NYC church sues Disciples of Christ over $7.3 million loan dispute
A congregation based in New York City has filed a lawsuit against an entity of the Indiana-based Disciples of Christ, accusing it of refusing to provide $7.3 million in loan funding advances.
La Hermosa Christian Church of New York City filed the complaint in June, claiming that the Disciples Church Extension Fund failed to provide the promised funds for a property development project.
Filed in the New York County Commercial Division of the New York state Supreme Court, the complaint alleges breach of contract and breach of an implied covenant of good faith, reported The Indiana Lawyer last week.
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The Christian Post reached out to the DCEF for this story, with a spokesperson replying on Wednesday that the Fund “cannot comment or give an opinion about the lawsuit.”
Nevertheless, the DCEF spokesperson did provide CP with a copy of the Fund’s motion to dismiss, which was filed in August and for which a decision is pending.
In the motion, the DCEF explained that it had already advanced “more than $11,000,000 to” La Hermosa “since inception,” but that the church had “lost its focus, through no fault of DCEF.”
“Far from displaying Christian values as one would expect from a church-plaintiff, LHCC attempts to redirect its own failings through an egregious display of baseless accusations and name-calling, and even an abuse of scripture itself,” stated the motion.
The motion went on to argue that La Hermosa was obligated “to enter into a purchase and sale agreement and/or a ground lease and development agreement with a developer, in accordance with provisions agreed to by DCEF.”
“Such an agreement, as a full sale or joint venture with a developer, is necessary to fund and enable the construction of the building, the ultimate objective of the pre-development expenditures,” continued the motion.
“Instead, seven years into this project, LHCC has utterly failed to satisfy this condition. Now faced with a much softer real estate market due to rising construction costs and interest rates, LHCC still has no firm prospects with a developer to develop the property.”
La Hermosa is being represented by the New York-based Blank Rome LLP. CP reached out to the law firm, but a response was not received by press time. This article will be updated if a response is received.
La Hermosa was founded in 1938 and is known for serving the local Latino community, having operated at its location in Manhattan near Central Park since the 1960s.
In 2019, Manhattan Community Board 10 rejected a proposal by the church to construct a 33-story residential building on their property, rejecting multiple zoning change requests.
At issue, according to local officials, were questions regarding the affordability of the residential units, as well as the church not having a developer chosen to oversee the project.
“Without a developer in place to authorize the project costs and/or profitability, compliance to [Mandatory Inclusionary Housing] mandates at both the city and community level, the building of an on-site mixed use facility at this site is both ambiguous and ambitious,” read a letter from the community board to the City Planning Commission, as quoted by Curbed New York.
“While we commend the church for shepherding the process as a means of maintaining control, we find it difficult to think that a savvy developer will agree to the financial terms and covenants of the church with no modification."
