A California-based real estate company has filed a lawsuit accusing a Delaware limited liability company of fraudulent practices in a failed property transaction. The complaint was lodged by 1812 University Avenue, LLC on December 13, 2024, in the Superior Court of California, County of San Francisco against H3M Partners, LLC. The case centers around allegations that H3M misled the plaintiff regarding financing plans for the purchase of a Berkeley apartment complex.
According to the complaint, 1812 University Avenue, LLC owns the Overture apartments located at 1812 University Ave., Berkeley, CA. In 2021, they were marketing this property for sale when they entered into negotiations with H3M Partners. During a meeting on December 17, 2021, H3M assured the plaintiff that it had secured conventional financing for purchasing the property and would not pursue bond financing—a method deemed risky by the plaintiff due to potential delays and uncertainties. Trusting these assurances, the plaintiff agreed to proceed with H3M over other interested buyers.
The agreement between both parties was formalized through a Letter of Intent (LOI) on December 21, 2021. This LOI included an exclusive negotiation period of thirty days during which both parties committed to negotiating in good faith exclusively with each other. However, after this period ended, H3M disclosed its intention to use bond financing despite previous assurances otherwise. The plaintiff claims that this revelation led to significant financial losses as interest rates increased during this period and alternative buyers had moved on.
The lawsuit further alleges that H3M was aware from the beginning that it would require bond financing and deliberately misled the plaintiff to secure an exclusive negotiation period. The plaintiff accuses H3M of bad faith tactics by locking up their property under false pretenses while failing to address known issues such as tenant lease agreements with Cal Lutheran University.
As a result of these actions, 1812 University Avenue claims it suffered damages exceeding $2 million due to lost opportunities and increased refinancing costs amidst rising interest rates. They are seeking compensation for these damages along with court costs and any additional relief deemed appropriate by the court.
Representing 1812 University Avenue is Todd E. Whitman from Karavas Kiely Schloss & Whitman LLP. The case is being overseen by Judge Sahar Enayati under Case ID CGC-24-620572.