News Releases

Third Circuit Affirms Dismissal of $2.7+ Million Complaint Against NorthMarq Capital, LLC

02.11.14

On Monday, February 10, the Third Circuit Court of Appeals affirmed the dismissal of an action in the Eastern District of Pennsylvania seeking in excess of $2.7 million from Lindquist & Vennum client NorthMarq Capital and its former Senior Vice President. In 2009, plaintiffs Chetty Holdings, Inc. and Carl Chetty contacted the Philadelphia office of NorthMarq Capital to assist in the application process for refinancing of a $27 million loan on an apartment complex for which the current lender, Northwestern Mutual, had agreed to waive a prepayment penalty until July 31, 2010. The refinancing was turned down on July 30, 2010 and Chetty then sold the property, incurring the $2.7 million prepayment penalty.

In July 2011, Chetty sued NorthMarq and its former SVP in the Court of Common Pleas for Philadelphia for negligence and negligent misrepresentation, alleging that they had represented that Chetty would obtain the refinancing, that Northwestern would extend the prepayment waiver period, and that Chetty should not pursue sale of the property during the prepayment waiver period. Before serving its complaint, Chetty amended it once as of right. Upon being served, NorthMarq’s Executive VP Mike Myers contacted Lindquist’s LB Guthrie who put them in touch with Lindquist partner Jon Bye. Bye, with the assistance of Karla Vehrs and John Laravuso, removed the case to the U.S. District Court for the Eastern District of Pennsylvania. They then moved for dismissal of the First Amended Complaint, whereupon Chetty requested, and received, leave to amend a second time, which it then did. They then moved to dismiss the Second Amended Complaint, and the court granted that motion, but with leave to amend a third time, which Chetty again did. They then moved to dismiss the Third Amended Complaint, and the third motion was the charm, as in April 2013, the district court dismissed the complaint with prejudice finding that as a matter of law, even if the allegations were true, NorthMarq was not the proximate cause of Chetty’s damages. By decision released February 10, 2014, the Third Circuit affirmed that dismissal.

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