ETS of Washington Accuses Private Money Lenders for Alleged “Breach of Contract and Misrepresentation”
February 21, 2021, District of Columbia – Plaintiff Debtor ETS of Washington LLC sues private money-lenders; WCP Fund I, LLC, 1 Sharpe Opportunity Intermediate Trust and DP Capital LLC (“WCP”) for” breach of contract, rescission of liens, recovery of money and declaratory judgment.”
ETS is a small business that focussed on the renovation and construction of new residential homes. Defendant WCP had an earlier lending relationship with ETS. The complaint alleges that WCP foreclosed on a property and, reached out to ETS for the sale of that property. WCP supposedly advertised the property as an “exclusive custom property with all permits secured on it.” It also showed future images and development plans of the property to ETS. According to the complaint, ETS relied upon the information and entered into a sales contract with WCP for $1.8 million. Of $1.8 million, ETS paid $320,000 as cash towards the down payment and got $1,480,000 financed from WCP to purchase the property. WCP and ETS also entered into mortgage instruments to secure the financing.
Subsequently, ETS found that WCP “did not adequately secure the permits” and that WCP allegedly made “false representations” to ETS. According to ETS, WCP also “perpetuated fraud” in the appraisal of the property’s proposed development and “did not tell the truth that it may not be possible to develop the property due to complications with the required permits.”
In its complaint, Plaintiff Debtor alleges that Defendant “intentionally made false representations” to ETS and induced it to enter into the sales contract, then purchase the property and the project and become indebted to Defendant under the mortgages. Plaintiff further contends that Defendant allegedly had a “duty to make truthful representations” as both a seller of the property and the provider of financing to acquire and develop the property. As a result of WCP’s fraudulent misrepresentations, ETS allegedly suffered enormous financial losses.
The Plaintiff Debtor now seeks the following remedies :
- Rescission of Sales Contract and the sale of property and project.
- Rescission of the mortgage loan.
- Compensatory damages and all legal fees and expenses.
The case is In re ETS of Washington, LLC, Case No. 20-00397-ELG in the United States Bankruptcy Court for District of Columbia. The next hearing date in the case is scheduled for April 13, 2021. Honorable Bankruptcy Judge Elizabeth L. Gunn is presiding over the Debtor’s case. Kenneth L. Samuelson from Samuelson Law Offices, LLC is representing the Debtor/Plaintiff in the case.