Lawsuit Targets Owners Of Mariah's Restaurant In Bowling Green, Kentucky, Over Defaulted Loans.
Bank: Kelleys have defaulted on three loans
Others also say Rick Kelley, who owns Mariah’s and the Pushin Building, owes money
By JUSTIN STORY
The futures of two downtown buildings hinge on the outcome of a foreclosure lawsuit currently in the courts.
Citizens First Bank is one of several entities that have filed claims in Warren Circuit Court alleging that Rick Kelley, owner of Mariah’s Restaurant and the Pushin Building, has defaulted on loans.
The bank’s complaint, filed May 19, contends that Rick and Tori Kelley owe $1,508,693.89 on three loans issued by Citizens First between 2008 and 2010.
According to court documents, Citizens First lent $1,235,000 to the Kelleys on Dec. 10, 2008. The terms of the loan, which matures Dec. 15, call for regular payments of $9,659.13.
The loan was secured by Bowman-Kelley Total Office Systems entering into a mortgage on the property at 400-404 E. Main Ave., commonly known as the Pushin Building, a former department store that now houses several small businesses.
A mortgage was also taken out by Mariah Moore House LLC on property that includes Mariah’s as collateral against the loan.
The bank extended a second loan of $116,833.88 to the Kelleys on May 10, 2010, a loan that was also secured by mortgages taken out on the Pushin Building and the Mariah’s property. That loan is scheduled to mature Dec. 15, 2015, according to a copy of the document.
The third loan, extended on May 26, 2010, and scheduled to mature Oct. 15, was in the amount of $200,000. Instead of mortgages, the collateral loan was secured by three commercial pledge agreements dated Dec. 10, 2008, of 500 shares of stock in Bowman-Kelley Total Office Systems Inc., 375 shares of Sunbelt Management stock and the Kelleys’ membership interest in Mariah Moore House LLC and Rick’s Cafe LLC. The commercial pledge agreements matured Dec. 15, 2009.
Rick Kelley is listed on the Kentucky secretary of state’s website as president and director of Bowman-Kelley Total Office Systems, and the site shows that the company has 2,400 authorized shares.
He is also listed on the site as a member of Mariah Moore House LLC and was listed as an organizer at the time of the company’s formation.
Citizens First claims that the Kelleys have defaulted on payments on each loan and seeks the court to grant a judgment awarding the bank the money it claims it is owed, as well as the liens on the mortgaged properties to be enforced through a judicial sale of the properties.
Also, the bank seeks to have either the Warren County master commissioner or someone appointed by the court to have receivership of the property, which would entail taking charge of the property, business operations and securing of collateral, along with collecting profits and income generated from the properties.
Citizens First’s action has triggered a series of counterclaims and cross-claims by other creditors in a civil action that has grown increasingly complex.
In addition to the Kelleys, the bank names Bowman-Kelley Total Office Systems Inc., Mariah Moore House, Bowling Green Hot Rods owner Art Solomon, Southern Foods Inc. and Aerl LC as defendants.
Aerl LC has a location in Iowa referred to in court documents as American Equity Investment Life Insurance Co., which claims it lent money jointly to Bowman-Kelley and Mariah Moore House in 2006 that is now in default.
Sunbelt Management Co., in which Rick Kelley serves as the registered agent and president and Tori Kelley is vice president and does business as Mariah’s Restaurant, and Rick’s Cafe LLC, also organized by Rick Kelley, were added as defendants July 28.
Rick Kelley said in an email Wednesday that the pleadings in a civil case try to state the facts but do not necessarily reflect the lender’s attitude toward resolving the case.
“Some (lenders) have been made party to a lawsuit that they wouldn’t have initiated themselves and are eager to put the matter to rest,” Kelley wrote. “I fully expect the suit will be resolved soon and that the buildings will stay with the current ownership.”
Kelley is represented by Andrew Stosberg, a Louisville-based attorney from the firm Lloyd and McDaniel. The law firm’s website says that Stosberg concentrates on federal bankruptcy matters and creditors’ rights litigation and that he has represented creditors and creditors’ committees in bankruptcy cases in Kentucky and Indiana.
“All I can tell you is we’re in extensive discussions with the parties involved and we’re optimistic that a deal can be reached where the existing ownership stays in effect,” Stosberg said.
The case is being presided over by Special Judge Janet Crocker, who normally functions as the circuit judge for Allen and Simpson counties.
