July 5, 2007
Kelley Drye successfully represented the White and Weiss Family Trusts in litigation over commercial property owned by the Trusts.
The Trusts' tenant, Walsam EMP ("Walsam") operated a shopping mall on the property. Walsam's below-market lease (the rent was $100,000.00 per year) was soon to expire, and Walsam sought to avoid arbitration concerning the rent for
its renewal term by filing a declaratory judgment court in state court and, eventually, by filing for bankruptcy. Kelley Drye obtained an order from the bankruptcy court compelling Walsam to arbitrate and obtained an award from
the arbitration panel setting the rent for the renewal term at a market rate: $1,350,000 per year with step ups every seven years. The total award over the renewal term is in excess of $30 million.
Walsam sought to vacate the arbitration award before the United States Bankruptcy Court for the Southern District of New York, but the Bankruptcy Court did not rule on the motion. Kelley Drye obtained an order from the United States
District Court for the Southern District of New York ordering the Bankruptcy Court to decide the motion to vacate in a timely fashion. After the Bankruptcy Court granted the motion to vacate, Kelley Drye appealed the decision.
In 2006, Kelley Drye obtained an order from the Southern District of New York reversing the Bankruptcy Court's decision to vacate the arbitration award and confirming the arbitration award. Kelley Drye also, on Walsam's appeal to the
Second Circuit, attained a summary affirmance of the District Court's confirmation of the arbitration award.
In addition, Kelley Drye represented the Trusts in litigation filed by Walsam's leasehold mortgagee, General Electric Capital Corporation ("GECC"). GECC filed suit in New York Supreme Court claiming that the Trusts had made independent
representations about the nature of the Lease between the Trusts and Walsam to GECC, which served the basis of GECC's loans to Walsam. In 2006, Kelley Drye successfully moved to dismiss all of GECC's claims against the Trusts.
As a result of Kelley Drye's representation, the Trusts were able to enter into an agreement under which Walsam and GECC surrendered their rights to the property to the Trusts. The Trusts are now managing the shopping center operating
on the property directly, resulting in a further significant financial gain to the Trusts.
In sum, Kelley Drye started work on this matter in November 2002. The case proceeded in the State Supreme Court, United States Bankruptcy Court, a long and involved valuation arbitration before the American Arbitration Association, the
Bankruptcy Court again, the United States District Court, the Bankruptcy Court yet again, the District Court again, the United States Court of Appeals for the Second Circuit and State Supreme Court. When Kelley Drye started, the two
trusts were sharing $100,000 per year and their only asset - the land - was heavily encumbered with a long term lease. The property is no longer encumbered with the long term lease and the two trusts will now share $2 Million per year,
which amount will grow quickly. The long fight that Walsam and GECC, the leasehold mortgagee, put up for this property shows how valuable this property is and what a boon it is for the trusts to have been able to terminate the lease.