Tuesday, October 5, 2010

O'Neill v. Citizens lawsuit allowed

"Developer J. Brian O'Neill's lawsuit against his onetime primary lender, Citizens Bank, will proceed to trial despite the bank's opposition - and with considerably fewer claims.

Philadelphia Common Pleas Court Judge Albert W. Sheppard Jr. rejected the bank's motion that he throw out the entire suit, in which O'Neill seeks $297 million. Sheppard did, however, dismiss six of the 11 claims, including that Citizens defamed and disparaged O'Neill as their relationship of eight years and more than $180 million in financing went bad.

That deterioration, according to a lawsuit that has been especially caustic in tone, coincided with the start of the recent recession, when lenders in general grew skittish over just about any financing opportunity.

Sheppard let stand O'Neill's claim that the bank misrepresented to him that it would lead financing for the vertical-construction phase, when the buildings actually go up, of his $700 million Uptown Worthington retail/office/residential development in Malvern, when it had already decided it would not.

Based on the belief that the bank would be participating in that stage of the project, the lawsuit contends, O'Neill entered into a $61 million loan agreement with Citizens and began the site work necessary for the project to go vertical. The project stalled when Citizens decided against any additional Uptown Worthington financing, effectively frightening off other potential lenders, the suit says.

Uptown Worthington, proposed as 1.6 million square feet of housing, shops, entertainment venues, a hotel, and high-value office space on 106 acres at Routes 202 and 29, remains largely unfinished, populated by just Wegmans and Target stores.

Among the claims Sheppard did not throw out in his ruling, issued late Thursday, is that Citizens' conduct damaged business deals O'Neill had with two funding sources and three confirmed or prospective tenants for Uptown Worthington. The hoped-for tenants included VWR, a pharmaceutical-equipment company that pulled out of a deal to relocate its headquarters from the West Chester area.

The bank maintains there is nothing in writing to show that it ever committed to the vertical-construction financing. Citizens' officers have testified that early indications that it might were overruled by parent company Royal Bank of Scotland Group P.L.C.

O'Neill's attorney, Steven M. Coren of Kaufman, Coren & Ress P.C., said Monday that he and his client "welcome the opportunity to move forward and to present evidence in support" of the remaining claims.

Citizens has contended that O'Neill's lawsuit, filed in January and originally seeking $8 billion in damages, is retaliation by the King of Prussia developer for its securing $64 million in judgments against O'Neill relating to Uptown Worthington and the Horizon Corporate Center, a 101-acre office/retail/restaurant complex in Bensalem.

Robert C. Heim, a Dechert L.L.P. attorney for Citizens, lauded the judge's ruling, noting that he threw out a majority of the claims and "severely limited" those remaining "even when being required to apply the most liberal standard . . . a standard where the court has to accept the plaintiff's allegations as being true."

Sheppard also denied O'Neill's request for sanctions over allegations that Citizens altered and/or destroyed documents related to the case.

The trial is set to begin April 4."

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