The Real Deal New York

Naftali sues UWS landlord over soured deal

Developer claims breach of fiduciary duties, asks for $2M in damages

January 25, 2013 04:30PM
By Hiten Samtani

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Miki Naftali

Updated: 6:27 p.m., Jan. 25

The Naftali Group has sued landlord Jack Benishai over an alleged breach of a letter of intent to sell two Upper West Side residential rental properties, according to records filed with the state Supreme Court. A request for further judicial intervention and a claim for compensatory damages of $2.12 million was made Tuesday, about two months after the initial lawsuit was filed.

The suit alleges that in April 2012, Naftali Group and Benishai executed a letter of intent for Benishai to sell a 50 percent stake in 250 West 76th Street — a four-story, 4,868-square-foot building and 252 West 76th — a 11-story, 50,600-square foot building for $12.5 million to the Naftali Group. The letter further established an “exclusivity period,” in which Benishai would refrain from negotiating with third parties to sell any interest in the buildings. The Naftali Group paid a $20,000 deposit for this exclusivity.

According to the Nov. 19 filing, Benishai “displayed little urgency to negotiate and finalize the contemplated transaction document,” until Naftali Group reached out to his brother, David Benishai with whom Benishai had an ongoing legal dispute relating to their co-ownership of their company, Ilan Properties. Naftali’s new agreement with Ilan Properties stated that it intended to purchase the entire property for $25 million.

But, the suit alleges, Benishai communicated with others during the exclusivity period, thereby breaching the letter of intent, and used the letter as leverage to obtain more money for the property. The suit claims that due to Benishai’s “foot dragging and inaction,” a party that Naftali was interested in bringing on board walked away from the deal, causing Naftali significant losses and putting their plans for the property into jeopardy.

“By his consistent course of conduct, it is abundantly clear that Jack Benishai did not engage in good faith negotiations with Naftali Group in order to consummate the proposed transaction,” the filing states.

Andrew Gold, an attorney for the Naftali Group, declined to comment on the suit.

The Naftali Group’s recent transactions include a $37 million purchase of a six-story Chelsea rental building from the Haruvi family. Miki Naftali, the chairman and CEO of the Naftali Group, was recently profiled by The Real Deal.

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