Tuesday, March 13, 2007
Judge Orders Dissolution of Ring Family Partnership, Sale of Marina Complex
By a MetNews Staff Writer
The limited partnership that operates the Mariner’s Village apartment complex on county-owned land in Marina del Rey must be dissolved so that the property can be sold, a Los Angeles Superior Court judge has ruled.
Judge Ronald Sohigian ruled Feb. 27 that the 981-unit, 23.5-acre complex should be sold because the general partners in Marina Admiralty Company cannot agree on whether to sell it or seek a groundlease extension from the county, which the judge said would be a “ruinous” course to pursue.
Marina Admiralty is one of a number of real estate companies formed by the late brothers Selden and Ellis Ring, major developers of rental housing in Southern California.
The plaintiffs in the dissolution suit are Selden Ring’s son and daughter-in-law, attorney/developer/civic activist Douglas Ring and former City Councilwoman Cindy Miscikowski. The defendants include Ellis Ring’s children, Suzanne Caplan, Jacqueline Morgen, and James H. Ring.
Defendants’ counsel Alan Wilken of Loeb & Loeb said yesterday that his clients had not yet decided whether to appeal.
In his statement of decision, Sohigian found, among other things, that “[t]he business of the partnership can only be carried on at a loss” and that “it is not otherwise reasonably practicable to carry on the partnership business in conformity with the partnership agreement.”
The judge explained that there had been offers of up to $225 million for the property, and that the defendants, while unwilling to accept those offers, had tried to buy the plaintiffs out “on terms so unrealistic, unreasonable, and unfavorable to plaintiffs as to indicate that those offers are in bad faith.”
He also criticized the defendants for claiming they had no idea what the leasehold was worth, or of what terms the county might insist on for an extension
“If true, these claims mean that defendants are impermissibly unaware of information which they should have in the exercise of reasonable care to satisfy their obligations to the partnership and its various investors,” the judge wrote. “....If these claims are not true, then that further reinforces this court’s view that defendants have tried to force plaintiffs out of the partnership at a less-than-fair-price.”
It is clear, Sohigian added, that the county would require a substantial increase in rent and/or construction of substantial improvements before renewing the lease, and that the partnership was not in a position to make such a commitment.
The only sensible thing for the partners to do is to sell the property without first seeking a letter of intent setting forth the potential terms for a lease extension, he said. He reasoned that a potential buyer would not want to be bound by terms negotiated by the seller and that “the mere passage of time inevitably will diminish the value of the leasehold,” which is set to expire in 2023.
The county, he explained, wants “to seize for [itself] the residual leasehold value that might otherwise belong to the lessee or, in the case of a long-term extension, to generate an essentially new and larger project that will general substantial additional rental revenues to the County instead of trying to preserve return to the lessee,” who would have to remove the improvements and restore the land at the end of the lease term.
Douglas Ring praised the decision in a statement.
“This was a difficult case because of the family connection, but we appreciate that Judge Sohigian recognized the importance of selling the asset and the difficult circumstances in which I was placed as a general partner,” said.
He added that his attorneys—Eric V. Rowen, Scott Bertzyk, and Eric Fisher of Greenberg Traurig—“did an outstanding job of articulating the reasons why it is in everyone’s best interests for the property to be sold, and the difficulties with my cousins.”
Wilken, who tried the case with Jed Lowenthal, told the MetNews that he saw the parties’ differences as business-related rather than personal.
“The evidence was that there was no lack of harmony within the family for the more than 10 years they owned the asset,” he said. “[Douglas Ring] wanted to sell and [his cousins] wanted to invest further in the Marina.”
The parties remain partners in other projects, he noted.
The case is Douglas R. Ring, Inc. v. Marasco, BC 341333.
Copyright 2007, Metropolitan News Company