Cathay General Bancorp, the bank financing an unfinished development once known as the Garden Grove Galleria project, is suing the property owner for more than $4 million in damages over allegations of fraud and breach of contract.
Cathay Bank filed a lawsuit last Friday against the building’s owner, the Emlen W. Hoag Foundation, over a 2014 contract to revive the rusting, nine-story steel structure into a mixed-use development, according to the OC Register.
The lawsuit is the latest development in a long-running battle that started in 2009, when Cathay refused to pay the developer’s construction costs and pulled funding from the project, citing a decline in the property’s value during the economic downturn.
Cathay and the nonprofit Hoag Foundation have tried unsuccessfully for several years to find a new developer to take over the project and avoid a demolition order obtained by the city in 2013 on the existing structure.
Cathay’s lawsuit is a response to Hoag’s decision late last year to end their relationship with Cathay and allow the city to move forward with the demolition. The City Council has given the parties until May, to come to an agreement on how to build on the existing structure, in order to avoid demolition.
According to the Register:
In December, Hoag filed a similar suit against Cathay, saying the bank breached the contract by not finishing construction.
But in its lawsuit, Cathay Bank says it has poured $20 million toward the construction of the Rusty Skeleton, including money for the initial structure, and has “bent over backwards … to bring the project back on track.”
But Hoag, the complaint continues, “has engaged in a pattern of deception and false promises to frustrate and obstruct Cathay’s efforts to … complete the project.”
Contact Thy Vo at [email protected] or follow her on Twitter @thyanhvo.