3:06pm: Hotline with Dave Weekley

Crossings Mall developers held personally responsible in $17 million federal lawsuit

CHARLESTON, W.Va. — A lender filed suit this past week holding developers William and Rebecca Abruzzino personally responsible for a $13.65 million loan for Crossings Mall in Elkview.

Overall, the lender says it is owed $17 million. The amount beyond the original loan is because of attorneys fees, costs and other expenses racked up in several court proceedings over the Crossings Mall troubles.

U.S. Bank National Association filed the lawsuit this past Monday in U.S. District Court for the Southern District of New York.

The Abruzzinos, through their Tara Retail Group, have been in court proceedings surrounding Crossings Mall for more than a year.

The bridge leading to the property washed out during the catastrophic flooding of summer 2016. That left businesses and workers with no way to operate and Tara Retail Group no way to collect rent.

A dispute over who should pay for the bridge to be replaced went on for months, finally resulting in a contractor agreeing to take on the job with the promise of payment later.

Tara Retail Group filed Chapter 11 bankruptcy this past Jan. 24. That case is still pending in U.S. Bankruptcy Court for the Northern District of West Virginia.

The company also filed a a civil suit over the bridge against the state Department of Transportation, which has called the lawsuit a cash grab against taxpayers.

The Abruzzinos are also the focal point of separate federal court actions over defaulting hotels in Morgantown, Clarksburg and Elkins.

The latest lawsuit against the Abruzzinos says UBS Real Estate Securities made an original loan of $13,650,0000 on Sept. 17, 2013.

Tara Retail Group was to make monthly debt service payments of $84,846 plus any late charges, interest and default interest. The lawsuit contends the monthly payments stopped in July, 2016, the time of the flood.

One of the loan terms stated, “the debt shall without notice immediately become due and payable at the option of lender if any payment required in this note is not paid on or prior to the date when due or if not paid on the maturity date or on the happening of any other event of default.”

On the same date, the Abruzzinos signed documents as the guarantors of the loan.

That agreement stated the guarantors “irrevocably and unconditionally guarantee to lender and its successors and assigns the payment and performance of the guaranteed obligations as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise.”

In other words, the Abruzzinos agreed to be on the hook for the loan.

The bankruptcy was considered a default under the loan documents, triggering the guarantor’s liability, according to the lawsuit.

“As a result of the above and other defaults, all amounts due and owing under the loan document have been accelerated and are immediately due and payable,” the lawsuit states.

The loan document shows that Rebecca Abruzzino has 99 percent of the investment and William Abruzzino has 1 percent.

William Abruzzino, an 83-year-old developer, was born in Shinnston and is at the top of a complicated, connected and — at this point — crumbling business empire.

Abruzzino saw early potential in the property that’s now Crossings Mall off Interstate 79. In testimony in federal court over the Crossings Mall financial problems last Dec. 20, Abruzzino described the process of developing the property over the years 1988 and 1989.

“The first thing we did, we had to move about 600,000 yards of dirt, and  we bought the property from three different people,” Abruzzino said in court. “And we had to run sewer lines and water lines for like 2.2 miles. And we had to go 800 feet under the interstate to drill, put the pipes under the interstate and under — under a two-lane 43. And we also had to put a pump station in to pump it back up the hill.

“And that’s when — it was the only thing that was there when we bought it. There wasn’t even a gas station for four miles. That area was completely blank when we started that, but we got water and sewer and people started coming in.”

After the property was developed, the first store to open was Kmart late in the fall of 1989. The store remains on the site as one of the largest tenants, along with Kroger. Kmart is viewed as so central to the shopping center that a “Kmart trigger event” is described in the loan.

Meanwhile, housing developments have blossomed out from the infrastructure started for Crossings Mall.

The tipping point at Crossings Mall came with the washed out bridge and the ensuing dispute.

After the flood destroyed the bridge, Abruzzino initially proposed replacing it through a mix of financing, including capital reserves, the sale of some undeveloped property and a loan. But the lender resisted — particularly to an aspect of the proposal that would have meant forgiving some Abruzzino debts until the end of the loan period.

During a Dec. 20, 2016, hearing about the bridge dispute, U.S. District Judge Thomas Johnston commented on the relationship with Abruzzino and the lender.

“It’s obvious to me what occurred there,” Johnston said, “and that is that the defendant was fully prepared to build the bridge and was going to do it. And then realized that the bank was going to play hardball in terms of not being really willing to work with them to find some adjustments in the loan to allow them to go forward.

“And I’m not unsympathetic to this sentiment. I think the defendant, Mr. Abruzzino, concluded that, given the bank’s posture on this, I’m not really willing to build the bank a bridge, because that’s what’s going to happen. I’m going to build this bridge and they’re unwilling to deal on this. They’re probably going to foreclose and take the bridge that I built. And why would I do that?”

When Crossings Mall dried up, it strained the rest of Abruzzino’s businesses.

The lender to another Abruzzino company, Emerald Coast, declared default on the La Quinta Inn at Crossings Mall, and that kicked off both cross-defaults and a personal, $10 million lawsuit on Abruzzino as the guarantor of the loan.

Carter Bank & Trust, a Martinsville, Va.-based lender to multiple Abruzzino companies, is involved in court actions with Interstate Properties, Mountain West, Covington Place Associates, Retail Designs LLC, Center Designs LLC, Tara Retail Group and Emerald Grande LLC — all Abruzzino companies.

The role of Carter Bank & Trust was discussed at length during the Dec. 20, 2016, federal court hearing in Charleston. In this case, the discussion focused on Carter Bank’s financing of the La Quinta hotel at Crossings Mall.

Christopher Schueller, an attorney for the U.S. Bank National Association, a trustee for the lender, posed questions on the matter to George Freisem, the lawyer who described himself as working for Abruzzino for about 30 years.

Schueller asked about meetings with Jonathan Hauser, an attorney who deals with personal bankruptcy.

“In these discussions, did you ever tell Mr. Hauser that Mr. Abruzzino was judgement-proof?” Schueller asked Freisem.

Freisem responded, “Well, I told Mr. Hauser that Mr. Abruzzino was a resident of Florida. He knew that, of course, which I guess makes everybody judgment proof, I don’t know, in Florida.





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