Mezzanine Loan Foreclosure at Washington, D.C.’s Union Station Vindicated by Injunction

On Tuesday, August 23, U.S. District Judge Gregory H. Woods issued a preliminary injunction for Daol Rexmark Union Station LLC and Kookmin Bank Co., Ltd. They were temporarily declared to be the rightful owner of Union Station Investco LLC (USI) – the entity in current possession of the leasehold interest in Washington, D.C.’s landmark Union Station – as Amtrak’s eminent domain action proceeds. David Scharf, Brett Dockwell, Kristin T. Roy, Latisha V. Thompson, and Amber R. Will are representing Daol Rexmark and Kookmin Bank in this matter.

The case centers around Union Station Sole Member LLC’s (USSM) attempt to invalidate a $141 million foreclosure. Daol and Kookmin purchased the pledged collateral at the foreclosure sale, namely all of USSM’s membership interests in USI. When USSM and its beneficial owner, Ben Ashkenazy, refused to cede control, our client filed a lawsuit for a declaratory judgment at the beginning of August. In the suit, they allege that USSM and Ashkenazy refuse to give up control of USI despite defaulting on a $100 million mezzanine loan. Judge Woods sided with Daol and Kookmin, and said that the default allowed them to foreclose. The preliminary injunction enjoins USSM from holding itself out as the owner or in control of USI, among other restrictions.

This decision marks another step in the ongoing battle over Union Station. The historic station is owned by the United States. In April, Amtrak filed a complaint to seek control of Union Station in a landmark condemnation case. Our clients are contesting the validity of the eminent domain in what is shaping up to be an unprecedented battle on legal issues and value at issue.

Following this week’s decision, Morrison Cohen Chair and Co-Managing Partner David Scharf told Law360 that “the judge's ruling speaks for itself, and we're pleased.”

Read the full article on Law360 here.

Read the pleading filed in SDNY on Pacer here. Note, this content is available to Pacer subscribers only.