Our New York Partner Shireen Barday and Associate Mark Davies have succeeded in fighting off two motions to dismiss in connection with a derivative lawsuit against the real estate empire of HFZ Capital and its lender, Monroe Capital. Currently pending are two motions to dismiss the defendants’ counterclaims along with a motion for sanctions filed on behalf of the investor plaintiffs against Monroe Capital in connection with a frivolous filing by the lender.
The case originally commenced in 2022 in the Commercial Division of the New York Supreme Court as an action to enforce inspection and audit rights by a minority investor in the industrial real estate portfolio maintained and marketed by HFZ. Investors had thought that they were joining a lucrative joint venture between HFZ and a successful real estate outfit known as the Reich Brothers. However, after observing profound irregularities in the books and records of the HFZ entities that were supposed to have been overseeing the industrial real estate portfolio, the complaint in the action was amended to assert derivative claims on behalf of all members and investors of the entities, including against lender, Monroe Capital. Currently pending in the matter are two motions to dismiss defendants’ counterclaims filed on behalf of the investor plaintiffs and one motion for sanctions against Monroe Capital based on a procedurally defective and substantively baseless counterclaim propounded by Monroe Capital.
Read the full court decision here.