Crocker was appointed after both Warren County Circuit Court judges recused themselves from the case.
Others make claims
Aerl has made a cross-claim stating that it lent $4.6 million in 2006 jointly to Bowman-Kelley and Mariah Moore House.
Bowman-Kelley put up as collateral the Pushin Building property, granting a mortgage lien to the lender, and the loan was further secured by a mortgage on the Mariah’s property.
Additional collateral on the loan involved assigning all existing and future leases and contracts affecting both properties in the event of default.
Rick and Thomas Kelley, listed on the secretary of state’s website as a Bowman-Kelley vice president, further secured the loan through a guaranty with American Equity Investment Life Insurance, in which Bowman-Kelley pledged prompt payment of debt.
Court documents show the loan to have a maturity date of April 12, 2016, and that the loan had been defaulted due to missed payments beginning in February 2010.
According to a demand notice dated May 28, 2010, from Iowa law firm Whitfield and Eddy, which represents American Equity, the borrowers failed to make monthly payments beginning in February of that year and the amount due on the loan as of the date of the notice was $4,434,376.56.
The letter claimed that the borrowers also violated the terms of its mortgages with American Equity by granting liens on both properties to Citizens First without American Equity’s consent.
Aerl is seeking $4,476,221.09 in loan payments, interest, late charges and other premiums and fees, plus the sale of both properties.
Brady Dunnigan, a Lexington attorney representing Aerl, did not return a message seeking comment.
Hot Rods owner claims to be owed money
In a cross-claim filed May 27, Art Solomon stated that he loaned Rick and Tori Kelley and the Downtown Economic Redevelopment Co. $450,000 on Feb. 9, 2009.
State records show Rick Kelley as a member and Bowling Green attorney Darell Pierce as the registered agent for Downtown Economic Redevelopment Co.
As collateral, Rick and Thomas Kelley, acting as shareholders for Bowman-Kelley and Mariah Moore House, authorized another mortgage on the Pushin Building property and the Mariah’s property.
As of May 24, Solomon was owed $401,783.50, according to court documents, and he sought the outstanding amount on the loan plus 5 percent interest, the properties to be sold at a master commissioner’s sale and for the court to establish the priority of all the defendants holding mortgages.
Attorney Bill Haynes of Bowling Green, representing Solomon, said he has sent requests for admissions to the borrowers as to what money they owe.
A case such as this does not lend itself to many court hearings or depositions taken from witnesses to determine the particular facts of the case, Haynes said.
“It’s hard to have a defense against a breach of a promissory note, either you breached it or you didn’t,” Haynes said.
A potential option to prevent the properties from being sold would be for the borrowers to file for bankruptcy, which would put the court proceedings on hold and allow for the Kelleys to be released from some of the debt obligations. Bankruptcy does not have to be a necessary step, however, in order to retain ownership of properties.
Another defendant, Bowling Green food distributor Southern Foods, has claimed that it is owed money on a loan of $405,762.26 that it made in 2009. Rick Kelley signed three promissory notes pledging payment of the total sum lent - $164,845.42 from Sunbelt Management, $185,761.56 from Rick’s Cafe and $55,154.88 from Yolo Nashville, the company that operates Yolo Restaurant and Bar in Nashville.
Southern Foods claims that there is $256,604 in principal and interest to be paid altogether on the loan, which was secured through mortgages on the Pushin Building and Mariah’s properties, according to court documents.
A separate foreclosure case involving a debt owed by Rick and Tori Kelley on a tract of land on the corner of Eighth Avenue and College Street is pending in Warren Circuit Court.
Independence Bank claimed in a suit filed in April that the Kelleys took out a loan in 2007 for $113,205.59 and had a debt of $73,854.65 as of April 1.
The property is part of Block 4 in Bowling Green’s Tax Increment Financing district.
In an April 18 Daily News story, Kelley said he expected the litigation to be resolved quickly and that he felt the long-term use of the property would remain a parking lot due to it being about a third of an acre and fairly land-locked.
News Publishing LLC, which owns the Daily News, was named in that lawsuit. The company signed an agreement in 2003 to use three parking spaces on the property.
A motion had been made by Citizens First Bank to consolidate the two cases, but the cases remain separate.
Independence Bank has been dismissed from the earlier complaint because the loan and mortgages are no longer assigned to the bank. The current holder is identified in court documents as Tracey Koorbusch of Riverside, Conn., and Koorbusch has replaced the bank as the plaintiff.
