Law Division Motion Section Initial Case Management Dates for CALENDARS (A,B,C,D,E,F,H,R,X,Z) will be heard In Person.

All otherCivil ActionInitial

Law Division Cover Sheet
Case - Case Initiation
Management Dates will be heard via Zoom (12/01/20) CCL 0520
For more information and Zoom Meeting IDs go to https.//www.cookcountycourt,org/HOME?Zoom-Links?Agg4906_SelectTab/12
IN THE
Court Date: 7/9/2024 9:15 AM CIRCUIT COURT OF COOK COUNTY, ILLINOIS FILED
COUNTY DEPARTMENT, LAW DIVISION 5/3/2024 1:11 PM
IRIS Y. MARTINEZ
KHRE SMA FUNDING, LLC, CIRCUIT CLERK
___________________________________________________________
COOK COUNTY, IL
FILED DATE: 5/3/2024 1:11 PM 2024L004874

2024L004874
Calendar, N
v. 27545246

ARTHUR G. HOLLIS, SCOTT GOODMAN, and OGDEN CAROLL 2016, LLC

2024L004874
No. ______________________________
___________________________________________________________

CIVIL ACTION COVER SHEET - CASE INITIATION

A Civil Action Cover Sheet - Case Initiation shall be filed with the
complaint in all civil actions. The information contained herein
is for administrative purposes only and cannot be introduced into
evidence. Please check the box in front of the appropriate case
type which best characterizes your action. Only one (1) case type
may be checked with this cover sheet.
Jury Demand  Yes  ■ No

PERSONAL INJURY/WRONGFUL DEATH

CASE TYPES: (FILE STAMP)
 027 Motor Vehicle COMMERCIAL LITIGATION
 040 Medical Malpractice
CASE TYPES:
 047 Asbestos
 002 Breach of Contract
■

 048 Dram Shop

 070 Professional Malpractice
 049 Product Liability
(other than legal or medical)
 051 Construction Injuries
 071 Fraud (other than legal or medical)
(including Structural Work Act, Road
 072 Consumer Fraud
Construction Injuries Act and negligence)
 073 Breach of Warranty
 052 Railroad/FELA
 074 Statutory Action
 053 Pediatric Lead Exposure
(Please specify below.**)
 061 Other Personal Injury/Wrongful Death
 075 Other Commercial Litigation
 063 Intentional Tort
(Please specify below.**)
 064 Miscellaneous Statutory Action
 076 Retaliatory Discharge
(Please Specify Below**)
 065 Premises Liability
OTHER ACTIONS
 078 Fen-phen/Redux Litigation
 199 Silicone Implant CASE TYPES:
 062 Property Damage
TAX & MISCELLANEOUS REMEDIES  066 Legal Malpractice
CASE TYPES:  077 Libel/Slander
 007 Confessions of Judgment  079 Petition for Qualified Orders
 008 Replevin  084 Petition to Issue Subpoena
 009 Tax  100 Petition for Discovery
 015 Condemnation ** ___________________________________________________
 017 Detinue
_____________________________________________________
 029 Unemployment Compensation
 031 Foreign Transcript cgair@gairgallo.com
Primary Email: _________________________________________
 036 Administrative Review Action
 085 Petition to Register Foreign Judgment docketing@gairgallo.com
Secondary Email: _______________________________________
 099 All Other Extraordinary Remedies
Chris Gair
By: _______________________________________________ Tertiary Email: _________________________________________
(Attorney) (Pro Se)

Pro Se Only:  I have read and agree to the terms of the Clerk’s O ice Electronic Notice Policy and choose to opt in to electronic notice
form the Clerk’s Office for this case at this email address: ______________________________________________________________

IRIS Y. MARTINEZ, CLERK OF THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS

Page 1 of 1
 FILED
5/3/2024 1:11 PM
IRIS Y. MARTINEZ
CIRCUIT CLERK
IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COOK COUNTY, IL
COUNTY DEPARTMENT, LAW DIVISION 2024L004874
Calendar, N
FILED DATE: 5/3/2024 1:11 PM 2024L004874

KHRE SMA FUNDING, LLC,

Plaintiff,

Case No.2024L004874
v.

ARTHUR G. HOLLIS,
SCOTT GOODMAN, and
OGDEN CAROLL 2016, LLC
Defendants.

