The developer of Monterey Bay Shores, the proposed hotel and condominium project on the dunes of Sand City, is fighting back—as he often does.
Ed Ghandour (through his company, Security National Guaranty) appealed permit denials and fought legal challenges for 16 years before finally winning the Golden Ticket last April: approval for a coastal development permit.
But as the Weekly reported last month, his headache's not over. California Coastal Commission staff say he hasn't met the conditions to actually receive the permit yet. And financial lender Fourth Third LLC alleges Ghandour's company has defaulted on a loan of up to $22.5 million and is taking legal action to foreclose on the 39-acre property and its entitlements.
SNG is counter-suing Fourth Third, demanding a jury trial and $300 million in damages.
But Ghandour's not done hitting back. And his latest move looks something like a very clever shell game.
Tanam Corp. and Abbat Corp.—companies owned by Ed's wife, Anna Ghandour—filed a cross-complaint against Fourth Third in Monterey County Superior Court Oct. 22. According to the lawsuit, Tanam and Abbat are lenders in Monterey Bay Shores, too.
Ghandour maintains the Tanam and Abbat loans, totaling almost $6 million, are secured by deeds of trust that pre-date Fourth Third's 2008 deed of trust. The Tanam and Abbat deeds of trust get priority over Fourth Third's, the cross-complaint states.
By this legal reasoning, Anna Ghandour's corporations could potentially foreclose on her husband Ed's property—keeping the Ghandours in possession of Monterey Bay Shores, and Fourth Third holding an empty bag.
In an email to the Weekly, Ed Ghandour writes that Tanam and Abbat are accusing Fourth Third of "intentional interference with contractual relations, fraudulent inducement and recission of written contract (subordination agreement)." Tanam and Abbat are seeking $40 million in damages from Fourth Third.
Later reached by phone, Ghandour acknowledges the loans from Tanam and Abbat to SNG were family matters, and that the three companies share financial interests. He says Fourth Third did make its loan on the condition Tanam and Abbat's loans were subordinated—that is, given lower legal priority than Fourth Third's loan.
But if Fourth Third committed fraud, he says, the loan subordination agreement should be rescinded. In other words, he's alleging Fourth Third didn't hold up its end of the bargain—so the loans from his wife's companies should be given priority.
Tanam and Abbat has funded "significant portions" of Monterey Bay Shores, he adds, and is "aligned with SNG to develop and entitle the project."