The Real Deal New York

Buyer sues Extell for deposit at Rushmore

October 09, 2009 03:26PM
By David Jones

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Already battling at least 34 buyers trying to back out of their sales contracts, Extell Development is facing a lawsuit from a Wall Street executive claiming that the Rushmore condominium tried to defraud her of her $1 million-plus deposit refund, and failed to obtain key city approvals.

Kelly Coffey, a managing director at JPMorgan Chase, filed suit in New York State Supreme Court Sept. 29, alleging the Upper West Side building’s sponsor missed the Sept. 1, 2008 closing deadline by five months, and then illegally amended the offering plan to deny buyers the right to get a refund.

“Instead of offering the plaintiff the right to rescind the agreement, as required by the offering plan, the defendant sponsor’s 16th amendment to the offering plan states that purchasers have no right of rescission related to the first closing,” attorneys Philip Hines and Marc Held wrote in the complaint.

In March 2007, Coffey agreed to buy two apartments and combine them into one $6.9 million deal, however, Extell was unable to start closing apartments until Feb. 1, 2009, which her lawyers say entitles her to a full refund of her deposit, plus damages.

In addition to missing the closing deadline, Coffey alleges that Extell failed to obtain proper approvals for her to combine her apartments into one as well as didn’t get a permanent certificate of occupancy for the combination after failing to get the building’s fire safety plan approved. She also claims there were design and construction defects in her apartments.

A spokesperson for Extell said the company would not comment on the case.

The Rushmore is a 289-unit luxury condo at 80 Riverside Blvd and 64th Street. Extell, a commercial and residential developer led by investor Gary Barnett, is developing the project along with the Carlyle Group.

Earlier this year, a group of 34 Rushmore buyers went to the New York State Attorney General demanding their deposits back, due to Extell missing the Sept. 1 deadline. Extell, according to published reports, claimed a typo by its law firm, Stroock & Stroock & Lavan, caused it to erroneously enter the wrong deadline, and that the real plan was to close by Sept. 1, 2009.

“Our basic point is we want the AG to enforce the offering plan as written,” said Richard Cohen, attorney for the 34 buyers.

Cohen told The Real Deal that after his initial complaints to the AG, the Rushmore sponsor published a 17th amendment that includes language revoking part of the 16th amendment changes. Cohen said he believes that regulators forced the Rushmore to enter this into the new amendment, thus restoring certain rights to the buyers.

The new language includes the following: “Nothing contained in any prior amendment to the plan, including without limitation, paragraph six of the 16th amendment entitled ‘Procedure to Purchase’ shall serve to limit the rights previously granted to a purchaser who executed an agreement prior to the filing date of such amendment.”

Michel Evanusa, a partner at Stroock, Stroock & Lavan, was not immediately available for comment.

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