COMPLAINT
Nature of the Case
1. This is an action for breach of a loan agreement, breach of a promissory

note, fraud, declaratory judgment, and breach of guaranty, brought by a lender,

KHRE SMA FUNDING, LLC (“KHRE”), against a borrower, OGDEN CAROLL 2016,

LLC (“OGDEN”), and its principals and the guarantors on the loan, ARTHUR G.

HOLLIS (“HOLLIS”) and SCOTT GOODMAN (“GOODMAN”).

2. KHRE loaned OGDEN $11.5 million (the “Loan”) for the refinance of a

commercial property in Chicago, Illinois, located at 340-344 N. Ogden Ave. and 1376

W. Caroll Ave. (the “Property”). The Loan Agreement (as defined below) required

monthly interest payments during the term of the Loan with a final payment of

principal and interest due in September 2024. The Loan Agreement also required
 that OGDEN obtain advance written approval from KHRE for any leases affecting

the Property.
FILED DATE: 5/3/2024 1:11 PM 2024L004874

3. OGDEN has failed to make and is currently in default on, hundreds of

thousands of dollars in monthly interest payments due under the Loan Agreement.

4. In addition, OGDEN, HOLLIS, and GOODMAN leased the majority of

the building space on the Property, in violation of the Loan Agreement, to a tenant

called ReloShare, Inc. (“ReloShare”), who is operating the building for residential use.

They did so without obtaining the approval of KHRE (prior or otherwise) and through

a pattern of intentionally false representations, deliberate omissions, and fraud.

OGDEN, HOLLIS, and GOODMAN then concealed their unapproved lease to

ReloShare for the purposes of preventing and delaying KHRE from declaring a

default on the Loan and avoiding KHRE from bringing legal action on HOLLIS’s and

GOODMAN’s guaranty of the Loan. Their actions in leasing to the unapproved tenant

have diminished the value of the Property which serves as the collateral for the Loan.

5. There is a current and active controversy among KHRE and the

Defendants. KHRE has suffered and will continue to suffer damages as a result of

the Defendants’ contractual breaches and fraudulent conduct.

The parties
6. KHRE SMA Funding, LLC is a limited liability company organized

under the laws of the State of Delaware, with its principal place of business in

Greenwich, Connecticut.

2
 7. ARTHUR G. HOLLIS is a real estate developer who resides in Chicago,

Illinois and is a principal in Ogden Caroll 2016, LLC. He is also a guarantor on the
FILED DATE: 5/3/2024 1:11 PM 2024L004874

Loan.

8. SCOTT GOODMAN, is also a real estate developer who resides in

Chicago, Illinois and is a principal in Ogden Caroll 2016, LLC. He is also a guarantor

on the Loan.

9. OGDEN CAROLL 2016, LLC is a limited liability company organized

in the State of Illinois, with its principal place of business in Chicago, Illinois. It owns

and operates the Property.

Jurisdiction and venue

10. This Court has personal jurisdiction over each of the Defendants

because each is a resident of Illinois.

11. Venue is proper in Cook County because the Defendants reside in Cook

County and the transactions at issue occurred in Cook County.

Facts
The Loan Documents
12. On September 28, 2021, KHRE and OGDEN entered into, inter alia, a

Loan Agreement (the “Loan Agreement”), Promissory Note (the “Note”), Mortgage,

Security Agreement, Assignment of Leases and Fixture Filing (the “Mortgage”), and

Assignment of Leases and Rents (the “Leases and Rents” and together with the Loan

Agreement, the Note and the Mortgage, collectively, the “Loan Documents”) (Exhibits

1-4, respectively).

3
 13. Under the Loan Agreement, KHRE loaned OGDEN $11,500,000 to

refinance and lease the Property to approved tenants under approved leases, as per
FILED DATE: 5/3/2024 1:11 PM 2024L004874

the Loan Agreement. OGDEN was obligated to make monthly interest-only

payments on the Note and payment in full of the principal and interest on September

28, 2024.

14. In addition, on the same date, HOLLIS and GOODMAN entered into a

Guaranty of Recourse Obligations, Debt Service and Completion with KHRE (the

“Guaranty”), under which HOLLIS and GOODMAN unconditionally and irrevocably

guaranteed specified obligations of OGDEN under the Loan Agreement and Note.

