedly has the present ability to make these required payments. 23. Financial information that JCC has provided to Bank of America pursuant to the

Supplemental Bond Loan Agreement indicates that JCC has more than sufficient unrestricted cash reserves to make all payments currently required under the Amended $2.5 Million Loan Agreement and the Supplemental Bond Loan Agreement.

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24.

Further, to Bank of America’s knowledge, JCC is making all required payments

to its other creditors. Bank of America is being singled out for non-payment. 25. In view of these circumstances, JCC’s refusal to pay the amounts required under

the Amended $2.5 Million Loan Agreement and the Supplemental Bond Loan Agreement is not the result of any present financial inability. Rather, JCC is using these payment defaults to leverage the negotiation of more favorable terms for the $45 Million Bond Loan. COUNT I (Breach of Contract – Amended $2.5 Million Loan Agreement) 26. Complaint. 27. 28. The Amended $2.5 Million Loan Agreement is valid and enforceable. Bank of America has fully performed its obligations under the Amended $2.5 Bank of America re-asserts and re-alleges paragraphs 1 through 25 of its

Million Loan Agreement. Any and all conditions precedent to Bank of America’s right to enforce the Amended $2.5 Million Loan Agreement have been satisfied. 29. JCC materially breached the Amended $2.5 Million Loan Agreement by failing

and refusing to pay all amounts due and owing thereunder on September 30, 2011. 30. JCC’s breach of the Amended $2.5 Million Loan Agreement has directly and

proximately damaged Bank of America in an amount of no less than $2,464,389.03, which amount includes $2,452,914.00 in principal and $11,475.03 in accrued interest. This amount does not include attorneys’ fees and other costs, fees and expenses which JCC is obligated to pay under the Amended $2.5 Million Loan Agreement. WHEREFORE, Bank of America respectfully requests that this Court enter an Order and Judgment in favor of Bank of America and against JCC in the amount of $2,464,389.03 plus interest, attorneys’ fees and expenses, fees, late charges, and additional amounts accruing and/or

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incurred by Bank of America, including interest accruing from and after February 17, 2012, and granting such other relief as this Court deems just and appropriate under the circumstances. COUNT II (Breach of Contract – Supplemental Bond Loan Agreement) 31. Complaint. 32. 33. The Supplemental Bond Loan Agreement is valid and enforceable. Bank of America has fully performed its obligations under the Supplemental Bank of America re-asserts and re-alleges paragraphs 1 through 30 of its

Bond Loan Agreement. Any and all conditions precedent to Bank of America’s right to enforce the Supplemental Bond Loan Agreement have been satisfied. 34. JCC materially breached the Supplemental Bond Loan Agreement by refusing to

redeem $785,000 of the $45 Million Bonds on December 1, 2010. 35. JCC also materially breached the Supplemental Bond Loan Agreement by

refusing to redeem $825,000 of the $45 Million Bonds on December 1, 2011. 36. JCC’s breaches of the Supplemental Bond Loan Agreement have directly and

proximately caused damage to Bank of America. Among other things, JCC’s actions have damaged and will continue to damage Bank of America, by, inter alia, (i) precluding Bank of America from receiving the bargained-for partial redemptions under the $45 Million Bonds, (ii) permitting JCC to use amounts that should be used to redeem the $45 Million Bonds to pay other creditors, potentially reducing Bank of America’s ability to recoup in full its investment in the $45 Million Bonds, and (iii) risking a default under the Bond Indenture and the Bond Loan Agreement and the acceleration of the $45 Million Bond Loan, all of which threaten the value of the $45 Million Bonds.

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37.

Bank of America has no adequate remedy at law. Under the Bond Indenture (to

which Bank of America is not a party), JCC is required to remit all partial redemption payments to the Bond Trustee, and the Bond Trustee then remits these payments to the owner of the $45 Million Bonds. Therefore, JCC’s failure to partially redeem the $45 Million Bonds may only permit the Bond Trustee (and not Bank of America) to pursue a money damage claim directly against JCC for this failure. Consequently, Bank of America’s sole remedy with respect to JCC’s failure to partially redeem the $45 Million Bonds is to seek specific performance of JCC’s redemption obligation. WHEREFORE, Bank of America respectfully requests that this Court enter an Order and Judgment in favor of Bank of America and against JCC (a) ordering JCC to redeem $1,610,000 of the $45 Million Bonds in accordance with the Supplemental Bond Loan Agreement and the Bond Indenture; (b) awarding Bank of America its reasonable attorneys fees and expenses; and (c) granting such other relief as this Court deems just and appropriate under the circumstances. Dated: March 1, 2012 Respectfully submitted, BRYAN CAVE LLP

By:

/s/ Herbert R. Giorgio Jr. Lloyd Palans, Esq., 22650 MO Mark B. Leadlove, Esq., 33205 MO Daniel M. O’Keefe, Esq., 45819 MO Herbert R. Giorgio, Jr., 58524 MO One Metropolitan Square 211 North Broadway, Suite 3600 St. Louis, MO 63102-2750 Telephone: (314) 259-2000 Facsimile: (314) 259-2020

COUNSEL FOR PLAINTIFF BANK OF AMERICA, N.A.

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