Court rules in favor of Oheka Castle lenders seeking foreclosure

A state Supreme Court justice has ruled in favor of the lenders seeking to foreclose on Oheka Castle and appointed a referee to calculate the property’s debt.

Justice Elizabeth Emerson granted summary judgment last week to lender U.S. Bank National Association and Florida-based LNR Partners, which services the loan, according to court papers. She appointed as referee David Rosenberg, a senior partner at law firm Rosenberg Fortuna & Laitman in Garden City.

The justice, Rosenberg said, “has determined that the plaintiff is entitled to foreclose the mortgage, and the court has appointed me as referee to determine the amount due and to report to the court on certain other issues.”

Rosenberg also will determine whether lenders acted properly when they declared the full amount of Oheka’s debt due in January 2016 — after Melius stopped making payments in November 2015 — and whether the property can be sold off in parcels, the judge’s order states.

“I would like to have a hearing within the next month or so, and then I would report to the court, and then it would be in the hands of the court,” Rosenberg said.

Gary Melius, who owns the Huntington hotel and events center, said he plans to appeal. A notice of intention to appeal would be due within 30 days.

“We feel we have a very, very good case,” Melius said.

The lenders, Melius said, held $2.5 million in an account for repairs “and they wouldn’t release it to me.”

“I told them I wasn’t going to pay until they release my money,” he said.

On Friday, Melius estimated that the total debt on the property is $28 million, and he said the lender estimated it at $37 million. US Bank and LNR sued to foreclose on the property in June 2016.

“Listen, I have the money to pay them off, but I don’t want to pay them off until I get them down to what the price is, so that’s the dispute now,” Melius said. “I’ve got to win that first and then I’ll settle with them.”

Melius said he hopes to eventually seek approval from the Town of Huntington to build 37 condominiums in the castle building. Previous plans to build 190 condominiums and a Jack Nicklaus-branded championship golf course on the Oheka grounds and adjacent Cold Spring Country Club are “off the table,” Melius said Friday.

The castle’s wedding and hotel business is “very good,” he said. “We’re the same as before, same as we’ve been for 10 years.”

By Maura McDermott

maura.mcdermott@newsday.commauramcdermott

Maura McDermott covers health care and other business news on Long Island.