(Exhibit 5). Those guaranteed obligations include, without limitation, OGDEN’s

obligation to pay interest payments on the Note, and the obligation to pay the

principal of the Note to the extent set forth in Section 9.4 of the Loan Agreement.

The payment defaults

15. Payment on the Note is due the 1st of each month. OGDEN has failed

to pay, in full, the interest due on the Note for October, November, and December

2023 and for January, February, March, and April 2024. The amount past due is

currently $1,193,580.99, through and including April 30, 2024, charged at the Default

Rate.

16. As a result of OGDEN’s failure to make timely interest payments and

other defaults under the Loan Documents, KHRE declared a default on March 18,

2024, sending a Notice of Events of Default to OGDEN on that date (Exhibit 6).

17. The Notice of Events of Default also required OGDEN to send direction

letters to its tenants pursuant to the Assignment of Leases and Rents, directing that

4
 rent payments becoming due after the date of the Notice of Events of Default be made

directly to KHRE.
FILED DATE: 5/3/2024 1:11 PM 2024L004874

18. While OGDEN issued such directions, it did so as part of its scheme to

deceive and deprive KHRE of amounts due under the Loan Agreement. In particular,

unbeknownst to KHRE, OGDEN had previously obtained prepayment of multiple

months of rent from its principal tenant, ReloShare. OGDEN did not disclose that it

had received these prepayments until KHRE learned of the facts from ReloShare and

confronted OGDEN.

19. Because OGDEN has defaulted on its obligations to make monthly

interest payments under the Loan Agreement and the Note, it is in default under

both Loan Documents. Pursuant to Article 2, the acceleration provision of the Note,

upon an Event of Default, the entire debt becomes due and payable immediately at

the option of KHRE. KHRE has exercised its acceleration option. Therefore, the total

principal now due and owing is $11,077,000.00.

The fraudulent scheme to lease the Property to Reloshare

20. During the summer of 2023, the Property was 74% occupied by

commercial businesses consistent with zoning and the parties’ agreement for how it

would be used. Indeed, a new commercial business opened up in the basement of the

Property in July 2023, for which KHRE’s prior written approval was requested by

OGDEN, and granted.

21. However, no later than August 2023, Defendants OGDEN, HOLLIS,

and GOODMAN embarked on a secret plan to remove commercial tenants from the

building and convert it to residential use.

5
 22. Section 5.1.17 of the Loan Agreement provides that “[a]ll proposed

Leases shall be subject to the prior written approval of the Lender. . . .”

FILED DATE: 5/3/2024 1:11 PM 2024L004874

23. OGDEN, HOLLIS, and GOODMAN were well aware of the approval

requirement, and adhered to this requirement for other leases, including, as recently,

as April of 2023. On information and belief, the Defendants were worried that KHRE

would not approve the lease with ReloShare. The Defendants therefore agreed among

themselves that they would enter into the lease for residential use whether or not

KHRE approved and further agreed that they would delay, conceal and hide the fact

that they had entered into such a lease for as long as possible.

24. To that end, on August 9, 2023, HOLLIS and GOODMAN participated

in a Zoom call with KHRE personnel to inform them about the possibility that the

City of Chicago would lease the Property for residential use and indicated that they

were in the early stages of evaluating such a scenario. The KHRE personnel inquired

about risk of damage, the ability to evict then-current tenants, and who would pay

for the work to convert the building from office use to residential use. KHRE told

OGDEN that the proposal would have to go before an investment committee and that

OGDEN would have to provide basic information before the proposal could even be

considered.

25. Prior to this August 9, 2023 conversation with KHRE, OGDEN had

already determined to convert the building to residential use and enter into a lease

for residential use. In fact, prior to this call, OGDEN was in talks with, or had agreed

to a contract with, a contractor to complete renovation of the building to convert

6
 commercial space into residential space. OGDEN, HOLLIS, and GOODMAN

concealed from, and did not disclose to, KHRE the existence of that contract, or their
FILED DATE: 5/3/2024 1:11 PM 2024L004874

intention to sign a lease for residential use within a few weeks without prior written

approval and without ever having provided the financial and other information

required by KHRE. OGDEN, HOLLIS, and GOODMAN also misled KHRE about the

identity of the lessee for the proposed residential use.

26. The contract for renovation of the building was executed and work was

begun on the renovation in August 2023, without the knowledge or prior written

approval of KHRE.

