Insurer suing Dream developer

Sept. 22--A Pennsylvania insurance company is suing the current developer of the American Dream retail and entertainment complex, claiming it fraudulently conspired to shield its valuable ground lease at the Meadowlands Sports Complex from a $5.2 million judgment over insurance premiums owed by a previous developer.

According to the lawsuit filed on Wednesday in federal court, the new developer, Triple Five, bought the assets and liabilities of the initial developer from California-based Colony Capital LLC last summer. And those liabilities include a $5.2 million judgment entered in March 2013 by a three-member arbitration panel and later affirmed by a federal judge in Philadelphia, the insurer, ACE American Insurance Co., alleges.

The company that initially held the lease _ Meadowlands Developer LP, a subsidiary created by the original developer of the project once called Xanadu _ stopped paying premiums on workers' compensation and general liability policies in 2010, according to court papers.

According to the lawsuit, the land lease is now held by two different entities affiliated with Triple Five _ Meadow ERC Developer LLC and Meadow Outparcels Developer LLC, both based in East Rutherford.

The insurer, which wants the money, alleges the ground lease was "fraudulently conveyed" from Meadowlands Developer to the Triple Five affiliates "to hinder, delay, or prevent" ACE from collecting the $5.2 million.

Alan Marcus, spokesman for Triple Five, and ACE's Newark lawyer, Eric R. Breslin of the firm of Duane Morris LLP, declined to comment on Friday.

ACE claims in the complaint that Triple Five has in the past acknowledged responsibility for those unpaid insurance premiums. The company took the outstanding judgment into account when it negotiated the price it would pay to take over the project, according to ACE, which is based in Philadelphia.

ACE also said in the lawsuit that Triple Five had reached out to ACE with a settlement offer in spring 2012, well before the $5.2 million judgment was awarded, but no agreement was reached.

The developer, which at that time was negotiating to take over the project, suggested it would resolve the issue by agreeing to buy insurance from ACE for two years and pay "at least $1.3 million in premiums," ACE claims.

The settlement offer said that ACE should "look to the state of New Jersey" to collect the rest of what it was owed.

"Of course, as you must realize, [Meadowlands Developer] cannot pay a judgment and if one is entered against them the lease will be breached and terminated by the state," wrote an American Dream lawyer, Alan Pomerantz, in a March 2012 email to ACE. "The state could then issue a new lease to us and you will have a judgment against a company with no assets," Pomerantz wrote.

"Although this is a possibility, we would like to avoid that outcome if we can," Pomerantz also wrote.

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