A California Court of Appeal decision Friday put a temporary hold on the expected foreclosure sale of the Oceanwide Plaza project in Los Angeles.

Earlier this summer, news on the unfinished Oceanwide Plaza seemed to be in favor of the project's EB-5 investors, who would have been able to force a foreclosure sale of the property this month to get the more than $157M they were owed.

But contractors Lendlease and Webcor called into question whether investors who gave their money to an EB-5 entity called LA Downtown Investment LP have lien priority.

In an LA County Superior Court motion filed in July, Lendlease alleged that LADI achieved its lien priority fraudulently and that doing so invalidates its claim to being paid first.

Lendlease said in its motion that LADI’s claim to priority is based on statements by LADI’s president that the entity collected $136.5M from EB-5 investors and gave it to Oceanwide for the project. But LADI hasn’t shared a loan agreement or any documentation that backs up those claims or proves that all the money was given to Oceanwide, Lendlease said in the motion.

“Whether and what amounts were ever actually paid to Oceanwide and where those funds were subsequently routed is highly relevant to the quantum and validity of LADI’s claim; if the money was not used on the Project, it is not the proper subject of a lien encumbering the Project,” attorneys for Lendlease wrote.

In its 32-page motion, Lendlease detailed multiple issues with LADI, including alleged close ties until 2020 between Oceanwide leadership and LADI’s president, Edward Chen, who had been ordered not to participate in EB-5 or the sale or offer of any securities.

Representatives for Lendlease weren't immediately available for comment.

The contractors’ sprawling legal battle for unpaid work on the incomplete project stretches back to 2019, around the time that work on the trio of towers next to the LA Convention Center abruptly stopped and mechanic's liens on the property began piling up.

Since then, Oceanwide has said that it was close to securing funding or a buyer for the $1B-plus project, but neither has materialized so far.

Lendlease separately won a judgment against Oceanwide in 2021 and was awarded $42.6M, a sum on which it has been unable to collect. In pursuit of that award, Lendlease filed a statutory declaration late last month that could result in a forced liquidation of Oceanwide.

A representative for Webcor declined to comment, citing ongoing litigation. Representatives for LA Downtown Investment didn't immediately respond to a request for comment.