27. In addition, OGDEN, HOLLIS, and GOODMAN secretly evicted

existing commercial tenants from the building without the knowledge or approval of

KHRE. In doing so, Defendants violated another provision in Section 5.1.17 of the

Loan Agreement that prohibited the termination of any lease without the prior

written consent of KHRE except in circumstances not present here.

28. Between August 21, 2023 and September 5, 2023, KHRE followed up

with a number of emails to HOLLIS to try and get the requested financial

information. On August 21, 2023, Peter Illuzzi of KHRE told HOLLIS he needed an

update call for an investment committee meeting. On August 22, 2023, Illuzzi

emailed HOLLIS and GOODMAN seeking the promised financial projections and pro

forma for the residential use “scenario.” HOLLIS responded that he was working on

it and would send. He didn’t, and on August 28, 2023, Illuzzi again asked for the

information. On August 29, 2023, HOLLIS said he would send it over the following

7
 day. He didn’t. A week later, on September 5, 2023, Illuzzi again followed up. HOLLIS

responded with nothing but the overall expected revenue for the asset. Almost two
FILED DATE: 5/3/2024 1:11 PM 2024L004874

weeks later, on September 28, 2023, Illuzzi was still chasing HOLLIS for the

numbers.

29. In the meantime, and unbeknownst to KHRE, OGDEN had actually

signed a lease with ReloShare on September 8, 2023 (or earlier) to provide space for

residential use at the Property and was moving residential tenants in during

September. The lease committed the building exclusively for residential use through

at least December 31, 2024 (Exhibit 7). OGDEN well knew at the time it executed the

lease that: (1) it was obligated to obtain KHRE’s prior written approval for the lease;

(2) KHRE had expressed concerns about residential use from the outset; (3) OGDEN

had never even mentioned the name ReloShare to KHRE and had instead suggested

that the lease was with a far more financially stable tenant, the City of Chicago; (4)

OGDEN had never provided any financial information necessary for KHRE’s

investment committee to evaluate the proposal; (5) it was intentionally stalling

providing that information in order to render the project a fait accompli; (6) KHRE

did not know of the lease; and (7) that KHRE had not approved the lease in writing

or otherwise.

30. OGDEN knew that KHRE was unaware that OGDEN had entered into

the lease. In an October 2, 2023 email, Illuzzi asked HOLLIS “What would the total

income be on this lease?” HOLLIS’s answer to the “would be” question was to

fraudulently and deceptively respond that it would be $150,000 per month, indicating

8
 that this was something that could happen in the future if KHRE approved the lease,

not that it had already occurred.

FILED DATE: 5/3/2024 1:11 PM 2024L004874

31. On October 17, 2023, Illuzzi emailed HOLLIS regarding the residential

use “option” and asked “Can you please send us the lease with the city? What state

of lease negotiations are you on at this point?” The only true answers to those

questions were that the City was not the proposed tenant and that the negotiations

were over and there was a binding lease in place. Instead, the following day, for the

first time, HOLLIS sent Illuzzi an unsigned estimate of costs from Aberdeen Services

and an unsigned draft of the lease captioned “form of agreement.” The purposes for

sending an unsigned draft form of lease when a signed lease existed were to

fraudulently persuade KHRE that this was still just an “option,” not an existing lease

that fundamentally changed the nature and security of KHRE’s collateral for the

Loan, and to conceal that the Property was already being used for residential

purposes.

32. On October 30, 2023, Jonathan Daniel, the principal of KHRE,

(“Daniel”) and Illuzzi had a Zoom call with HOLLIS and GOODMAN. KHRE

expressed more doubts about the proposed project, including about how the changed

proposed use of the Property would affect the asset and about what the relationship

between the lessee and the City was. HOLLIS and GOODMAN continued to lead

KHRE to believe that the proposed project was just that: a proposal for a future

agreement.

9
 33. On November 1, 2023, Daniel presented a write-up of the residential use

proposal to KHRE’s investment committee. The investment committee rejected the

FILED DATE: 5/3/2024 1:11 PM 2024L004874

proposal out of hand because of its belief that the project would massively deplete the

value of the Property and thus KHRE’s collateral. Illuzzi called HOLLIS and notified

him of the investment committee’s rejection. HOLLIS did not then, or ever for that

matter, inform Illuzzi or KHRE that the lease had been in place for months or that

the building was occupied by residential tenants. Because of the fraudulent

misrepresentations, omissions, and misleading conduct by HOLLIS, GOODMAN,

and OGDEN, they were under a duty to tell KHRE the true facts.

