Lexington owner files suit against partner
Orlando Business Journal - by Anjali Fluker Staff Writer
Orlando CityPlace LLC has filed suit against its former executive, George Kalivretenos.
The firm is the developer and owner of downtown's Lexington condo hotel, which now faces bankruptcy.
The suit alleges breach of fiduciary duty, and also names Kalivretenos' wife, Julie, and Lake Title Group Inc.
The suit, filed on Sept. 26, claims George Kalivretenos, formerly the firm's managing member, told Lake Title Group to transfer $1.5 million of the nearly $2.6 million in Lexington condo sale deposits from an escrow account to Everhome Mortgage.
The filing says Kalivretenos used the money last April to buy a $5.1 million home in Isleworth Golf & Country Club. In addition, the couple used Lake Title Group as the escrow agent for the purchase of their home, the filing says.
Now, Orlando CityPlace has asked the court to impose a constructive trust over the Kalivretenos' Isleworth home for the value of the funds that were removed from the escrow account.
"After learning the money was removed from escrow, Orlando CityPlace removed Mr. Kalivretenos from management and sued him for breach of fiduciary duty," says Orlando CityPlace attorney Scott Shuker of Latham Shuker Eden & Beaudine LLP.
Shuker adds that Kalivretenos, during his deposition on Oct. 29, pled the Fifth Amendment, which protects witnesses from self-incrimination.
When asked for comment about the lawsuit, George Kalivretenos would only say, "That lawsuit will disappear."
No trustee
At an Oct. 29 hearing, the judge also ruled that Barry Greer, George Kalivretenos' business partner and father-in-law, did not benefit from nor was he aware of Kalivretenos' dealings.
Greer replaced Kalivretenos as manager during the summer and now is the firm's sole officer with authority over CityPlace's bank accounts, say court documents.
As a result, the judge denied U.S. Trustee Miriam Suarez's request to place an independent Chapter 11 trustee to oversee the firm's operations and finances until the property is sold later this year. It's a decision Kalivretenos calls "a good thing."
Shuker says appointing a Chapter 11 trustee could have derailed the process to sell the Lexington. The sale is part of a deal to satisfy $30 million owed to New York-based lender iStar Financial Inc. (NYSE: SFI). Bids are due Nov. 14, and the buyer should be selected by Nov. 29.
Title company woes
Meanwhile, the company that held the escrow account, Lake Title Group, filed for Chapter 7 bankruptcy on Oct. 29 -- less than a month after its former owner, Nancy Mahan, filed for personal Chapter 7 bankruptcy.
Mahan declines to comment on the case, saying only that she no longer owns Lake Title Group.
Shuker, whose firm currently is holding the remaining deposits in its own escrow account, says he believes Lake Title's trustee likely will file for court approval to reassume responsibility for the remaining funds.
The Lexington opened about a year ago at 304 W. Colonial Drive near Interstate 4.
Company officials say the hotel itself has been profitable, but Orlando CityPlace filed for voluntary Chapter 11 bankruptcy on July 23 because it failed to meet payments on a $30 million loan for the hotel and land. That's because only 31 of the Lexington's 227 condos were sold, Greer told Orlando Business Journal in a July 20 interview.
Anjali Fluker can be reached at (407) 241-2910 or via e-mail at afluker@bizjournals.com. Managing Editor Susan Lundine added to this report.
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