Judge places Marktplatz Mall in receivership
NEW ULM – The operation and ownership of the Marktplatz Mall had a shake-up this week due to a Brown County Court order.
Judge Robert Docherty approved motions requested by the attorney for New Ulm Retail & Development Corp., owners of two-thirds of the mall, who are plaintiffs in a lawsuit against the owner of the other third, Randy Danielson and his SEK?Financial, LLC, which owns the mortgage on NURD’s portion of the mall.
Docherty placed the mall in receivership and appointed Upper Midwest Management Corp. in New Ulm as the receiver, as requested by NURD.
A receiver is a court-appointed individual or entity that takes over control of running the related property to enact the court’s neutral will and prevent harm to the property. The receivership ends with the trial or when the judge orders it stopped.
Docherty, in appointing Upper Midwest Management Corporation as the receiver, ordered it to focus on dealing with the owed taxes and other costs.
Danielson objected to the order on the grounds of being unnecessary, given his rights with the documents, but said he has no problem with a receiver running NURD’s portion.
Ownership of NURD
Regarding the ownership of the mall, California real estate broker Doug Cogan has replaced Cliff Strand, Mike Strand and Lance Warners as the sole owner of New Ulm Retail and Development, LLC. (NURD), which owns the northern two-thirds of the mall. Docherty granted NURD’s request to remove the Strands and Warner from the lawsuit and replace them with Cogan and other listed owners of the second mortgage on NURD’s portion of the mall, Thomas and Erma Evans, and Ralph and Nancy Bowers. The request was argued based on the lawsuit being brought by NURD the entity itself and Cogan now being its representative. The Strands previously controlled the second mortgage before giving it to the current holders. Outside of Cogan, the other second mortgage holders have made no official appearance in the lawsuit and have no contact information outside of a shared California mail box.
The second mortgage is subordinate to the interests of the first mortgage, but has financial claims in the case.
The Strands will remain involved through a third mortgage they added to their side of the mall when they exchanged ownership. Mike Strand said they will work to help Cogan continue to pursue the lawsuit, but Cogan will take over the official side of the lawsuit.
The lawsuit itself is largely oriented around the first mortgage on NURD’s side of the mall, which was assumed by the entity in 2008 but became entirely due when it defaulted in 2011. Danielson, through his SEK Financial, LLC, bought the mortgage to stop the foreclosure. He then began collecting the NURD side rents through the mortgage’s Assignment of Rents.
NURD sued Danielson and SEK over accusations of mismanaging the rents and accounting for the mortgage. Danielson accuses NURD of lying to bully him into a better settlement price for the mortgage.
NURD has refused to pay utilities, insurance and property taxes while Danielson collects rents. Danielson has paid the utility bills, but the mall insurance has been revoked due to non-payment and $88,000 in taxes is owed on the NURD side. The Assignment requires that any fund Danielson does not apply to mall expense has to go towards paying off the mortgage.
The ownership changes shift around the NURD side ownership, but the lawsuits should progress as already scheduled.
Finally, the order will require NURD and Danielson to enter arbitration, and to agree on an arbitrator by June 30 to determine who is owed what funds related to their Reciprocal Easement agreement for their shared common area. The dispute is separate from the dispute over the rents.
Looking into the future, Cogan said he wants to focus on filing the mall with stores local want to see. He toured New Ulm this last week and meet with local organizations like the Chamber. The Strands said they plan to stay involved with the mall and lawsuit through the third mortgage.
Cogan said he continues to pursue the NURD lawsuit, but declined to provide further details on his plans.
The trial dates for the lawsuit are set to start on Dec. 17.
Josh Moniz can be e-mailed at email@example.com