34. OGDEN and the guarantors consistently failed to reveal the true facts

to KHRE despite their duty to inform KHRE what was actually happening with the

Property, and instead continued the scheme to defraud KHRE. On November 21,

2023, GOODMAN and HOLLIS spoke to Daniel and Illuzzi in an effort to persuade

them to change the investment committee’s rejection of the residential use plan.

GOODMAN and HOLLIS never suggested that the Property was already being used

for residences, and to the contrary created the impression that they were seeking

permission for something that had not yet happened.

35. On December 1, 2023, HOLLIS spoke with Illuzzi. HOLLIS told Illuzzi

that OGDEN was working with two lenders to “get [KHRE] taken out” in Q1 or Q2

2024. He added that lenders were underwriting a residential use “scenario” as well

as an office scenario. That statement represented a false declaration that the

10
 residential use was simply a scenario and that other scenarios, including leasing the

space for offices, were still potential options.

FILED DATE: 5/3/2024 1:11 PM 2024L004874

36. KHRE did not discover the fact that the Property was being used for

residential purposes until mid-December 2023. At that time KHRE’s counsel wrote

to confirm that KHRE had not approved any such lease. On December 22, 2023,

counsel wrote again, this time demanding confirmation that no such lease had been

entered into. OGDEN gave an evasive and misleading response. It did not confirm

the existence of the lease with ReloShare until approximately March 21, 2024, almost

seven months after the lease became effective.

COUNT ONE: BREACH OF CONTRACT (LOAN AGREEMENT)

(against OGDEN CAROLL 2016, LLC)

37. Plaintiff realleges and reincorporates paragraphs 1 to 36 above.

38. The Loan Agreement, attached to this Complaint as Exhibit 1, is a

binding contract between OGDEN and KHRE.

39. Under the Loan Agreement, OGDEN is, among other things, required

to make timely monthly interest payments for the Property, to obtain prior written

approval from KHRE before any lease can be entered into with a tenant, to obtain

prior written approval before any approved lease can be terminated, and to provide

all financial and other information, including copies of leases to KHRE.

40. In addition, the Loan Agreement requires payment of the entire amount

of the debt by September 28, 2024, or earlier in the event of a declaration of default.

11
 41. OGDEN breached the Loan Agreement by failing to make timely

interest payments beginning in September 2023 and continuing through at least

FILED DATE: 5/3/2024 1:11 PM 2024L004874

April 2024.

42. OGDEN breached the Loan Agreement by repeatedly failing to provide

information and documentation to KHRE as required by the Loan Agreement.

43. OGDEN breached the Loan Agreement by leasing the Property to

ReloShare for residential use without obtaining prior written approval of KHRE and

by terminating previously-approved commercial leases without obtaining the prior

written approval of KHRE.

44. OGDEN and guarantors HOLLIS and GOODMAN further breached the

Loan Agreement by committing the fraud and making the intentional

misrepresentations identified above, triggering full recourse liability against the

guarantors pursuant to the Section 9.4(c)(vii) of the Loan Agreement.

45. KHRE has fully performed all its duties and obligations under the Loan

Agreement.

46. KHRE has declared a default and accelerated the debt under the Loan

Agreement.

THEREFORE, KHRE respectfully prays for the following relief:

a. judgment in the full amount of the principal due on the Loan, together with

all interest (including, but not limited to interest at the default rate), costs,

expenses, and attorney’s fees; and

12
 b. a final and binding determination that the guarantors committed fraud

and intentional misrepresentation and are therefore subject to full recourse for the
FILED DATE: 5/3/2024 1:11 PM 2024L004874

debt.

COUNT TWO: BREACH OF CONTRACT (PROMISSORY NOTE)

(against OGDEN CAROLL 2016, LLC)

47. Plaintiff realleges and reincorporates paragraphs 1 to 46 above.

48. The Note, attached to this Complaint as Exhibit 2, is a binding contract

between OGDEN and KHRE.

49. OGDEN breached the Note by failing to make interest payments on the

Note as required.

50. OGDEN further breached the Note by failing to repay the principal and

remaining interest on the debt after the declaration of a default and acceleration.

