MANHATTAN (CN) - A U.S. corporation owned by Indian business magnates hatched a "dastardly plan to wrest control" of a yacht that served every president from Herbert Hoover to Jimmy Carter, the Sequoia Presidential Yacht Group claims in court.
The Sequoia Presidential Yacht Group and its owner, Washington, D.C.-based attorney Gary Silversmith, sued FE Partners LLC in New York County Supreme Court.
"This action is both urgent and compelling," the 22-page complaint begins. "It concerns the iconic former United States presidential yacht named the U.S.S. Sequoia Presidential Yacht (the 'Sequoia'), which is among the most famous vessels in America."
Presidents used the Sequoia for half a century, until President Carter sold it as a symbolic reduction of government spending.
"The Sequoia is truly a historic icon," the complaint states. "It is a finely appointed, meticulously restored, wooden 104-foot yacht built in 1925, and it is the longest-serving presidential yacht in the United States. The Sequoia was designated by Congress as a National Historic Landmark in 1987 and is possibly the most important piece of Americana not owned by the United States government."
In 2000, a consortium of Japanese buyers sought to buy the yacht - it once carried Emperor Hirohito - but Silversmith beat them to the sale to preserve its role in American history, according to the complaint.
The Sequoia Presidential Yacht Group claims it spent millions on renovations "to restore it to its former glory." They rent it out for private charters and offer it for free for charitable events.
On July 3, 2012, the group says, it tried to pull their business out of an economic slump by loaning the ship to FE Partners LLC for $5 million.
The owners of the LLC, the nonparty Timblo family, are mining, hospitality, shipping, and media business titans in India.
According to the complaint, one clause of the contract gave FE the option to buy the yacht for $13 million, or at a discount of $7.8 million if Sequoia defaulted on the agreement.
Silversmith claims that FE defaulted by funding roughly half of what the contract required.
"In short, defendant only funded those amounts required to satisfy Sequoia LLC's existing lienholders," the complaint states. "Defendant did not even provide enough to pay off all of Sequoia LLC's debt, or provide any money for operating capital which, from plaintiffs' perspective, was the main purpose of the loan. By strategically failing to meet its contractual obligations, defendant placed itself in a first-lender position over the Sequoia whereby it could take advantage of Sequoia LLC's continuing financial distress and loot Sequoia LLC of its prized asset.
"Had plaintiffs known that defendant would not fund the entire loan amount, plaintiffs would never have entered into any of the Loan Documents and would have obtained financing elsewhere," the complaint states.
Silversmith claims he sent the Timblo family two emails about the default and never received a reply.
"Rather than act in an honorable manner and live up to its obligations, defendant, in a predatory manner, sensed an opportunity to pounce on the Sequoia," the complaint states. "On July 20, 2012, just two weeks after defendant partially funded the loan, and having completed lengthy due diligence, defendant had the audacity to issue the first of at least 30 trumped up 'default notices.' The July 20, 2012 default notice stated that Sequoia LLC's failure to pay its crew in a timely fashion permitted a lien in favor of the crew and in preference to defendant's lien, creating a default. This was a lie and was utterly frivolous. At the time, Sequoia LLC was slightly tardy in delivering paychecks to its crew, but the checks were delivered shortly thereafter."
A series of "outlandish default notices" followed, the complaint states.
"All of these purported defaults were either trivial in nature, overblown, outright false, or in the event they contained even a hint of legitimacy, were remedied immediately," the complaint states.
Sequoia and Silversmith seek punitive and treble damages for breach of contract, and an injunction forcing FE to relinquish any rights to the Sequoia and pay off the loan.
They are represented by Larry Hutcher, with Davidoff Hutcher & Citron.
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