Destiny USA Holdings, LLC v. Citigroup Global Markets Realty Corp.

In 2005 Citigroup Global Market Realty Corporation (Citigroup) (defendant) entered into an agreement with Destiny USA Holdings, LLC (Destiny) (plaintiff) to finance $155,000,000 toward an expansion project for a shopping center and tourist destination in Syracuse, New York. In 2007 Citigroup, Destiny, and the Syracuse Industrial Development Agency (SIDA) amended the agreement to adopt a unique financing structure providing that Citigroup would act as lender and agent for Destiny and SIDA. As agent, Citigroup was responsible for approving the advances of all funds. In summer 2008, Citigroup asserted deficiencies in the accounts. Destiny disputed Citigroup’s calculation of the deficiencies, and Destiny and Citigroup ultimately agreed that tenant-improvement costs should be excluded from the deficiency calculations. In May 2009, Citigroup sent Destiny another deficiency notice, asserting that Destiny’s deficiency exceeded $15,000,000. The majority of the alleged deficiencies included tenant-improvement costs. Destiny did not cure the deficiency, and Citigroup declared default on the loan and refused to fund any of Destiny’s additional draw requests. Destiny sued Citigroup, alleging breach of contract and seeking declaratory judgment, specific performance, and various injunctions. In particular, Destiny moved for a preliminary injunction to require that Citigroup fund the pending draws and exclude tenant-improvement costs in calculating the deficiency, asserting that Destiny would suffer irreparable harm to its reputation because the funds might not be available elsewhere. The trial court vacated the notice of deficiency and notice of default, holding that tenant-improvement costs should not be included in calculating the deficiency. The trial court also held that Citigroup was in breach of its agreement and ordered the funding of the pending draws and future requests. It also ordered Citigroup to pay all future sums due as draws or advances as they come due, which was beyond the scope of the relief requested by Destiny. Citigroup appealed.