The Real Deal New York

Massey Knakal sues Nevins Realty over $30M Steiner Studios deal

The brokerage says it's owed $900,000 in lost commissions

June 29, 2011 10:53AM
By David Jones

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Clockwise from top left: 345 Schermerhorn Street, 325 Schermerhorn Street, 350 Livingston Street (building credits: PropertyShark) and 62 Flatbush Avenue. Center: Paul Massey

[Updated 4:40 p.m.] Massey Knakal Realty Services has filed a lawsuit against Nevins Realty
and its president, alleging he directly negotiated a $30 million sale of
four downtown Brooklyn parcels to Steiner Studios, costing the commercial
real estate brokerage $900,000 in lost commissions.

Massey Knakal, in the suit, filed June 22 in Manhattan Supreme Court,
alleges fraud and breach of contract against Nevins and asked the court for
an injunction to prevent the transfer of the $900,000 commission fee at the
closing, which is scheduled for tomorrow.

According to the complaint, Ray McKaba, president of Nevins, hired
Massey Knakal in December 2009 to market the four properties, which
include a 120,000-square-foot office building at 350 Livingston Street; a vacant lot and a medical office building at 325 and 345 Schermerhorn
Street, respectively; and a 20,000-square-foot parking lot at 62-64 Flatbush
Avenue.

As part of the deal, Nevins agreed to pay a 3 percent commission and
agreement was valid until June 9, 2011.

Lawyers for Massey Knakal claim that Doug Steiner of Steiner Studios
directly contacted Nevins Realty, and entered into secret talks on a deal,
which led Nevins to send a “cease and desist” letter to Massey Knakal in
January 2011, instructing the firm to stop marketing the property.

The suit claims that the letter was sent after an offer was made and never
expressly cancelled the agreement to market the properties. Lawyers for
Massey Knakal said there was no assertion that Massey Knakal did anything
to violate the agreement.

“That’s the odd part,” Steven Landy with Steven Landy & Associates, who
represents Massey Knakal in the case, told The Real Deal. “There was no
issue whatsoever.”

Landy, in the lawsuit, says that one of Massey Knakal’s “founding
members” contacted McKaba and asked him to explain the letter, and
he “recanted” the letter, assuring the firm that they should continue
marketing the property and that they were not being pushed out of the deal.

Massey Knakal says it continued to show the property and received seven
offers ranging from $25 million to $30 million, but on April 18, the firm
learned that Steiner entered a contract with Nevins Realty to buy the parcels.

Massey sent a letter that day demanding a commission, and by April 25,
the escrow agent, Cullen & Dykman, contacted Massey Knakal claiming
that they indeed were canceled as the broker of record. They also filed a
$900,000 lien on all the properties.

A hearing on the injunction was scheduled for June 24. Officials would not
comment on the ruling.

Douglas Steiner, chairman of Steiner Studios and of developer Steiner NYC, “has never knowingly circumvented any exclusive broker and was unaware of any actual or arguable exclusive agency in connection with this potential transaction,” according to a spokesperson for both entities.

The properties were previously the subject of a high-profile fraud suit
by four investors, who had agreed to buy the parcels from Nevins
Realty, only to find out that the purchasers could not get clear title to the
site because two subway lines ran underneath the site. The court allowed the
buyers, who planned a 60-story mixed-use building on the site, to get out of
the deal and awarded $3.6 million in damages.

Paul Massey, president at Massey Knakal, declined to comment, citing the
ongoing case. Steiner officials were not immediately available for comment.

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