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The Emperor In Hartford Is Now In Foreclosure

Shawn Eddy’s upscale downtown club is history

by Daniel D’Ambrosio

July 01, 2010

The long and bitter struggle between club and restaurant owner Shawn Eddy and the residents of the building where he built his upscale Emperor at the Linden is nearing an end, and it looks like Eddy has lost big.

Eddy’s club and restaurant have been closed for nearly a year, and now the 12 commercial condominiums on the first floor of the historic Linden Building on the corner of Main Street and Capitol Avenue he owned with partner Anne Bell are in foreclosure. Stories in the Advocate in 2008 and 2009 detailed Eddy’s debilitating clashes with the other residents of the building — the 59 owners of residential condominiums surrounding the 12 commercial condos.

The noise emanating from the restaurant and club was simply too much for those living in the building full-time, and the Linden Condominium Association filed suit for an injunction limiting that noise to less than 40 decibels. In June 2008, a judge ordered Eddy to soundproof the club and close its outdoor patio by 11 p.m. At the same time, the 12 condo spaces owned by Eddy-Bell Commercial Properties LLC were mostly vacant and foreclosure hearings were looming.

Eddy said he did the soundproofing and reopened the Emperor in September 2008, but by December of that year, the condo association was back in court, claiming the noise was as bad as ever, and asking the entire business be shut down by 11 p.m. each night. Eddy told the Advocate in 2009 a judge’s decision to grant the request for an 11 p.m. closing time was untenable, and that he was “basically shut down.” He would be looking for a new location for his business, either in Hartford, or perhaps Stamford or New Haven.

Today that seems unlikely as mounting debts and a new foreclosure action have closed in on Eddy-Bell properties. Eddy did not return a call for comment for this story, but court documents and interviews with attorneys for the condominium association and a court-appointed receiver show the seriousness of his situation.

Eddy-Bell owes approximately $240,000 in common charges to the Linden Condominium Association, having not paid for 16 months, according to Michael Feldman, attorney for the receiver appointed to take control of the property away from Eddy. Shaw Funding of Hicksville, N.Y., holds a first mortgage on the Eddy-Bell property of $460,000. Frank S. Bell of West Palm Beach, Fla., Anne Bell’s father, holds a second mortgage of $800,000.

In addition, Eddy-Bell owes just over $100,000 in back taxes, more than $58,000 in unpaid electrical bills, nearly $14,000 in unpaid attorney’s fees and a $3,300 water bill that also gives the Metropolitan District Commission the right to foreclose on the property should it choose to.

All told, Eddy-Bell owes some $1.5 million on a property that has been appraised at just $200,000 in downtown Hartford’s extremely soft market for retail space.

In an attempt to hang on to his property, Eddy-Bell filed for Chapter 11 bankruptcy in March, stopping a foreclosure action filed by the condo association in its tracks, according to Attorney Matthew N. Perlstein, who represents the association. Eddy-Bell stopped the foreclosure obtained by the association about a year ago with an appeal, says Perlstein. But this time Perlstein was able to get the foreclosure action back on track.

“We went in and challenged the bankruptcy on the grounds there was no hope of reorganizing,” says Perlstein. “Two months later the bankruptcy was dismissed.”

By June 3, Servus Management Corporation of Hartford, the court-appointed receiver, was back in place with the mandate of taking over the property and getting the commercial spaces filled to relieve some of the burden that has fallen on the residential owners as a result of Eddy’s failure to pay his bills.

Perlstein says the common charges for residential owners have increased dramatically to pick up the slack for Eddy-Bell. For example, monthly charges for a typical two-bedroom condo have increased from about $500 to about $725, with $225 going to cover the Eddy-Bell shortfall.

The condominium association spent about $1.5 million on major repairs for the 1892 building soon after Eddy-Bell acquired the 12 commercial condos in 2005, and has had to pay that loan back without any income from those 12 units.

“It has been a nightmare for the residential owners,” says Marjorie Morrissey, president of the Linden Condominium Association. “They are the ones that have to pick up all the expenses of running the property that the commercial owners aren’t paying.”

Now Eddy is in danger of being held in contempt of court for not complying with court orders to cooperate with Servus Management as it moves to take over the commercial condos.

Attorney Feldman told a Superior Court judge last week that Eddy had not turned over keys to empty units, and only supplied the leases to rented units when he was ordered to do so. During the two months of his bankruptcy this year, Eddy managed to rent several of the commercial spaces, including a portion of the old Emperor space to attorney Deron Freeman, a friend of Eddy’s.

As of Monday, no decision on the contempt charge had been made. But Morrissey says Eddy’s stalling tactics have already taken their toll.

“The inequity is off the charts,” she says. “Everybody is very angry at the commercial owners for taking such ruthless advantage of the residential owners and there are some people in financial distress because of the extra [common] charges they did not plan on.”

Some of the new commercial tenants are feeling equally abused by Eddy, wondering what their fate will be as a result of the foreclosure action and the possibility of a new owner taking control of the commercial condos.

Gonzalo Fernandez moved his convenience and grocery store to the Linden after 16 years at 250 Main Street. He says he spent about $15,000 on the move, and he’s not sure where he would find the money to move again.

“This space was totally empty. It cost me a lot of effort, money and sacrifice to get it running perfect,” says Fernandez. “If somebody kicks me out I would lose almost everything.”

But Feldman says Fernandez has nothing to worry about, because his rent is paid in full.