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Commercial Real Estate Finance Workout, Foreclosure and Litigation

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Miller Canfield’s commercial real estate workout and foreclosure practice is among the leading and most experienced practices of its type in the nation and is recognized as such by lenders, servicers, borrowers, guarantors, competing creditors and other firms. We earned our reputation through aggressive and successful litigation of some of the industry’s most prominent cases. We succeed in part because our attorneys are drawn from our Commercial Litigation, Banking and Finance, Real Estate and Bankruptcy Groups, and are well-versed in the challenges presented by distressed CRE assets. We truly understand the particular issues arising from the life-cycle of commercial real estate and CRE lending and the challenges presented by defaulted loans, troubled collateral and, at times, uncooperative borrower parties.

Experienced and Proven Team

Our dedicated commercial real estate and foreclosure team offers an extensive range of services to our clients in connection with the enforcement, workout and foreclosure of defaulted commercial mortgage loans and distressed properties. Many of our team members have exclusively handled these matters for decades. Our team is backed by over 200 attorneys and paralegals across all practice areas and industry teams, including specialties in bankruptcy, tax, litigation and environmental law.  

Deep Industry Knowledge Coupled With a Broad Range of Experience 

Our deep knowledge of real estate law combined with our vast litigation experience makes us particularly capable of developing effective and efficient strategies to enforce our clients’ rights in alignment with their business objectives. We are committed to unparalleled client service and finding the most efficient, cost-effective way to meet our clients’ needs while maximizing recovery.

Our experience includes all property types, including office, retail, industrial, multi-family, hospitality, regional shopping malls, manufactured housing communities and senior living. Based on our long experience and broad knowledge of real estate law and finance, litigation and dispute resolution, we effectively manage our role in all aspects and stages of distressed commercial real estate debt and related collateral, including: 

  • Judicial and nonjudicial foreclosures
  • Construction-related claims and litigation, including contractor defect, mechanics liens
  • Lease and contract enforcement
  • Guarantee enforcement
  • Receiverships, across the full spectrum of a receiver’s activities, including asset sales
  • Bankruptcy and insolvency proceedings
  • Forbearance agreements
  • Loan modifications, reinstatements and assumptions
  • Discounted payoffs
  • Deeds-in-lieu and deeds-in-escrow
  • Distressed real estate loan sales
  • REO property management, leasing and sales
  • Lender liability claims and related litigation
  • Fraudulent transfers and voidable transactions
  • Investor and intercreditor litigation involving syndicated and club loans, participations and pooling and servicing agreements
  • Fraud investigations and litigation

Extensive Geographic Reach

With offices throughout Michigan and in Chicago, Cleveland, New York, Florida, Canada, Mexico, Poland and China, and attorneys licensed in multiple jurisdictions, Miller Canfield offers local roots, regional and national knowledge and cross-border representation throughout the world. While our U.S. practice focuses on assets in the Midwest, primarily in Michigan, Illinois, Ohio, Indiana and Wisconsin, it extends nationwide, and internationally, when necessary.

Clients

We represent leading commercial and investment banks, insurance companies, credit unions, financial institutions, private equity funds, CMBS master and special servicers, private investors and non-bank lenders throughout the capital stack, in connection with troubled loans and distressed real estate debt, portfolio and CMBS programs, and bankruptcies of parties involved in those transactions. We also represent receivers over commercial real estate, where we leverage our extensive knowledge of and experience with the complexities inherent in distressed assets.

Leading Edge Issues and Litigation Success

We have successfully litigated some of the industry’s leading cases in connection with novel issues, particularly involving receiver’s sales, lender liability, deficiency liability, springing liability and guarantee enforcement, and assignments of leases and rents.

Miller Canfield attorneys offer an extensive range of services to our clients in connection with the enforcement, workout and foreclosure of defaulted commercial mortgage loans and distressed properties. Our experience includes all property types, including office, retail, industrial, multi-family, hospitality, regional shopping malls, manufactured housing communities and senior living.

In addition, we have successfully litigated some of the industry's leading cases in connection with novel issues, particularly involving receiver's sales, lender liability, deficiency liability, springing liability and guarantee enforcement, and assignments of leases and rents (and persistent collateral rights thereunder). Among our representative engagements and matters:

Guarantor Lawsuits

Successfully represented a CMBS special servicer in connection with a $12.5 million guaranty lawsuit as well as a lawsuit against the property management company for collecting subordinate management fees

Post-Judgment, Collection Matters and Pursuit of Fraudulent Transfers

  • Represented a national lender in connection with all aspects of the collection of a $9.5 million judgment, including the pursuit of fraudulent transfer claims, at all stages, including in the state circuit court, Michigan Court of Appeals and Michigan Supreme Court
  • Represented a national lender in connection with the collection of a $2.5 million judgment against multiple guarantors

Representation of Court-Appointed Receivers

Multiple matters representing court-appointed receivers for the duration of the receivership and the receiver’s sale of multiple commercial properties in both state and federal courts

National Mortgage Company Forbearance/Workout Transactions 

Representation of a national mortgage servicing company in numerous forbearance/work-out transactions related to the collapse of the home mortgage securitization industry in the mid-to-late 2000s

Shopping Mall Receiverships and Foreclosures

  • Represented a CMBS special servicer in all aspects of the receivership and guarantor litigation concerning a $31 million loan secured by one of the first suburban shopping malls in a major city, including the subsequent sale of the mall by the receiver to the local municipality
  • Represented a special servicer in all aspects of foreclosure and receivership litigation concerning a $95 million loan secured by a shopping center in suburban Indianapolis
  • Represented a CMBS special servicer in all aspects of the foreclosure and receivership litigation concerning a $46 million loan secured by a suburban shopping mall

