A judge has agreed to boot Santa Monica developer Neil Shekhter’s NMS Properties from eight properties it manages in Los Angeles while an ownership dispute plays out in the courts.

At a hearing on Wednesday, Los Angeles Superior Court Judge Gerald Rosenberg ordered lawyers representing Shekhter and defendant and cross-complainant SPI Holdings to decide on a neutral party to take over management responsibilities for the properties. If the NMS and SPI cannot come to an agreement, Rosenberg will make a decision who to appoint on Jan. 3 based on lists provided by each side’s attorneys, according to a transcript of the hearing.

In court filings made by SPI, which bought nine properties in November from a joint real estate venture that NMS was party to, the company claims Shekhter and NMS employees “barricaded” themselves in the properties in order to avoid turning over operations of the apartment complexes. A cross-complaint alleges Shekhter himself verbally and physically assaulted SPI representatives on Dec. 1 when they came to relieve NMS of management responsibilities.

“To thwart the transition, Cross-Defendants prevented New Managers from accessing the managerial spaces, destroyed physical and electronic documents at the properties, and harassed and intimidated New Managers and their representatives,” the cross-complaint reads. “Shekhter himself repeatedly screamed at New Managers to ‘get… off my property,’ and he physically assaulted one of New Manager’s representatives by grabbing him by the neck and shoving him out the door of the managerial spaces at one of the properties.”

Shekhter’s initial complaint in the case, which was filed Dec. 1, the same day the alleged incident happened, painted a starkly different picture. He claims SPI - which is controlled in part by Golden State Warriors minority owner Dennis Wong - and its agents sprang a trap to oust NMS from its property management position before the ownership dispute was worked out.

“Defendants orchestrated a coordinated plan to run roughshod over Plaintiffs’ rights and commandeer control of the Properties in violation of law… (using) a small army of professional hackers, locksmiths, and private security guards to storm Plaintiffs’ offices at each of the Properties,” Shekhter’s filing reads.

The eight properties at issue in the management dispute bring in approximately $1.8 million of rental income a month of which NMS takes 2 to 3 percent, according to court documents and statements at Wednesday’s hearing. A ninth property that is also at issue in the underlying ownership dispute is managed by a third party.

The litigation over the apartment complexes stems from a joint development venture Shekhter’s NMS Properties entered into with AEW Capital Management in 2010. AEW provided some $60 million to help Shekhter finish the projects. Shekhter tried to buy out AEW $106 in in 2013, but the hedge fund refused to relinquish its stake. These two companies have been embroiled in litigation since 2014 over who controls the properties. Another judge ruled in November that Shekhter had forged documents and committed perjury in an effort to prove NMS should be awarded ownership. That order was stayed by an appellate court Dec. 20 until a full review of the case can take place.

Deals & Dealmakers reporter Henry Meier can be reached at hmeier@labusinessjournal.com. Follow him on Twitter @henry_meier.

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