51. KHRE has fully performed its duties and obligations under the Note.

THEREFORE, KHRE respectfully prays for the following relief:

a. judgment in the full amount of the principal due on the loan, together

with all interest (including, but not limited to interest at the default

rate), costs, expenses, and attorney’s fees; and

b. a final and binding determination that the guarantors committed

fraud and intentional misrepresentation and are therefore subject to

full recourse for the debt.

13
 COUNT THREE: FRAUD AND INTENTIONAL MISREPRESENTATION
(against all Defendants)
FILED DATE: 5/3/2024 1:11 PM 2024L004874

52. Plaintiff realleges and reincorporates paragraph 1 to 51 above.

53. Each of OGDEN, HOLLIS, and GOODMAN, knowingly and

intentionally made false representations to KHRE regarding the leasing of the

Property for residential use.

54. Each of OGDEN, HOLLIS, and GOODMAN, knowingly and

intentionally omitted to disclose material facts to KHRE regarding the leasing of the

Property for residential use.

55. Each of OGDEN, HOLLIS, and GOODMAN, knowingly and

intentionally made partial and ambiguous statements to KHRE regarding the leasing

of the Property for residential use that required additional information to be disclosed

to avoid misleading KHRE, and knew that it possessed knowledge not available to

KHRE and that KHRE was acting on the basis of mistaken information.

56. The intentional misrepresentations, misleading statements, and

omissions included:

a. The statements by Defendants on August 9, 2023 that they were

merely considering the idea of using the Property for residential use

and that they would move forward only after providing requested

information and obtaining KHRE’s approval.

b. The failure to disclose on August 9, 2023, that they were in talks

with, or had already received a proposal from, a contractor for work

to renovate the Property for residential use.

14
 c. The false, misleading, partial, and ambiguous statements between

August 9, 2023, and September 5, 2023, indicating that the

FILED DATE: 5/3/2024 1:11 PM 2024L004874

Defendants did not yet have pro formas or other financial

information to present to KHRE as part of its evaluation whether or

not to approve the residential use project.

d. The false representation between August 9, 2023 and at least

October 17, 2023, that the prospective tenant would be the City of

Chicago and not ReloShare, and the failure to disclose that

information, knowing that KHRE was mistaken about the identity of

the prospective tenant.

e. The failure to disclose between September 1, 2023, and late March

2024, that a lease with ReloShare for the Property went into effect

as of September 1, 2023, and was signed no later than September 8,

2023, knowing that they had deliberately created the false

impression that the use of the Property for residential use was

merely a proposed scenario and that they had deliberately lied to

KHRE in saying that they would not move forward with that

proposed use of the Property without KHRE’s prior written approval.

f. The failure to disclose that they had terminated leases of commercial

tenants previously approved by KHRE without receiving KHRE’s

prior written approval and that they had secretly moved those

tenants out of the Property.

15
 g. The false statement on October 2, 2023, that the projected monthly

income on the lease “would be” $150,000, knowing that this was an
FILED DATE: 5/3/2024 1:11 PM 2024L004874

actual amount already in force.

h. The deliberately false and misleading representation on October 7,

2023, in response to a question about the status of the lease

negotiations providing a draft, unsigned lease and fraudulently

concealing from KHRE that the lease had actually been executed a

month earlier.

i. The deliberate omission to tell KHRE that residential tenants had

already moved into the building beginning in September 2023

without the approval of KHRE.

j. The false and misleading statements in the October 30, 2023

conversation regarding subjects of concern to KHRE with the

proposed project and the failure to disclose on that date that the

Property was already being used for residential tenants and that a

binding lease had already been in place for two months.

k. The failure to disclose on November 1, 2023 after Defendants were

told that KHRE’s investment committee had rejected the proposal,

that the Property was already being used for residential tenants and

that a binding lease had been in place for almost two months.

16
 l. The statements on November 21, 2023, indicating that the proposal

for residential use was not in effect and the failure to disclose the
FILED DATE: 5/3/2024 1:11 PM 2024L004874

true facts on that date.

m. The deliberately false statements on December 1, 2023, that

potential lenders were then evaluating the viability of both a

scenario of residential use and a scenario of using the Property for

offices, knowing that this was untrue and that the Property was

already being used for residential purposes.

n. The evasive and misleading response to the December 22, 2023

demand by KHRE that they disclose whether the Property was being

used for residential purposes.

o. The failure to disclose, in connection with the March 18, 2024 Notice

of Events of Default and the demand for direction to the tenants to

pay KHRE directly, that ReloShare had prepaid its rent through

April 2024 and other months in December 2023, and that ReloShare

would therefore decline to pay KHRE as required.

