Rincon EV Realty v. CP III Rincon Towers CA1/4

I. BACKGROUND

A. The Loan and the Foreclosure In June 2007, plaintiffs purchased Rincon Towers, a San Francisco apartment complex (the Property) for approximately $143 million. (Rincon I, supra, 8 Cal.App.5th at p. 5.) Cohen, a real estate investor, holds controlling interests (either directly or through intermediate entities) in each of the three plaintiffs. The trial court found, and Cohen does not dispute, that Cohen controls the relevant entities and makes all important decisions for them. Plaintiffs financed their purchase of the Property in part by borrowing $110 million (the Loan) from Bear Stearns Commercial Mortgage, Inc. (Bear Stearns). (Rincon I, supra, 8 Cal.App.5th at p. 5 & fn. 2.) In connection with the Loan, plaintiffs and Bear Stearns executed a Loan Agreement and a Cash Management Agreement. (Id. at pp. 5, 7.) In addition, Cohen and Bear Stearns entered a Guaranty Agreement providing that, under certain circumstances, Cohen would be personally liable for plaintiffs’ obligations. Bear Stearns collapsed in 2008, and one of the defendants in the present litigation—CP III Rincon Towers, Inc. (CP III)—ultimately acquired the Loan in April 2010. (Rincon I, supra, 8…