The Real Deal New York

Time Warner Center condo renovation embroiled in court battle

January 30, 2013 05:30PM
By David Jones

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Vitaly Malkin

UPDATED, Feb. 8, 4:29p.m.: An entity linked to the son of Russian billionaire Vitaly Malkin is suing a Manhattan contractor for allegedly overbilling him for work on his Time Warner Center apartment. The entity, called 25 CCST74B, alleges that the contractor, Katselnik & Katselnik Group, tried to extort a multimillion-dollar contract to build out the space after the plaintiffs decided to go with another contractor for subsequent work.

The $600,000 suit, originally filed Jan. 25 in New York State Supreme Court, alleges the entity hired K&K to serve as its pre-construction manager — overseeing the initial demolition at the 3,200-square-foot duplex on the building’s 74th and 75th floors.

K&K, a boutique firm specializing in interior construction, has done work at venues such as Harry Cipriani restaurant, Barclays Bank and Aspen Fitness Center.

The complaint alleges that the firm put a $170,000 lien on the apartment after performing unauthorized work and overbilling at the site, but offered a deal to make the lien ‘go away’ if the entity granted K&K the lucrative renovation contract.

“They were acting as our New York rep in connection with this project,” said Joshua Bernstein, a partner at Pryor Cashman and attorney for the trust. “What we allege is that K&K, seeking an opportunity to make money off a wealthy foreign investor, took advantage of the confidence that had been reposed of him.”

According to the complaint, Leonid Malkin is the beneficiary of the trust. Both Malkins spend most of their time outside of New York, the complaint says.

Ark Katselnik, vice president of K&K, vehemently denied the allegations, and said he refused to enter a more extensive agreement with the investors because they would not transfer funds into a U.S. escrow account.

“My lawyer said if they do not send money to the escrow [account] do not sign the contract,” he told The Real Deal.

Jeffrey Rea, an attorney for K&K, said he does not comment on pending litigation.

The trust originally acquired the property in August 2010, with records filed with the city Department of Finance showing the purchase price at more than $15.6 million. The trust hired K&K in March 2011 to  handle demolition work and by May 2011 retained the firm as its pre-construction manager.

In October 2011, K&K hired CCS Architecture to design the new interior; however by March 2012, K&K offered to become the general contractor on the renovation. The plaintiffs and K&K were unable to come to an agreement on the terms of the contract, according to court filings. “Their prices were out of whack and they had demands that we were not willing to meet,” Bernstein told The Real Deal.

K&K asked the investors to deposit the entire construction amount into a domestic escrow account, the complaint says. A new invoice was sent in May 2012 for $170,000 for a range of construction services, including electrical, carpentry, HVAC, dry-walling and other services that allegedly were never authorized.

The trust contacted one contractor, New York Cooling Towers, and was told an invoice for $27,500 was actually for $10,500 worth of work and that K&K was overbilling, the lawsuit claims. K&K then filed a $170,000 lien in August 2012, which is being litigated in a separate case.

UPDATE: A previous version of this article stated that Vitaly Malkin was the plaintiff in this case. However, on Feb. 6, attorneys for the plaintiff amended the complaint to revise the relationship between Malkin and the entity. The latest version of this article also includes a comment from the defendant. 

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