57. Each of the Defendants intended to defraud KHRE.

58. KHRE reasonably relied on the false representations and omissions.

59. KHRE suffered damages as a result of its reliance on the

misrepresentations and omissions.

THEREFORE, Plaintiff respectfully prays for compensatory and punitive

damages, together with prejudgment interest.

17
 COUNT FOUR: DECLARATORY JUDGMENT UNDER NY CPLR 3001 FOR
BREACH OF GUARANTY
(against all Defendants)
FILED DATE: 5/3/2024 1:11 PM 2024L004874

60. Plaintiff realleges and reincorporates paragraphs 1 to 59 above.

61. HOLLIS and GOODMAN guaranteed payment of interest on the Note

to KHRE pursuant to the Guaranty.

62. HOLLIS and GOODMAN further promised in the Guaranty payment of

the entire debt in the event that one of the triggers of full recourse set forth in Section

9.4(c) of the Loan Agreement occurred.

63. One of the Section 9.4(c) triggers in fact occurred, namely fraud and

intentional misrepresentations by all Defendants.

64. There exists a justiciable controversy among KHRE on the one hand and

defendants OGDEN, HOLLIS, and GOODMAN on the other hand, as to the whether

KHRE is entitled to pursue full recourse on the Loan against the guarantors, HOLLIS

and GOODMAN, based on the fraud and intentional misrepresentations and

omissions detailed above.

65. There is a genuine and live controversy between the parties on this

issue.

66. KHRE has demanded of OGDEN, HOLLIS, and GOODMAN that they

acknowledge that the entire debt is subject to full recourse.

67. OGDEN, HOLLIS, and GOODMAN have refused to acknowledge that

the entire debt is subject to full recourse and have asserted that Section 9.4(c) has

not been triggered.

18
 68. KHRE has demanded full payment on the Guaranty from the

guarantors based on the evidence of fraud and intentional misrepresentation.

FILED DATE: 5/3/2024 1:11 PM 2024L004874

69. The guarantors have refused to pay on the Guaranty.

70. KHRE is entitled to a declaration of its rights under the Loan

Agreement, Note, and Guaranty in order to collect on the debt.

THEREFORE, Plaintiff respectfully requests declarations that:

a. OGDEN, HOLLIS, and GOODMAN committed fraud and intentional

misrepresentation in violation of Section 9.4(c)(vii) of the Loan

Agreement; and

b. that the fraudulent conduct triggered KHRE’s right to full recourse

against the guarantors; and

c. that KHRE is entitled to collect the full amount of the debt from

guarantors HOLLIS and GOODMAN, jointly and severally.

COUNT FIVE: BREACH OF GUARANTY

(against HOLLIS and GOODMAN)

71. Plaintiff realleges and reincorporates paragraphs 1 to 70 above.

72. HOLLIS and GOODMAN guaranteed payment of interest on the Note

to KHRE pursuant to the Guaranty.

73. HOLLIS and GOODMAN further promised in the Guaranty payment of

the entire debt in the event that one of the triggers of full recourse set forth in Section

9.4(c) of the Loan Agreement occurred.

74. One of the Section 9.4(c) triggers in fact occurred, namely fraud and

intentional misrepresentations by all Defendants.

19
 75. HOLLIS and GOODMAN have refused to honor the Guaranty.

76. KHRE has fully performed its obligations under the Guaranty.
FILED DATE: 5/3/2024 1:11 PM 2024L004874

77. KHRE has been injured by HOLLIS and GOODMAN’S breach of the

Guaranty.

THEREFORE, KHRE respectfully prays for judgment in the full amount of

the principal due on the loan, together with all interest (including, but not

limited to interest at the default rate), costs, expenses, and attorney’s fees.

DATED: May 3, 2024 Respectfully submitted,

KHRE SMA FUNDING, LLC

By: /s/ Chris Gair

Chris Gair
Blake Edwards
Cook County Firm No. 101147
Gair Gallo Eberhard LLP
1 East Wacker Drive, Suite 2600
Chicago, IL 60601
(312) 600 – 4900
cgair@gairgallo.com
bedwards@gairgallo.com

20