The Real Deal New York

Judge rules against former AG at Rushmore

January 25, 2011 01:00PM
By David Jones

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Andrew Cuomo (top), Gary Barnett and the Rushmore
A state Supreme Court judge ruled against former Attorney General Andrew Cuomo who filed to dismiss a lawsuit by developer Gary Barnett in the long running $16 million escrow fund dispute at the Rushmore condominium.

The former AG argued that the developers, Barnett’s Extell Development and Carlyle Realty Partners, operating as CRP/Extell, missed a key deadline to challenge the April 9, 2010 ruling, in which Cuomo ordered them to refund deposits to 41 buyers at the 80 Riverside Boulevard building.

CRP/Extell filed the so-called Article 78 lawsuit in October, after attempting to overturn the ruling in federal court. After failing to get a federal district judge to block the release of the funds, a three judge panel on the U.S. Circuit Court of Appeals rejected the CRP/Extell case, saying it was unlikely to win on the merits.

The developers argued that the federal judges told them repeatedly that the proper forum to challenge the Cuomo ruling was in state court, and state Judge Anil Singh agreed that the developers had the right to still litigate the Rushmore case on the merits.

“Clearly [federal district] Judge Daniels intended for petitioner to pursue its Article 78 claim in state court,” Singh wrote in his opinion. “If the attorney general’s argument is to be accepted, petitioner will not get a determination on the merits.”

The case involved whether CRP/Extell fell behind schedule and missed a Sept. 1, 2008 deadline to close its first apartment sale. The developer says that the proper closing date was Sept. 1, 2009, and a single-digit typo should be excused. Buyers at the building and the AG raised doubts about whether there ever was a typo, and said anyway, the offering plan was unilaterally drafted and CRP/Extell had three years to fix the date.

Lawyers from the buyers, surprisingly, welcomed the ruling, stating this will allow the judge to make a final ruling on the merits of the case.

“We find it a positive development, so the court can move more quickly in resolving this case in favor of the purchasers, by upholding the AG’s determination,” said Richard Cohen, attorney for 33 of the buyers.

Lawrence Weiner, who represented three buyers at the Rushmore, said he was “eager for the court to now address the merits of the AG’s determination in favor of the purchasers.”

A spokesperson for AG Eric Schneiderman, who was voted in to succeed Cuomo, had no comment, but sources familiar with the case said they expected the AG to “vigorously” defend its claim.

Carlyle had no comment. CRP/Extell officials did not have a copy of the ruling and were not immediately available for comment.

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