On February 21, 2023, the Georgia Court of Appeals awarded multifamily real estate lender ORIX USA (and its affiliates) a complete victory in a decision affirming in part and reversing in part a summary judgment ruling entered last year by a Georgia trial court. The plaintiffs in the case, owners of four large apartment complexes that took mortgage loans from an ORIX affiliate, asserted claims arising from fees the lender earned in selling mortgage-backed securities related to the borrowers’ loans. Contending that those fees should have been, but were not, disclosed before the loans were closed, the plaintiffs had sought damages in excess of the $50 million borrowed (and the possibility of treble and punitive damages).
As reported in our April 2022 edition (see here), the trial court granted summary judgment to ORIX on most of the claims, finding that, contrary to the borrowers’ allegations, ORIX had no contractual obligation to procure or offer “best” rates and that it had no legal duty to disclose the premium that it expected to earn from the post-closing securitization transactions. The appellate court affirmed that ruling in full. As to a narrow set of other claims, related to payments to a third-party consultant, the trial court had denied summary judgment on the basis of a purported fact dispute over whether the consultant’s fees (which ultimately included a portion of the sale premium) were adequately disclosed under the loan documents. The appellate court reversed that portion of the order, holding that the borrowers had presented no evidence that ORIX had misrepresented the fees paid to the third-party consultant and that ORIX was thus entitled to summary judgment on that claim, too.
The case is Overlook Gardens Properties, LLC v. ORIX USA, L.P., Nos. A22A1627 and A22A1633 (Ga. Ct. App. Feb. 21, 2023). ORIX USA and its affiliates are represented by King & Spalding LLP. The plaintiffs are represented by Bondurant Mixson & Elmore LLP, Charles A. Gower, P.C., and Waldrep, Mullin & Callahan, LLC. The opinion is available here.
