The Real Deal New York

Catsimatidis’ Gristedes sues Madison Capital over allegedly unpaid rent at Ansonia

Investment firm accused of misrepresenting its financial stability in bankruptcy court

May 22, 2015 04:30PM
By Mark Maurer and Kyna Doles

2101 Broadway Lawsuit

From left: John Catsimatidis, 2101-2115 Broadway and Richard Wagman (credit: Bisnow)

John Catsimatidis’ Gristedes supermarket chain is suing Madison Capital for allegedly defaulting on rent at the Ansonia condo building and misrepresenting its financial stability.

Gristedes signed a sublease from fellow grocery-store tenant A&P in 2002 for a roughly 37,000-square-foot retail space at 2101-2115 Broadway, near West 73rd Street, property records show. Department store Loehmann’s then entered into a sub-sublease there in 2005, until filing for bankruptcy nine years later. Madison Capital, a Midtown East-based investment firm led by Richard Wagman and J. Joseph Jacobson, bought several unexpired Loehmann’s leases, including the one at the 17-story apartment building known as the Ansonia. The Loehmann’s sublease was set to expire in 2018.

In a lawsuit filed Friday in New York State Supreme Court, Gristedes, which remains a sublessee, alleges that Madison made fraudulent claims to a bankruptcy court in an effort to prevent Gristedes, the sub-landlord, from objecting to the lease deal.

Madison allegedly purchased the lease under a shell company, referred to as its “alter-ego” in the lawsuit. Gristedes alleges Madison never disclosed that the sublease was being assigned “to its own subsidiary that was without assets or finances.”

Gristedes is seeking a total of $1.2 million, which includes claims of unpaid rent through May and the security deposit.

The affiliate of Madison has a fixed annual rent of $2.4 million for the space, the lawsuit states.

“The court should pierce the veil and award judgment in favor of the plaintiff and against Madison for all amounts” stated, the suit says.

In response to the lawsuit, Leo Leyva, attorney for Madison Capital, said: “The lawsuit filed by Gristedes is without merit and a regurgitation of an identical suit recently dismissed in a separate court.”

Madison Capital specializes in buying retail condos. Last month, the firm was the highest bidder for Scholastic’s retail at its Soho headquarters, at $400 million, as The Real Deal reported. Scholastic has since announced it has paused plans to sell the space.

Catsimatidis is also the founder and CEO of Red Apple Group, which is developing four residential buildings on Brooklyn’s Myrtle Avenue.