ST. LOUIS – Senior U.S. District Judge E. Richard Webber recently granted a request by Alliant Tax Fund and Alliant Tax Credit for a preliminary injunction against Paul Weismann and NTD I in a case involving multiple claims by both parties over a limited partnership agreement.
In his decision filed July 20 in U.S. District Court for Eastern District of Missouri, Webber upheld an argument by the Alliant Tax companies that the preliminary injunction would serve the public interest by stopping foreclosure on Water Tower Place, which is low-income housing "in an area that desperately needs it," according to the lawsuit.
The Alliant Tax companies also argued they would suffer a loss of business reputation and the tax credits they receive on the low-income housing.
In the July 20 ruling, Webber also upheld one of the claims in a motion by Weismann and NTD for a summary judgment.
An original lawsuit was filed on Aug. 1, 2016, by Weismann, NTD and North Tower Development in making various claims against six Alliant companies, which included Alliant Asset Management Company, Alliant Capital and Alliant Credit Facility Ltd.
A controversy arose when WC Orange (WCO), a for-profit limited liability company based in Delaware, sent a notice of loan acceleration to the limited partnership concerning a mortgage on Water Tower Place that it had purchased in 2016 for $2.1 million. WCO demanded full payment of the accelerated loan, according to the lawsuit.
This resulted in the limited partners demanding that Weismann pay the full amount, as stated in the opinion. According to the memorandum, Weisman rejected this demand and said that he viewed the relationship with the Alliant companies as an "adversarial relationship," according to the lawsuit.
After a court dismissed some of the claims in a lawsuit filed by Weismann and NTD, Alliant Tax Credit Fund 36 Ltd. and Alliant Tax Credit 36 LLC, countersued.
They claimed breach of contract and sought injunctive relief against Weismann and NTD alleging they violated the terms of their limited partnership agreement, allegedly for withdrawing funds from reserve accounts that the partnership held.
Other counterclaims included breach of contract and injunctive relief against NTD, Weismann, and WCO because WCO purchased the debts of the partnership without the consent of the administrative limited partner and WCO is related to the general partner.
Another accusation was a breach of fiduciary duty and injunctive relief against NTD, Weismann and WCO by allowing, participating in, and facilitating the purchase of the partnership’s debt by WCO.
In addition, the court documents stated that counterclaim plaintiffs requested breach of contract and declaratory relief against NTD and Weismann for failure to repair material deficiencies and/or non-conformities in the physical property of Water Tower Place. Another breach of contract claim against NTD and Paul Weismann was stated for failure to pay for any development deficits which incurred by the partnership prior to rental achievement.
NTD, Weismann, and WCO (the counterclaim defendants) filed the instant motion for summary judgment on May 8 seeking an order granting summary judgment against defendants on Counts III and IV of the amended counterclaims. They also requested the court to grant “such other and further relief as the court may deem proper and just.”
In their motion for a preliminary injunction, as stated in court documents, counterclaim plaintiffs Alliant, et al, were seeking a declaration that Weismann and NTD breached fiduciary duties to the limited partners. As a result, they requested injunctive relief prohibiting WCO from exercising its mortgage rights against Water Tower Place and imposing a constructive trust upon that mortgage interest.
After consideration of these motions, Webber said in the ruling, “It is hereby ordered that counterclaim defendants’ motion for summary judgment is granted, in part, and denied in part. Counterclaim III shall be dismissed against NTD I and WC Orange. Counterclaim IV shall be dismissed in its entirety. It is further ordered that counterclaim plaintiffs’ motion for preliminary injunction is granted.”