(Updates with excerpt from ruling in fifth paragraph.)
Feb. 23 (Bloomberg) -- Sheldon H. Solow, the billionaire real-estate developer, lost a bid to have an appeals court overturn a $98.9 million judgment against him in a suit brought by Citigroup Inc.’s Citibank NA unit.
Citibank sued Solow in 2008, saying he failed to make payments on a $503 million line of credit it provided to develop a site along New York’s East River. Solow said the bank rebuffed his offer of more collateral and instead sold his initial collateral for millions of dollars less than fair market value.
New York State Supreme Court Justice Bernard Fried in March 2010 granted the bank’s request for a verdict before trial and awarded the company $85.7 million plus fees and damages.
A New York appeals court upheld that ruling today, saying that Solow didn’t support his claim that the value of the collateral was “determined in bad faith.” The sale of the collateral was “commercially reasonable” because New York- based Citibank wasn’t bound to wait and risk a declining market and the sale price wasn’t significantly lower than the market value, the appeals court said.
“It did not evince bad faith for plaintiff to refuse to accept additional collateral to cure defendant’s default based on a shortfall, despite having accepted additional collateral in the past,” Justice David B. Saxe wrote.
Donald A. Corbett, an attorney at Lowenstein Sandler PC in New York who represented Solow in his appeal, didn’t immediately return a voice-mail message left at his office seeking comment on the ruling.
The case is Citibank NA v. Solow, 603697/2008, New York State Supreme Court (Manhattan).
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