Manufactured Housing Workouts and Foreclosures

  • Represented a national lender in connection with the workout of a multi-loan portfolio secured by 19 mobile home parks in six states, including foreclosure proceedings, loan workout agreements and subsequent guarantor lawsuits
  • Represented a CMBS special servicer in all aspects of the foreclosure and receivership litigation concerning a $12.5 million loan secured by six manufactured housing communities, including subsequent guarantor lawsuit and the lawsuit to enforce the assignment of rents against the assignee of the sheriff’s deed for one of the communities
  • Represented a CMBS special servicer in all aspects of the foreclosure and receivership litigation concerning an $85 million loan secured by ten manufactured housing communities in two states

Hotel Construction Defects Litigation

Represented the owners of a high-rise hotel, which closed for two years after it was originally occupied, requiring complete reconstruction because of defective exterior wall panels and internal HVAC design defects. It is reported to have been the largest lawsuit in the history of that county. The initial mediation took a full week resulting in a settlement with 29 of the 32 defendants, recovering well into eight figures for the client.

Municipal Construction Litigation

Represented a large west Michigan city with regard to an expansion to its drinking water facility. The city was sued by a contractor for $3 million in damages for delay of the project. We defended the claim and counter-sued for damages with respect to poor workmanship. Utilizing high-technology CAD drawing demonstrations, which were regarded as highly persuasive and effective, we obtained a favorable settlement for the city of $6.2 million and no payment to the contractor.

Financial Institution Litigation and Trial

  • Successful defense of lender liability cases by summary judgment and jury verdict and through appeal
  • As trial counsel, successfully defended a national financial institution's interest in real property in case that involved complex and novel issues of priority under mechanics' lien statute

Reported and Published Decisions

  • Dime LLC v Griswold Building LLC, 2014 WL 3747389 (Mich App, Jul 29, 2014), (summary judgment for lender on deficiency affirmed; sanctions later assessed for appeal taken for hindrance or delay)
  • Wells Fargo Bank, NA v Cherryland Mall Limited Partnership, 295 Mich App 99 (2011), remanded at 493 Mich 859 (2012), rev’d upon remand at 300 Mich App 361 (2013) (guarantor carve-out liability; constitutionality of retroactive application of Michigan Nonrecourse Mortgage Loan Act)
  • Kim v JPMorgan Chase Bank, N.A., 493 Mich 98; 825 NW2d 329 (2012) (defects in mortgage foreclosure renders sale voidable, not void; amicus brief on behalf of Real Property Law Section, State Bar of Michigan)
  • 7800 W. Outer Drive Holdings, L.L.C. v College Park Partners, L.L.C., 2012 WL 2402010 (Mich. App. 2012) (foreclosing lender entitled to predefault rents and real estate tax refunds)
  • 8375 Honeytree Boulevard Holdings, LLC v Jeffrey S. Starman, et al., 2012 WL 683379 (E.D. Mich. March 2, 2012) (summary judgment for lender on carve-out guaranty for bankruptcy filing) 
  • 51382 Gratiot Avenue Holdings, LLC v Chesterfield Development Co., 835 F.Supp.2d 384, 2011 WL 6153023 (E.D. Mich. 2011), reconsideration denied 2012 WL 205843 (summary judgment for lender on carve-out guaranty for insolvency)
  • U.S. Bank National Association v Mobile Associates National Network Systems, Inc., et al., 961 N.E.2d H-15, 195 Ohio App.3d 699, 2011-Ohio-5284, 10th Dist. (foreclosure judgment affirmed; prenegotiation agreement bars claim of modification)
  • Livonia Properties Holdings, LLC v 12840-12976 Farmington Road Holdings, LLC, 717 F.Supp.2d 724 (E.D. Mich. 2010), aff'd 399 Fed. Appx. 97, 2010 WL 4275305 (6th Cir. 2010), cert. den. 131 S. Ct. 1696, (2011) (borrower's request for preliminary injunction to enjoin foreclosure sale denied since 'record chain of title' means documents recorded in register's office and borrower lacks standing to contest interim assignments of mortgages in blank)
  • In re Griswold Building, LLC, 420 B.R. 666 (Bkry. E.D. Mich 2009) (denial of confirmation in single asset real estate case)
  • Highland Park CDO I Grantor Trust v Wells Fargo Bank, N.A., as Trustee, 2009 WL 183496 (S.D.N.Y. 2009) (summary judgment on intercreditor agreement)
  • Ivankovich v PAMI Grand Lake, LLC, 910 N.E.2d 271 (Ind. App. 2009) (summary judgment for lender on guaranty affirmed)
  • AXS Opportunity Fund, LLC v Continent French Quarter, LLC, 2008-Ohio-1047 (10th Dist., 2008) (contempt of court for violation of receivership order)
  • Check Reporting Services, Inc. v Michigan National Bank - Lansing, 191 Mich App 614, 478 NW2d 893, 16 UCC Rep2d 1116 (1991) lv den'd 440 Mich 887 (lender liability)
  • In re Briggs, Receiver of Birmingham Bloomfield Bank, 116 Mich App 267, 324 NW2d 332 (1982) (state bank receivership)
  • Wholesale Tool Company, Inc. v Liberty State Bank & Trust, Michigan Court of Appeals, Case No. 141391-L (unreported), lv den'd 448 Mich 924 (letter of credit)