Core Group Marketing claims in court papers filed this week that the developers of the stalled condominium conversion project Jasper are personally liable for half a million dollars after an exclusive marketing contract was terminated last fall.
The sales and marketing firm led by CEO Shaun Osher alleges that developers Harry Jeremias, Francisco Pujol and Henry Orlinsky owe the firm a $500,000 termination fee after the marketing agreement was ended in November 2008, court papers filed in Manhattan State Supreme Court April 20 say.
Development companies the Harch Group, led by Jeremias, and PHH Realty, a partnership of Jeremias, Pujol and Orlinsky, joined forces to build an 80-unit condo in a converted office building in Murray Hill at 114 East 32nd Street, between Park Avenue South and Lexington Avenue.
But in November, with just 43 units sold (the developers returned the deposits) and cost overruns, Jeremias tried to refinance the project with a European fund and turn it into a 200-unit hotel, but the plan fell through.
Core Group says Jeremias signed a termination agreement with the marketing group that indicated the developers would pay $350,000 by November 17, plus $150,000 if the developers reached a settlement with an unnamed, third-party entity. Osher would not elaborate on what kind of settlement the suit was referencing.
The payments were not made, Core alleges, so the company filed suit.
“Unfortunately, due to its own financial constraints, our client has placed us in a position where our last avenue to recoup the monies our client owes to us is through the legal process,” Osher said in a statement.
Jeremias told The Real Deal yesterday the project was stalled but he believed he and his partners could work out a deal with the lender, Petra Capital Management, to get the development going again as a residential building.
A source familiar with the project said the building may be converted to a rental apartment.
He would not comment on the claim in the lawsuit that the partners were personally liable for the payments, and questioned the monetary figure.
“I don’t know how they came up with their number. What I do know is the contract has a dollar amount termination fee and whatever that ‘X’ dollar amount is will have to be discussed,” he said.
The lender filed a suit March 3 to foreclose on $83 million lent to the developers, and this month the lender filed to have the New York State Supreme Court name a temporary receiver.
Core Group took the unusual move to file the action as a “notice” instead of using the more common “complaint.” Darren Oved, a partner at Oved & Oved who was not involved with the case, said it was possible a plaintiff would file a notice instead as a way to warn a defendant that they were serious about pursuing their claim, but not yet prepared to file a full complaint.