The Real Deal New York

Lawsuit roundup: Extell sues Sloane Square, Skidmore sues Capstone and church fund sues Deutsche

October 02, 2009 05:23PM
By Adam Pincus

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The Lucida at 151 East 85th Street, Gary Barnett

Extell sues Sloane Square regarding the Lucida

An Extell Development affiliate is suing a small residential brokerage firm for breach of contract for allegedly keeping nearly $200,000 in commissions at the Upper East Side condominium tower Lucida, even though the sales were never finalized.

Gary Barnett’s development firm said that its May 2007 agreement gave boutique brokerage Sloane Square a 3 percent commission for completed sales, but should not be paid for sales that were never closed, according to a lawsuit filed in New York State Supreme Court Sept. 28.

The court filing says Sloane obtained option agreements for buyers at two units at 151 East 85th Street, one for $5.8 million and another for $7.1 million in May 2007. The brokerage billed Extell for half the commission, and the developer paid it an advance of $195,745 in June 2007, the court papers say.

But the lawsuit, which was filed by Extell’s ownership entity WB Imico Lexington Fee, says the buyers backed out, and in June 2009, the developer asked for its money back, but the brokerage allegedly refused to comply.

Extell is seeking the return of the money, as well as interest and any legal fees. The company as well as Sloane Square declined to comment.

Skidmore, Owings & Merrill sues Capstone over space at 14 Wall Street

Meanwhile, in the Financial District, the international architectural firm Skidmore, Owings & Merrill claims its landlord, a partnership between real estate private equity firm Capstone Equities and investor the Carlyle Group, has stiffed it on more than $1 million in tenant improvement work at its Financial District office, a recent lawsuit says.

Skidmore, Owings & Merrill claims expenses of $1.1 million to improve its office space at 14 Wall Street at Broad Street have piled up, and have not been paid by the property owners, despite a clause in a lease signed last year providing for that, a lawsuit filed Sept. 25 in New York State Supreme Court says.

Instead of paying, the landlord wants the firm to deduct the payments from its rent, which Skidmore does not want to do, the filing shows.

In December 2008, Skidmore renewed its lease for 67,210 square feet for more than 10 years, and as an incentive, the building owners agreed to pay for up to $1.96 million for rehabilitation of the architectural firm offices, the suit says.

By July 2009, Skidmore had bills amounting to $1.1 million, but the landlord has not paid a penny, the suit says.

It would take at least five months to pay the $1.1 million through rents, according to an estimate by The Real Deal. At the time of the deal, asking rents were reportedly in the mid-$40s per square foot, which would amount to a monthly payment of about $252,000.

A spokesperson for the joint venture said in a statement that the parties planned to meet in the coming days.

“We believe this is a misunderstanding based on a clause in the lease. We are meeting with [Skidmore] next week, and expect to resolve this matter amicably,” the statement says.

Skidmore declined to comment.

Church fund sues Deutsche for overdue payment at 45 John Street

In the Financial District, a stalled condo conversion project has created one more headache for the German lender Deutsche Bank that provided equity financing for the site at 45 John Street.

The former owner of the office building at 45 John Street, a church fund called Collegiate Asset Management, is seeking $1.325 million from 45 John Mezzanine in a breach of contract suit filed in New York State Supreme Court on Sept. 25.

Collegiate Asset Management sold the building in 2006 on condition that the fund would receive a fifth-floor condo for half price, as well as a retail condominium at no cost, sometime before August 25, 2009, and if not the fund would receive a payment of $1.325 million, according to a lawsuit.

But the development at the corner of John and Dutch streets stalled and the property owner, 45 John Mezzanine, could not deliver the condos by the deadline, so the $1.325 million was owed, the suit claims, but has not been paid.

Furthermore, if 45 John Mezzanine cannot pay, a Deutsche Bank fund called RREEF Global Opportunities Fund II that invested in the project is responsible for paying, the papers claim. As of the filing, no payment has been made, the suit claims.

The Deutsche Bank fund was also named as a defendant in a $51 million foreclosure suit brought by another German bank, Bayerische Landesbank, which holds a mortgage on 45 John Street. That suit was filed June 22 and remains pending, according to court records.

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