Bailey & Glasser LLP issued the following announcement on July 16.
The state Tax Department has filed a lawsuit in Harrison County Circuit Court against a New York commercial bank company and a firm that operated a hotel in Clarksburg and another in Elkins. The lawsuit seeks to recover over $720,000 the state agency says it’s owed in trust-fund taxes.
Respondents include the banking company, Deutsche Bank Trust Co. Americas, in its role as registered holder of a commercial mortgage trust and commercial mortgage pass-through certificates; and Mountain West Hospitality LLC, a Georgia limited liability company with an address in Fairmont.
Also named as a respondent is an attorney who served as a substitute trustee and last Nov. 30 conducted trustees’ sales of Mountain West’s Hilton Garden Inn in Clarksburg and its Hampton Inn in Elkins.
The lawsuit also names three other limited liability companies, including one that credit bid to buy the hotel properties.
The case has been assigned to Harrison Chief Judge James A. Matish.
The lawsuit contends Mountain West collected consumer sales taxes from its Elkins and Clarksburg hotels and turned over the full amount to the state until 2015. At that point, “Mountain West failed to remit or to otherwise pay the state hundreds of thousands of dollars of consumer sales taxes it collected from its customers,” the lawsuit asserts.
The money instead went into one more “lock-box bank accounts over which Deutsche Bank,” Mountain West’s lender, “had sole dominion and control,” according to the lawsuit.
All trust-fund sales collected by Mountain West “were commingled with all or virtually all of Mountain West’s other funds in the lock-box bank account(s),” the lawsuit contends.
Figures provided by Deutsche Bank and/or one of the other limited liability companies named in the lawsuit showed the bank “used the commingled funds … first to escrow and pay real estate taxes, insurance, and certain capital expenditures, to pay bank fees and expenses, to pay principal and interest owing to Deutsche Bank, and to play late charges and other amounts due to Deutsche Bank,” the lawsuit asserts. The remaining money then was made available to Mountain West “for use in paying its operating expenses,” according to the lawsuit.
The lawsuit contends bank officials knew that wouldn’t be enough money for Mountain West to cover its operating expenses and also pay in full the sales taxes it had collected.
The filing contends Mountain West used the money “to pay certain operating expenses but did not pay the state for the full amount sales taxes it collected from 2015 through the time it lost control of the two hotels in 2017.”
In a separate federal action, the hotels were sold for purported credit bids of about $8.6 million Nov. 30, 2017, according to the filing.
The lawsuit seeks damages of at least $720,000, and punitive damages against Deutsche Bank, Mountain West and the other limited liabilities.
The lawsuit was filed by Marc R. Weintraub, Kevin W. Barrett and J. Zak Ritchie, lawyers for Bailey & Glasser LLP in Charleston who are serving as special assistant attorneys general for West Virginia.
Weintraub didn’t immediately return a message seeking comment.
A message left with Christopher P. Schueller, a Buchanan Ingersoll & Rooney LLP attorney from Pittsburgh who is representing Deutsche Bank Trust Co. Americas in the federal case, wasn’t immediately returned. A message left with Deutsche Bank’s Legal Department also wasn’t immediately returned. Timothy J. LaFon, an attorney for Ciccarello, DelGuidice & LaFon in Charleston who represents Mountain West in the federal matter, said he hadn’t been served with the Harrison County lawsuit and declined to comment. A message left for the trustee named as a respondent also wasn’t immediately returned.
Original source can be found here.