Others also say Rick Kelley, who owns Mariah’s and the Pushin Building, owes money
By JUSTIN STORY
The futures of two downtown buildings hinge on the outcome of a foreclosure lawsuit currently in the courts.
Citizens First Bank is one of several entities that have filed claims in Warren Circuit Court alleging that Rick Kelley, owner of Mariah’s Restaurant and the Pushin Building, has defaulted on loans.
The bank’s complaint, filed May 19, contends that Rick and Tori Kelley owe $1,508,693.89 on three loans issued by Citizens First between 2008 and 2010.
According to court documents, Citizens First lent $1,235,000 to the Kelleys on Dec. 10, 2008. The terms of the loan, which matures Dec. 15, call for regular payments of $9,659.13.
The loan was secured by Bowman-Kelley Total Office Systems entering into a mortgage on the property at 400-404 E. Main Ave., commonly known as the Pushin Building, a former department store that now houses several small businesses.
A mortgage was also taken out by Mariah Moore House LLC on property that includes Mariah’s as collateral against the loan.
The bank extended a second loan of $116,833.88 to the Kelleys on May 10, 2010, a loan that was also secured by mortgages taken out on the Pushin Building and the Mariah’s property. That loan is scheduled to mature Dec. 15, 2015, according to a copy of the document.
The third loan, extended on May 26, 2010, and scheduled to mature Oct. 15, was in the amount of $200,000. Instead of mortgages, the collateral loan was secured by three commercial pledge agreements dated Dec. 10, 2008, of 500 shares of stock in Bowman-Kelley Total Office Systems Inc., 375 shares of Sunbelt Management stock and the Kelleys’ membership interest in Mariah Moore House LLC and Rick’s Cafe LLC. The commercial pledge agreements matured Dec. 15, 2009.
Rick Kelley is listed on the Kentucky secretary of state’s website as president and director of Bowman-Kelley Total Office Systems, and the site shows that the company has 2,400 authorized shares.
He is also listed on the site as a member of Mariah Moore House LLC and was listed as an organizer at the time of the company’s formation.
Citizens First claims that the Kelleys have defaulted on payments on each loan and seeks the court to grant a judgment awarding the bank the money it claims it is owed, as well as the liens on the mortgaged properties to be enforced through a judicial sale of the properties.
Also, the bank seeks to have either the Warren County master commissioner or someone appointed by the court to have receivership of the property, which would entail taking charge of the property, business operations and securing of collateral, along with collecting profits and income generated from the properties.
Citizens First’s action has triggered a series of counterclaims and cross-claims by other creditors in a civil action that has grown increasingly complex.
In addition to the Kelleys, the bank names Bowman-Kelley Total Office Systems Inc., Mariah Moore House, Bowling Green Hot Rods owner Art Solomon, Southern Foods Inc. and Aerl LC as defendants.
Aerl LC has a location in Iowa referred to in court documents as American Equity Investment Life Insurance Co., which claims it lent money jointly to Bowman-Kelley and Mariah Moore House in 2006 that is now in default.
Sunbelt Management Co., in which Rick Kelley serves as the registered agent and president and Tori Kelley is vice president and does business as Mariah’s Restaurant, and Rick’s Cafe LLC, also organized by Rick Kelley, were added as defendants July 28.
Rick Kelley said in an email Wednesday that the pleadings in a civil case try to state the facts but do not necessarily reflect the lender’s attitude toward resolving the case.
“Some (lenders) have been made party to a lawsuit that they wouldn’t have initiated themselves and are eager to put the matter to rest,” Kelley wrote. “I fully expect the suit will be resolved soon and that the buildings will stay with the current ownership.”
Kelley is represented by Andrew Stosberg, a Louisville-based attorney from the firm Lloyd and McDaniel. The law firm’s website says that Stosberg concentrates on federal bankruptcy matters and creditors’ rights litigation and that he has represented creditors and creditors’ committees in bankruptcy cases in Kentucky and Indiana.
“All I can tell you is we’re in extensive discussions with the parties involved and we’re optimistic that a deal can be reached where the existing ownership stays in effect,” Stosberg said.
The case is being presided over by Special Judge Janet Crocker, who normally functions as the circuit judge for Allen and Simpson counties.
Crocker was appointed after both Warren County Circuit Court judges recused themselves from the case.
