The Real Deal New York

Core Group sues over termination fee

October 23, 2008 01:36PM
By Adam Pincus

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Core Group Marketing filed a lawsuit seeking more than $100,000 from the developer of a condominium project at the site of one of Andy Warhol’s Factory buildings two blocks from the Empire State Building.

Core said the developer, identified in city records as 158 Madison Ave. Associates, owed the firm an $113,799 termination fee for pre-development work done for the project, upon being fired from the job in March.

In a complaint filed in Manhattan State Supreme Court October 17, Core said it entered into a contract November 2007, for the sale and marketing of a residential tower at 158 Madison Avenue, at 33rd Street. The contract was terminated in March, but Core Group said it was owed the money because a provision in the contract gave the company a termination fee of $27,777.78 for each month worked up to a maximum of $250,000.

Plans for the site were not immediately clear, but according to the city’s Department of Buildings Web site, there are partially approved plans for a 38-story, 101-unit apartment building at the site, but a stop-work order was placed on the project in September for failure to provide weatherproofing to a neighboring building.

The developer shares officers and a Midtown office with Capstone Business Credit, the sponsor of the project. A representative for Capstone did not return calls for comment, but Anthony Noto of Capstone, who was identified as a part-owner of the project by the DOB Website, said of the lawsuit: “Let them do what they have to do.”

In a statement, Core Group Founder and CEO Shaun Osher said his firm was owed a termination fee for the pre-development work his firm did for the project.

“In 2007, Core worked with Capstone, the project’s sponsor and owner, on conceptualization, branding, and product design for several months,” he said. “Core is owed monies for pre-development work on the project and unfortunately has been left with no other option but to pursue a legal course of action to be compensated for our efforts.”

The T-shaped development site has had a colorful history. It was the location of the last of Warhol’s Factory buildings which the late artist owned until his death in 1987, then in 2005 a joint venture between developer Joseph Sitt of Thor Equities and Andrew Heiberger, founder of development company Buttonwood Real Estate and former CEO of brokerage Citi Habitats, proposed a luxury 50-unit, building called Sundari Lofts and Tower. That project never got off the ground, and city records show that the building was picked up by the current developer, 158 Madison Ave. Associates, in April 2007 for $28.46 million, and was subsequently demolished.

Core is also on the other end of a lawsuit. Osher and his company were named as defendants in a March lawsuit by broker Joseph Bongiovanni, who left the company in 2006 and claimed in court papers he was owed more than $51 million in commissions. That litigation, in Manhattan State Supreme Court, is ongoing, representatives from both Core Group and Bongiovanni said. Osher said in the e-mailed statement that “most of the original causes of action have been discontinued.”

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