The Rushmore and Extell’s Gary Barnett
[Updated with comment from attorney Richard Cohen, 1:01 p.m., Sept. 30, 2010] The U.S. Court of Appeals today denied a request by Gary Barnett’s Extell Development and Carlyle Realty Partners to block the release of $16 million in escrow funds to buyers at the Rushmore condominium on the Upper West Side.
The ruling by a three-judge panel upholds a decision by a federal district court judge in May, which ruled that the development entity, CRP/Extell, must release the deposits to 41 buyers at the condo at 80 Riverside Boulevard, who complained to state Attorney General Andrew Cuomo after the developer failed to meet a deadline for the first closing.
CRP/Extell immediately appealed in the Second Circuit Court, arguing that refunding the deposits would cause undue hardship, because they would have to file multiple lawsuits to recover the funds from each individual buyer should CRP/Extell win the case on appeal. The panel ruled it cannot overturn the lower court’s order to release the escrow funds, because monetary damages can be recovered in the future.
“Here, plaintiff-appellant has failed to make the required showing because it has adduced nothing more than conclusory assertions in support of its claim that one or more defendant-appellees might ‘spend’ the escrow monies and later become insolvent,” the panel wrote in its decision. “To award relief based upon these purely speculative allegations would push the standard for injunctive relief beyond its reasonable limit.”
Lawyers for the purchasers said the ruling means the deposits should be released by the escrow agent.
“The obvious effect of the [U.S. Court of Appeals] ruling is that CRP/Extell must disburse the deposits to the various purchasers as per the AG’s prior ruling,” said attorney Lawrence Weiner, who represents buyers Michael Salerno and Phil and Glennis Politziner.
Richard Cohen of Friedberg Cohen Coleman & Pinkas, who is representing 33 Rushmore buyers, said in an e-mail: “We are very pleased that the Federal Court of Appeals has affirmed the decision of District Court Judge Daniels, who had previously affirmed the attorney general’s order that the purchaser’s down payments must be returned to the purchasers. We expect that Stroock & Stroock [the escrow agent], and sponsor, will immediately comply and return the purchaser’s down payments.”
Officials at Cuomo’s office were not immediately available for comment. CRP/Extell officials were not immediately available for comment, nor where the company’s attorneys.