Others make claims
Aerl has made a cross-claim stating that it lent $4.6 million in 2006 jointly to Bowman-Kelley and Mariah Moore House.
Bowman-Kelley put up as collateral the Pushin Building property, granting a mortgage lien to the lender, and the loan was further secured by a mortgage on the Mariah’s property.
Additional collateral on the loan involved assigning all existing and future leases and contracts affecting both properties in the event of default.
Rick and Thomas Kelley, listed on the secretary of state’s website as a Bowman-Kelley vice president, further secured the loan through a guaranty with American Equity Investment Life Insurance, in which Bowman-Kelley pledged prompt payment of debt.
Court documents show the loan to have a maturity date of April 12, 2016, and that the loan had been defaulted due to missed payments beginning in February 2010.
According to a demand notice dated May 28, 2010, from Iowa law firm Whitfield and Eddy, which represents American Equity, the borrowers failed to make monthly payments beginning in February of that year and the amount due on the loan as of the date of the notice was $4,434,376.56.
The letter claimed that the borrowers also violated the terms of its mortgages with American Equity by granting liens on both properties to Citizens First without American Equity’s consent.
Aerl is seeking $4,476,221.09 in loan payments, interest, late charges and other premiums and fees, plus the sale of both properties.
Brady Dunnigan, a Lexington attorney representing Aerl, did not return a message seeking comment.
Hot Rods owner claims to be owed money
In a cross-claim filed May 27, Art Solomon stated that he loaned Rick and Tori Kelley and the Downtown Economic Redevelopment Co. $450,000 on Feb. 9, 2009.
State records show Rick Kelley as a member and Bowling Green attorney Darell Pierce as the registered agent for Downtown Economic Redevelopment Co.
As collateral, Rick and Thomas Kelley, acting as shareholders for Bowman-Kelley and Mariah Moore House, authorized another mortgage on the Pushin Building property and the Mariah’s property.
As of May 24, Solomon was owed $401,783.50, according to court documents, and he sought the outstanding amount on the loan plus 5 percent interest, the properties to be sold at a master commissioner’s sale and for the court to establish the priority of all the defendants holding mortgages.
Attorney Bill Haynes of Bowling Green, representing Solomon, said he has sent requests for admissions to the borrowers as to what money they owe.
A case such as this does not lend itself to many court hearings or depositions taken from witnesses to determine the particular facts of the case, Haynes said.
“It’s hard to have a defense against a breach of a promissory note, either you breached it or you didn’t,” Haynes said.
A potential option to prevent the properties from being sold would be for the borrowers to file for bankruptcy, which would put the court proceedings on hold and allow for the Kelleys to be released from some of the debt obligations. Bankruptcy does not have to be a necessary step, however, in order to retain ownership of properties.
Another defendant, Bowling Green food distributor Southern Foods, has claimed that it is owed money on a loan of $405,762.26 that it made in 2009. Rick Kelley signed three promissory notes pledging payment of the total sum lent - $164,845.42 from Sunbelt Management, $185,761.56 from Rick’s Cafe and $55,154.88 from Yolo Nashville, the company that operates Yolo Restaurant and Bar in Nashville.
Southern Foods claims that there is $256,604 in principal and interest to be paid altogether on the loan, which was secured through mortgages on the Pushin Building and Mariah’s properties, according to court documents.
A separate foreclosure case involving a debt owed by Rick and Tori Kelley on a tract of land on the corner of Eighth Avenue and College Street is pending in Warren Circuit Court.
Independence Bank claimed in a suit filed in April that the Kelleys took out a loan in 2007 for $113,205.59 and had a debt of $73,854.65 as of April 1.
The property is part of Block 4 in Bowling Green’s Tax Increment Financing district.
In an April 18 Daily News story, Kelley said he expected the litigation to be resolved quickly and that he felt the long-term use of the property would remain a parking lot due to it being about a third of an acre and fairly land-locked.
News Publishing LLC, which owns the Daily News, was named in that lawsuit. The company signed an agreement in 2003 to use three parking spaces on the property.
A motion had been made by Citizens First Bank to consolidate the two cases, but the cases remain separate.
Independence Bank has been dismissed from the earlier complaint because the loan and mortgages are no longer assigned to the bank. The current holder is identified in court documents as Tracey Koorbusch of Riverside, Conn., and Koorbusch has replaced the bank as the plaintiff.
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