Opinion ID: 77669
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 7 In 1985, Ambrosia, a Pennsylvania-based corporation, entered into a real estate transaction with Garita Hotel Limited Partnership (Garita L.P.), an Ohio based partnership formed by George Malizia. Ambrosia provided Garita L.P. with four million dollars in order for Garita L.P. to purchase a ninety-nine-year leasehold interest in beachfront property in Puerto Rico. In exchange for supplying the financing, Ambrosia received a one hundred percent ownership interest in Garita Hotel Corporation (Garita Hotel Corp.), a Puerto Rican corporation. Garita Hotel Corp. is the majority owner and sole general partner of Garita L.P. (collectively referred to as the Garita entities). In sum, the corporate structure of Ambrosia and the Garita entities is that of parent and subsidiaries, respectively. 8 George Malizia and Lenine Strollo, purporting to act on behalf of Garita L.P., attempted to sell the leasehold to Isla Verde Beach Hotel & Casino, S.E. (Isla Verde) for twelve and a half million dollars. 2 Ambrosia claimed that it did not authorize the sale of the lease, and did not receive any consideration from the sale. Ambrosia sued in the Pennsylvania state courts. Ultimately the court found in Ambrosia's favor and entered a consent order confirming that Ambrosia was the sole owner of Garita Corp., and, was therefore entitled to the proceeds of the unauthorized sale. 9 In 1994, Ambrosia, in its own right and on behalf of the Garita entities, advised Isla Verde and Mr. Pages of its intent to file an action relating to the title of the lease and/or for recovery of the consideration paid for the lease. After numerous exchanges via mail and phone conversations, in lieu of filing suit, a settlement agreement was reached. The agreement provided that Green Isle, a limited partnership established under Florida law, would own the Lease. Ambrosia agreed to relinquish its rights in the Lease in exchange for $750,000 in cash and a promissory note in the amount $3,250,000, payable on October 25, 2001. The promissory note was subject to the condition that it be paid solely from cash distributions made from Green Isle to Mr. Pages. 3 According to the settlement agreement, Mr. Pages would receive a thirty-three percent limited partnership interest in Green Isle Partners Ltd., S.E. 10 Ambrosia claims that it entered into the settlement agreement based on the misrepresentation that Mr. Pages' interest in the Green Isle partnership would not be diluted in the future. Ambrosia alleges that the 1995 post-settlement restructuring of Green Isle's partnership agreement, which reduced Mr. Pages' interest in Green Isle to Class B limited partnership status, diluted Mr. Pages' interest, negatively impacted the terms of the settlement agreement, and impeded Ambrosia's ability to collect payment on its promissory note from Mr. Pages. Furthermore, Ambrosia claims that misrepresentations were made during settlement negotiations which led Ambrosia to believe that Lenine Strollo and George Malizia would not be involved with any aspect of the future project. 11 On September 15, 1999, Ambrosia's subsidiaries, Garita L.P. and Garita Hotel Corp., assigned their claims under the 1994 settlement agreement to Ambrosia. 4 Thus, Ambrosia's Puerto Rico and Ohio subsidiaries were not parties to the action when, in December of 1999, Ambrosia, as the sole plaintiff, commenced litigation against Hector Carlos Pages Morales, Ana Celia Pages, Isla Verde, S.E., Isla Verde Hotel & Casino, and Green Isle; without the Garita entities involved, there is complete diversity of citizenship in this litigation. 5