USA Parking Seeks Return of Deck, $8M in Damages
YOUNGSTOWN, Ohio – USA Parking Systems LLC and a related entity are seeking to reclaim title to the downtown Youngstown Plaza Place parking deck building that now serves as Eastern Gateway Community College’s Youngstown campus.
In an amended complaint filed Sept. 3 in U.S. District Court, Cleveland-based USA Parking and USA Plaza Parking Inc., a new party plaintiff identified as USA Parking’s “single managing member,” seek the restoration of fee title to Plaza or no less then $8 million in compensation.
The filing follows the late July order by Judge Benita Pearson of the U.S. District Court for the Northern District of Ohio that HEP-EGCC Ohio LLC, one of the defendants identified in a breach of contract suit USA Parking field a year ago, pay USA Parking $5,380,470 for rental fees and other obligations owed based on the terms of a management agreement signed in 2014. The decision was characterized as a partial final judgment and only affected HEP-EGCC.
The defendants in the suit filed last year were Eastern Gateway, Steubenville; HEP-EGCC Ohio LLC, Wilmington, Del.; and Store Master Funding VI LLC, Columbus.
In previous court documents, Eastern Gateway has said it should not be bound to the agreement since it did not sign the contract with USA Parking.
The amended complaint adds the following defendants:
Store Capital Acquisitions LLC and Store Capital Corp., which share the same Columbus address as Store Master Funding;
Higher Education Partners LLC, Wilmington, an entity that “conducted business related to the claims set forth herein interchangeably and not distinguished” from itself, HEP EGCC-Ohio or Michael Perik of Providence, R.I., sole owner of both entities and another new defendant;
Huntington National Bank, trustee for the bondholders of general receipts bonds Eastern Gateway took out to finance its purchase of Plaza Place, now called Thomas Humphries Hall, from Store Master Funding.
In addition to seeking the return of the deck or compensation for it, the plaintiffs are demanding no less than $6 million in income lost because of the violation of the 2014 management agreement in four causes of action, $2,556,665 in rental income received by the Capital entities and HEP-EGCC Ohio, any and all income of the property in a sum of at least $5 million.
It also calls on the court to find that the conduct of the defendants entitles the plaintiffs “to a trembling multiplier of damages if applicable,” as well as attorneys’ fees, costs and expenses.
According to the court documents, USA Plaza agreed to sell Plaza Place to HEP-EGCC for $3 million, below what it had determined to represent the “underlying value of the property and the forward value of the combined revenue stream from leasing, commercial parking and retail business rentals.
In exchange, HEP-EGCC would enter into a management agreement with USA Parking under which it would be paid $150,000 per year for the use of 600 parking spaces and a management fee of $30,000 per year. Under the agreement, which would be binding on any successor ownership entities, USA Parking would collect all revenues from the public parking operation and retail rental leasing.
In April 2020, Eastern Gateway purchased the garage and building from Store Master Funding, which HEP had surrendered the title to, and informed USA parking it would terminate the management agreement as of Aug. 31, 2020.
The management agreement that is part of the original contract “clearly states [it] survives for 20 years to all successors of the property,” said Lou Frangos, chairman of the Frangos Group, Cleveland, which operates USA Parking.
“We tried to be flexible and accommodating to EGCC and help and work with them and now are being taken advantage of,” he continued in an email responding to a request for comment. “We can’t sit back and allow that to happen.”
Eastern Gateway did not respond to a request for comment regarding the filing of the amended complaint.
Copyright 2021 The Business Journal, Youngstown, Ohio.