The Real Deal New York

Flank tried to scoop up in-contract Williamsburg deal: lawsuit

Investor claims owner, tenant conspired to bring in new buyer of site near Domino Sugar

January 21, 2016 02:12PM
By Mark Maurer Twitter_logo_blue copy

45 south 3rd

45-51 South 3rd Street in Williamsburg (inset: Flank’s Jon Kully and Jones Hospitality Group’s Brice Jones)

After his lawsuit over a botched South Williamsburg deal was dismissed, investor Shulem Herman is now setting his sights on the developer that allegedly attempted to swoop in on buying an assemblage for which he was already in contract.

Herman filed a complaint Friday in New York State Supreme Court, claiming that architecture and development firm Flank was “determined to own the property, even if it meant using deception and fraud.” The development site – consisting of five contiguous tax lots with frontage on South 2nd Street, South 3rd Street and Wythe Avenue – is next to the Domino Sugar Factory megaproject.

In October, Herman filed a suit against Bruce Terzano, the site’s owner and a Long Island-based landlord who runs Glen Cove Arena Taxi, accusing him of breach of contract. Herman claims he signed a contract Sept. 2 to buy the parcels for $36 million. On Oct. 5, Terzano told Herman he would no longer proceed with the sale, that suit said.

On Jan. 14, a judge approved a motion to dismiss the complaint.

The following day, Herman returned with a new, expanded suit. In addition to Terzano, defendants now include Flank and Brice Jones’ Jones Hospitality Group, which leases space on two of the parcels.

According to the suit, Jones agreed to transfer and assign a majority of its capital stock and/or ownership interest in his firm’s entity BKLN Garden LLC to Flank. Jones did this purely as a method for Flank to elect under its right of first refusal, ignoring the fact that such an assignment was in breach of both the terms of Jones’ lease and Terzano’s contract with Herman, the legal filings claim.

Herman alleges that Terzano intentionally concealed the recent transfer and of Jones’ ownership from him. Terzano and Jones “participated in a scheme to cover up and disguise the true identity of” Flank, a third-party purchaser, Herman claims.

Marcus & Millichap’s Shaun Riney, who is representing the seller in the deal, said, “It was a competitive campaign and neither prospective buyer wants to lose the site.” Riney declined to comment on the lawsuits.

The site, home to a mix of vacant lots and low-rise structure, offers more than 45,000 buildable square feet, property records show. The addresses are 60 South 2nd Street and 41, 43, 45-51 and 53 South 3rd Street. Popular coffee shop and bar Freehold, of which Jones is a co-owner, occupies one of the properties. Terzano assembled the package between the 1970s and 1990s, records show.

Attorneys for Flank and Terzano declined to comment, while an attorney for Jones could not be reached.

Flank is a Chelsea-based firm that has become one of the most active residential developers in Brooklyn. Flank and the Carlyle Group are developing the Boerum, a 20-story, 128-unit property in Boerum Hill.

MENU
Real Time Web Analytics