United States District Court, E.D. Pennsylvania
case before me involves one of several ongoing disputes
related to a series of failed real estate development
transactions in and around Philadelphia, Pennsylvania. In
November 2018, Rachel Foster, 532 Brooklyn, LLC (“532
Brooklyn”), and DEMK, LLC (“DEMK”) brought
suit against Moshe Attias and Unity Loft, LLC
(“Unity”) alleging liability arising out of four
of these transactions (the “Foster
Action”). Thereafter, on February 15, 2019, Moshe
Attias and Marion Court, LLC filed suit in state court
against 532 Brooklyn and Alain Kodsi (who is Rachel
Foster's husband), alleging liability arising out of a
separate real estate transaction (the “Attias
Action”). Following removal of the Attias
Action to federal court, both the Foster and
Attias Actions were administratively consolidated.
in the Attias Action (Attias and Marion Court, LLC)
now seek to amend their Complaint to join WPHL Housing
Associates, LLC (“WPHL”) as a defendant and to
assert claims against WPHL in connection with a fifth failed
real estate transaction. For the following reasons, 1 will
grant the Motion.
Facts in the Original Complaint
following facts are taken from Plaintiffs' Complaint in
the Attias Action:In July 2016, Plaintiff Attias was
the sole member of Plaintiff Marion Court, which in turn was
the sole owner of a property located at 5824-38 and 5840-50
N. 13th Street, Philadelphia, PA (“the
13th Street Property”). The 13th
Street Property consisted of a lot with two buildings, one
designated as Building 1 and the other designated as Building
2. (Compl. ¶¶ 6-8.)
2016, Defendant Kodsi approached Attias for the purpose of
conducting a § 1031 exchange. The two men agreed to
jointly renovate Buildings 1 and 2 and convert said buildings
into apartments under the following terms:
a. Attias, through Marion Court, would sell the
13th Street Property to 532 Brooklyn for $3.8
b. The sale proceeds would be used to clear mortgages, liens,
and past taxes on the 13th Street Property and to
renovate Building 1.
c. Upon completion of the Building 1 renovations, 532
Brooklyn would transfer title to Building 1 to Kodsi.
d. The parties would then obtain construction financing in
the amount of $1.2 million, using Building 1 as collateral,
to renovate and complete construction of Building 2.
e. Upon payment of $250, 000 by Attias, 532 Brooklyn would
transfer title of Building 2 to Attias.
f. The parties would share certain profits derived from the
construction and renovation of the 13th Street
(Compl. ¶¶ 11-13.)
closing for the sale of the 13th Street Property
took place on September 8, 2016, during which Attias executed
a deed transferring ownership of the 13th Street
Property to 532 Brooklyn in exchange for $3.8 million. The
parties agreed that Kodsi and 532 Brooklyn would pay $2, 330,
669.50 of the purchase price at or near the closing and that
the remaining portion of the purchase price, plus legal fees,
would be paid on September 7, 2017. (Id.
¶¶ 16, 18, 19.) Payment of the remaining purchase
price was secured by a promissory note. According to the
Complaint, Defendants have not paid any portion of the
remaining purchase price to Plaintiffs. (Id.
¶¶ 20- 22.)
2016 and 2017, Plaintiffs performed substantial renovations
on Building 1. In 2017, however, Defendant Kodsi directed
Plaintiffs to send all of their construction forces to
another construction project, which the parties were then
working on at the old West Philadelphia High School.
Defendants' demand prevented Plaintiffs from completing
construction and renovation work on the 13th
Street Property. (Id. ¶¶ 23-25.)
2018, Defendants agreed to make scheduled payments to
Plaintiffs for the completion of the development of Building
1. After February 9, 2018, however, they ceased making
on May 26, 2018, without Plaintiffs' knowledge or
consent, Defendants sold the Property to 5824 N
13th Street LLC, which is an entity managed by
Kodsi's friend and business partner Lael Shultz.
According to the Complaint, the sale price for the
13th Street Property was millions of dollars below
its fair market value. In conjunction with that sale,
Defendants and 5824 N 13th Street caused a
mortgage in the amount of $8, 000, 000 to be placed on the
13th Street Property. Plaintiffs aver that
Defendants are now renovating the 13th Street
Property with Schultz, to ...