Nylim Real Estate Mezzanine Fund v. Lembi CA1/4

STATEMENT OF FACTS

In March of 2007, Personality Hotels III, LLC and Hotel Metropolis II, LLC (the Borrowers), obtained a loan from plaintiff‟s predecessor, Nomura Credit & Capital, Inc. (Nomura or the Lender) in the total amount of $75.9 million, to finance the renovation of hotel properties. The loan was secured by two promissory notes executed by the Borrowers in favor of Nomura on March 30, 2007: Note A in the amount of $58.4 million; Note B to secure the remaining $17.4 million. The loan agreement provided that the lender was entitled to sell all or any portion of the loans and security interests to third party investors as collateralized debt obligations, and required the Borrowers to execute any amendments to the loan documents or new component notes as requested by the Lender to facilitate the most favorable loan-to-value ratios and rating levels for the securities. Concurrently, defendant Frank Lembi, acting in his individual capacity and as Trustee for the Olga Lembi Revocable Trust (the Trust), and his son Walter Lembi, who were indirect owners of the Borrowers, executed two documents guaranteeing the Borrowers‟ indebtedness to Nomura pursuant to Notes A and B: a…