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Wells Fargo Bank, N.A. v. FREP III-Rozzelle Crossing, LLC

United States District Court, W.D. North Carolina

December 9, 2019

WELLS FARGO BANK, N.A., AS TRUSTEE, FOR THE BENEFIT OF THE HOLDERS OF DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION, COMM 2014-CCRE19 MORTGAGE TRUST COMMERCIAL MORTGAGE PASS THROUGH CERTIFICATES, ACTING BY AND THROUGH MIDLAND LOAN SERVICES, A PNC REAL ESTATE BUSINESS, SOLELY IN ITS CAPACITY AS SPECIAL SERVICER, Plaintiff,
v.
FREP III-ROZZELLE CROSSING, LLC, Defendant.

          R. Andrew Hutchinson, BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC, Counsel for Plaintiff.

          Clint S. Morse, BROOKS, PIERCE, MCLENDON, HUMPHREY & LEONARD, LLP, Counsel for Consenting Defendant.

          CONSENT ORDER AND NOTICE OF HEARING

          Frank D. Whitney Chief United States District Judge.

         This cause came before the Court on the “Joint Motion for Entry of Consent Judgment and Order” (the “Motion”), Doc. No. 6, filed by Plaintiff Wells Fargo Bank, N.A., as Trustee, for the Benefit of the Holders of Deutsche Mortgage & Asset Receiving Corporation, COMM 2014-CCRE19 Mortgage Trust Commercial Mortgage Pass Through Certificates, Acting by and Through Midland Loan Services, a PNC Real Estate Business, solely in its capacity as Special Servicer (“Plaintiff”), and Defendant FREP III - Rozzelle Crossing, LLC (“Consenting Defendant, ” and together with Plaintiff, collectively, the “Parties”). Upon due consideration of the Parties' filings and the pleadings in this action, the Court finds that the Motion is due to be and hereby is GRANTED.[1] The Court finds, orders, adjudges and decrees as follows:

         Findings of Fact

         1. Consenting Defendant obtained a loan (the “Loan”) from Cantor Commercial Real Estate Lending, L.P. (“Original Lender”) made pursuant to the terms of that certain Loan Agreement dated July 29, 2014, entered into by and between Consenting Defendant and Original Lender (the “Loan Agreement”).

         2. To evidence the Loan, Consenting Defendant executed that certain Promissory Note dated July 29, 2014, in the original principal amount of $6, 800, 000.00, made payable to the order of Original Lender (the “Note”).

         3. In order to secure Consenting Defendant's obligations to Original Lender under the Note, Consenting Defendant granted to Original Lender a first-priority security interest in certain real property (the “Real Property”) pursuant to that certain Deed of Trust, Security Agreement, Assignment of Leases and Fixture Filing dated July 29, 2014 (the “Deed of Trust”). The Deed of Trust was recorded in the Register of Deeds for Mecklenburg County, North Carolina (the “Register's Office”) on August 1, 2014 in Book 29355, Page 914.

         4. Pursuant to the Deed of Trust, Consenting Defendant further granted to Original Lender an absolute assignment of and security interest in (i) all rents, income, profits and issues stemming from the Real Property and improvements located thereon (collectively, the “Rents”); (ii) all improvements and fixtures located upon the Real Property; (iii) all equipment used in connection with the Real Property or improvements located thereon; and (iv) all other personal property of the Consenting Defendant including general intangibles and proceeds of all of the foregoing (together with the Rents, collectively, the “Personal Property, ” and together with the Real Property, collectively, the “Collateral”). The Collateral encompasses all real and personal property securing the Loan, including, without limitation, the Rents. Plaintiff and Consenting Defendant agree that Consenting Defendant is not in violation of this Consent Judgement and Order by virtue of paying or incurring operating expenses related to the Collateral subsequent to Consenting Defendant's receipt of the Demand Letter (as hereinafter defined) from Plaintiff.

         5. Pursuant to the Deed of Trust and that certain Assignment of Leases and Rents dated July 29, 2014 and recorded in the Register's Office on August 1, 2014 in Book 29355, Page 942, executed by Consenting Defendant in favor of Original Lender (the “ALR”), Consenting Defendant absolutely and unconditionally assigned to Original Lender all Rents from the Real Property and improvements located thereon.

         6. Original Lender's interest in the Personal Property was perfected and evidenced by the filing of UCC-1 Financing Statements, including that certain filing recorded with the Register's Office on August 1, 2014, in Book 29355, Page 954; and that certain financing statement filed with the Florida Secretary of State on July 30, 2014, as Instrument Number 20140191648X (collectively, the “Original Lender Financing Statements”).

         7. Original Lender assigned all its right, title and interest in and to the Loan, and documents evidencing the Loan, to Plaintiff by way of the following documents (collectively, without limitation, the “Assignment Documents”):

a. That certain General Assignment dated August 21, 2014, executed by Original Lender in favor of Plaintiff;
b. That certain Allonge to Promissory Note executed by Original Lender in favor of Plaintiff;
c. That certain Assignment of Deed of Trust, Security Agreement, Assignment of Leases and Fixture Filing dated August 21, 2014, executed by Original Lender in favor of Plaintiff, recorded in the Register's Office on August 27, 2014 in Book 29407, Page 401;
d. That certain Assignment of Assignment of Leases and Rents dated August 21, 2014, executed by Original Lender in favor of Plaintiff, recorded in the Register's Office on August 27, 2014 in Book 29407, Page 405; and
e. That certain UCC Financing Statement Amendment recorded with the Register's Office on September 16, 2014 in Book 29449, Page 122, as continued by that certain filing dated February 14, 2019 and filed with the Register's Office in Book 33285, Page 450; and that certain UCC Financing Statement Amendment filed with the Florida Secretary of State on September 2, 2014, as Instrument Number 201402110276, as continued by that certain filing dated February 12, 2019 bearing Instrument Number 201907681009 (collectively, the “Plaintiff Financing Statements, ” and together with the Original Lender Financing Statements, collectively, the “Financing Statements”).

         8. The Note, Deed of Trust, ALR, Financing Statements, Assignment Documents, and all other documents referring to, relating to, securing, or evidencing the Loan are hereinafter referred to as the “Loan Documents, ” and any capitalized terms used herein but not otherwise defined herein shall have the meaning ascribed to them in the Loan Documents.

         9. Plaintiff is the owner and holder of the Loan and all rights of the Original Lender under the Loan Documents.

         10. Consenting Defendant has failed to make payments when due and owing as required under the Loan Documents, including without limitation, payment of all loan obligations arising under the Loan Documents on or before August 6, 2019, the maturity date provided by the Loan Documents (the “Maturity Default”).

         11. By letter dated September 30, 2019, Plaintiff notified Consenting Defendant of the Maturity Default and demanded immediate payment of all amounts due under the Loan (the “Demand Letter”).

         12. By letter dated October 2, 2019, Plaintiff demanded that Consenting Defendant turn over to Plaintiff all Rents received in connection with the Real Property since the date of the Maturity Default in addition to all Rents received or held by any third-party going forward, and revoked Consenting Defendant's license to collect Rents from the Real Property (the “Demand for Turnover”).

         13. In accordance with N.C. G.S. § 45-21.16, a written statement regarding notice of the outstanding balance due and owing under the Note, Deed of Trust, and other Loan Documents has been transmitted to Consenting Defendant.

         14. Consenting Defendant has not cured the Maturity Default.

         15. Accordingly, Events of Default have occurred and are continuing under the Loan Documents including, among other things, Consenting Defendant's failure to pay the full amounts when due and owing as required under the Loan Documents.

         16. Pursuant to the Loan Documents, the entire outstanding principal balance of the Note, together with all accrued and unpaid interest late charges, and all other obligations and amounts due and owing under the Note, Deed of Trust, and ...


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