The 104-foot Presidential yacht Sequoia is back at the center of a legal dispute. Days after the megayacht’s current owner re-filed a lawsuit against a lender, the owner and lender have agreed to a temporary respite.
At a hearing with a Delaware judge last week, FE Partners, the lender, and Gary Silversmith, Sequoia’s owner, agreed to a 60-day truce. According to John Reed, the lawyer for FE Partners, the judge asked if the company would maintain the status quo of the agreement initially made with Silversmith. Under the agreement, neither party will take any action against the other. The truce follows the re-submission of a complaint against FE Partners by Silversmith in a Delaware court on February 1, after the same complaint had been filed in and then tossed from a New York court.
Silversmith sued FE Partners in New York in early January, claiming “a dastardly plan to wrest control of the Sequoia” and “overwhelming avarice.” He alleged that the company purposely provided only part of a $5-million loan to him, to ensure that he’d default and that FE Partners could then enforce an acquisition option for the megayacht that both parties had arranged when the loan was signed. Specifically, both parties agreed that FE Partners could acquire Sequoia for $7.8 million if Silversmith failed to repay the funds. A New York judge dismissed the lawsuit in late January, based on jurisdiction. The contract stipulated that disputes could only be filed in Delaware, where both FE Partners and Silversmith’s Sequoia Presidential Yacht Group LLC were registered.
When Silversmith re-filed the complaint in Delaware earlier this month, the lawsuit made the same claims as before. These include the allegation that FE Partners deliberately loaned only partial funds to prevent him from fulfilling financial obligations. Silversmith also alleges that FE Partners sent several wrongful notices of default, based on false claims. On February 10, FE Partners filed a reply to the complaint, claiming that it uncovered substantial debts that Silversmith’s company owed to various parties, and that these debts dated back before its agreement with him. “The plaintiffs’ concealment of their significant debts and their potential contingent liabilities constitute material breaches of the express warranties in the loan documents,” FE Partners’ filing states. The apparent money owed totals nearly $10.5 million and includes wages and bonuses for the crew, taxes, and the misclassification of employees as independent contractors.
Regarding the temporary truce, Reed says, “We agreed to do it for 60 days to provide more time to get to the actual merits of the dispute and because our current exercise notice of the option to purchase the Sequoia sets December 1 as the date on which the exercise would be completed.”
While the truce is in place, lawyers for each side are permitted to continue to gather evidence.
UPDATE, MAY 16, 2013: While the lawsuit between FE Partners and Silversmith was expected to proceed before a judge this week, following the end of the truce, the date has been postponed until the end of August.
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