We have two unexpected problems at Calvert Crossings - both of which need to be addressed as
Question:
We have two unexpected problems at Calvert Crossings - both of which need to be addressed as soon as possible.
First, we received a default notice on behalf of Foozer's Grille regarding a failure of the Site Plan Contingency. Foozer's withdrew their site plan amendment application several months ago in order to correct errors in their application but never resubmitted it for final approval. In the meantime, we obtained a use permit for all of the drive through lanes at the entire shopping center under Zoning Ordinance Section 23(C)(4)(e). As a result, Foozer's Grille technically has the right to use the drive through lanes next to their building under the use permit even though the site plan amendment hasn't been formally approved yet.
Second, we received a cease and desist letter on behalf of Darcy, LLC - the owner of the neighboring parcel - regarding the access easement that runs across the back of their property to connect the shopping center to Maryland Route 765. We constructed a road over the Easement Area several months ago and even walked the site with Elihu Root immediately after construction. At the time, he didn't mention any problems during the site inspection with the location. The facts in the default letter are thin as to what part of the access road may be located outside of the Easement Area and our surveyor is supposed to be at the property later this week to confirm the location of the road and all related improvements. I've attached some satellite photos showing the properties during the construction phase as well as after completion.
Another issue raised in the Darcy, LLC default letter may reveal the true motivations behind the default letter. Darcy, LLC alleges that the vehicular traffic traveling across the access easement is producing too much noise. You'll recall that the access easement was originally prepared by Elihu Root when he was an owner of the Calvert Crossings property and controlled Darcy, LLC. Phil heard that the access easement has become a problem for Elihu Root's efforts to sell the Darcy, LLC property to a national homebuilder and that he could fetch a much higher purchase price if he could reduce the size of the Easement Area or eliminate it all together. At this point, we don't have much time to address these problems; however, as Phil mentioned, we have a lot of material to work with in terms of confirming our position. While I coordinate efforts with outside counsel on both of these default letters, you can run point on the items noted below and let me know your thoughts by next week:
(1) Review the drive-through contingency in Section 29.29 of the Foozer's Grille lease and confirm the following:
a. Does our use permit approving all of the drive-through lanes in the entire shopping center satisfy the technical requirements of Section 29.29? If not, does the use permit satisfy the intent of the drive-through lanes?
b. Does the failure on the part of Foozer's Grille provide us with any sort of defense against the attempt by Foozer's Grille to terminate the Lease? Is there anything else we can do to prevent the termination?
(2) Review the Access Easement and Restriction Agreement and confirm the following:
a. Does the Access Easement restrict our use of the road in terms of noise or intensity of vehicular traffic?
b. Does the Access Easement provide for any specific remedies to Darcy, LLC for either allegation - the location of the road outside of the Easement Area or the use of the easement at a greater intensity than permitted?
c. From a practical standpoint, is there anything we can do to mitigate the impact on the Darcy, LLC property of the traffic traveling across the access road?
(3) Review the default provisions under the loan agreement (a copy of which can be found in the Project Documents folder) and confirm the following:
a. Are we in default of the loan terms at this time as a result of the Foozer's Grille default letter? If not, will we be in default of the loan terms once the Foozer's Grille lease is effectively terminated in 30 days?
b. Are we in default of the loan terms at this time as a result of the Darcy, LLC default letter? If not, when might we be in default of the loan terms as a result of the Darcy, LLC dispute?
(4) Review the HK Calvert Crossings, LLC operating agreement and confirm the following:
a. What authority we have to address both default letters. Specifically, what sort of approvals would we need to commence a lawsuit against either Foozer's Grille or Darcy, LLC?
b. Are there any adverse consequences to the company or Phil as a result of these default allegations? Regards, Lyla Gage Vice President and General Counsel Hyper Kapital HK Calvert Crossings Marketplace Construction Phase HK Calvert Crossings Marketplace Stabilization
Financial and managerial accounting
ISBN: 978-1118016114
1st edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso