NEW ORLEANS – A New Orleans company is suing its former bank after being forced to cease construction of a planned condominium in the Treme area of the city.
Ursulines LLC filed suit against Regions Bank and their insurer in the Orleans Parish Civil District Court on Nov. 13. In the suit the plaintiff claims that although it never missed a payment on its mortgage, it was forced to abandon the project as a result of Regions’ pursuit of defaulting on the property.
Ursulines LLC planned to begin construction of the 21-unit condominium on Nov. 1, 2005. It sought to finance the project through AmSouth, which valued the proposed site for the condominium at $1.4 million as of Aug. 10, 2005. AmSouth approved a commercial development loan of $4.8 million, $1.4 million of which would be immediately available for the land purchase.
The remainder would be available as a line of credit with the condition that five units in the condominium be pre-sold before disbursement of the funds. Shortly after the property was purchased in August of 2005, progress was halted due to Hurricanes Katrina and Rita, although the property itself did not flood. In February of 2006, AmSouth confirmed its original valuation of the project and in May of 2006 AmSouth merged with Regions. Regions then modified the terms of the original agreement requiring that Ursulines pre-sell all 21 of the units.
Ursulines claims that it continued marketing the condominium in an attempt to meet the new requirements but as a result of the new requirement construction was rendered impossible. The plaintiff further asserts that it had made all scheduled payments and payed $331,505.00 total on the mortgage. Ursulines was informed that Regions wanted the company to move the loan or “right size” the loan. A November 2008 appraisal by Regions valued the property at $575,000, although no other non-flooded New Orleans experienced such a drop in value after the hurricanes.
Regions allegedly failed to provide Ursulines with a copy of the appraisal. Ursulines claims that it was forced to seek relief from another bank before discharging the loan. That bank, First NBC, placed the value of the property at $1,215,000 as of September 2009. Due to company policy, First NBC was unable to provide the full value of the loan and $218,334.00 of the mortgage remained with Regions. The plaintiff was told to move the note or Regions would begin the process of defaulting the mortgage. Because of Regions pursuit of defaulting Ursulines on the mortgage, the plaintiff was forced to give up the project and the valuation of construction.
The defendant is accused of breach of contract, fraud, detrimental reliance/error, causing a loss of business opportunity and unjust enrichment.
An unspecified amount of damages is sought for breach of contract.
Ursulines LLC is represented by Robert V. Evans III, Robert J. Daigre and Gabriel O. Mondino of New Orleans.
The case has been assigned to Division J Judge Paula A. Brown.
Case no. 2012-10611.