Point Ruston Legal Battle Grows As Members Seek A Receiver

The Point Ruston legal battle started from financial difficulties and several lawsuits. Now, the residents of five condominium associations have taken legal action to ask for a neutral receiver to take over operations.

Point Ruston Legal Battle

Five condo associations representing the residents of Point Ruston filed a petition on January 25 in Pierce County Superior Court. They filed the petition against the Point Ruston Owners Association (PROA). According to state filings, the association is a non-profit organization incorporated in 2014 by Loren Cohen. Loren is the son of the late developer of Point Ruston, Michael Cohen. Michael passed away in December 2020, leaving Loren Cohen as the sole director.

The PROA is responsible for the development’s administration, management, and on-site governance. However, the condo associations ask for a custodial receiver to take over operations, finances, and management. They have cited conflicts of interest and lack of accountability as reasons for the request.  The residents also claim that assessments are escalating to cover environmental expenditures, marketing, and the community’s legal bills.

PROA manages an upscale community that reaches into Ruston and Tacoma. It is a superfund site as it’s the former location of the longtime ASARCO smelter. However, this isn’t the first Point Ruston legal battle.

Filings to the Pierce County Superior Court

Seattle attorney Jeremy Stilwell represented the Baker Building Residential Condominium Association, the Century, Copperline Tower West and Tower East, and Rainier Building Residential Condominium Associations in a Pierce County Superior Court filing. On February 9, Stilwell wrote that his clients are seeking the appointment of a neutral receiver to take control over PROA. They want fair management free of conflicts of interest.

According to Stilwell, the PROA, the assessments for 2024 were billed to the property owners every month. However, Cohen has been pushing more expenses onto the residents due to the association’s increasing judgments and foreclosure actions. Meanwhile, the attorneys for PROA and Cohen have vehemently denied the allegations. They contend that the assessments are inappropriate and that the allegations are false. On February 7, Jack Krona, an attorney representing the PROA, said the associations lack the standing to seek receivership.

In a filing on February 9, Stilwell stated that the petitioners, regardless of ownership, have a statutory standing to pursue the application based on their interest in the property.

New Receivership

As Loren Cohen and PROA’s attorneys argued against the call for a custodial receiver, Krona filed a voluntary petition by the PROA to call for a general receiver in another court. Meanwhile, Stilwell was moving forward with a hearing set for February 12 at the Pierce County courthouse. In this hearing, the PROA’s attorneys were to showcase why the court should not approve the custodial receiver appointment.

However, on February 12, a stay was issued in the case with an order to appoint a general receiver, Resource Transitions Consultants of Lynnwood (RTC). This was granted on February 9 by Henry Judson, the King County Superior Court Commissioner. Stilwell received the notification on the evening of February 9 when Loren Cohen’s lawyer sent an email notice.

The timing of this notice prevented the parties of the Pierce County case from taking action to preserve the hearing on February 12. Loren Cohen and the PROA’s attorneys did not answer questions about why they filed the action in King County. RTC already acts as a general received in two other orders in Point Ruston. They were both entered in the Pierce County Superior Court last year.

TerraCotta Credit REIT of El Segundo requested the first order in April. It was pursuing a debt repayment case concerning seven parcels in Point Ruston. Jack Krona requested the second order in December. Krona requested the order for various LLCs in Point Ruston as part of a dissolution petition.

Vacating the King County Order

The PROA petition filed in King County listed “1201 3rd Ave. Suite 320” as PROA’s address in Seattle. They listed this address under the “Assignment for the Benefit of Creditors” part of the document. However, others referencing the PROA in the same filing used “5020 Main St., Tacoma” as the address. The PROA uses the Tacoma address as its principal office in its corporate filing in Washington. However, the corporate filing also shows the Seattle address as the mailing address of the PROA’s registered agent.

According to Stilwell, they believe the actions belong in Pierce County Superior Court. They want to pursue a motion to vacate the King County order. On February 15, Stilewell wrote a King County Superior Court filing stating that serious irregularities warrant the vacation.

Furthermore, he states that the address being different from the PROA’s principal address is another issue. The address first appeared in a Statement of Change/Designation. It appeared in a filing that switched the registered agent from an agent in Spokane to one in Seattle. Moreover, the change was made on February 9, the same day as the filing for receivership. According to Stilwell, no indication exists that the PROA changed its principal office.

In addition, Stilwell contested the RTC’s appointment as a receivership. This is because the RTC already serves as a receivership in Point Ruston entities that appeared to have financial obligations to the PROA. It cannot simultaneously act for the PROA and its debtors.

The condo associations’ proposal listed Revitalization Partners of Seattle instead of RTC in the filing with Pierce County. The motion to vacate the King County order could come as quickly as early March.

Other Impacts of the Lawsuit

The Point Ruston legal battle could affect another case. In December, the AURC III sought to recoup unpaid loans among several LLCs tied to the Point Ruston development via sales of properties and foreclosure. It represents a group of foreign investors through the American United EB-5 Regional Center of Portland, Oregon.

In the AURC case, the PROA is a defendant via one of the common areas under its governance, the Point Ruston parking garage. It’s one of the properties the AURC is trying to foreclose. In November, the PROA became a party to the case.

There were arguments over the financial formula used to calculate the amount owed to AURC during the trial’s first phase. In the second phase, the trial will focus on the foreclosure of several Point Ruston properties tied to the debt. Point Ruston and AURC first entered arbitration after the loan’s interest payments stopped in 2020. In October 2021, the AURC received an arbitration award of $11.49 million.

The AURC filed a second lawsuit in November 2022 in Pierce County Superior Court, resulting in the current trial. According to the AURC, the defendants did not pay interest on the promissory note’s continually accruing interest regardless of the given arbitration award.

The trial’s first phase ended in less than half an hour on February 5. Attorneys representing PROA, Point Ruston LLC, and AURC III agreed on the calculation behind the debt. Point Ruston’s debt reached over $90 million, including the principal, interest, a LID assessment paid to the City of Tacoma, and interest on the LID payment.

AURC states that it maintains the first position on the deeds of specific properties. However, the Point Ruston legal battle and PROA’s receivership may affect the second phase of the trial in March.