The Real Deal New York

HFZ Capital’s Bryant Park sale draws $5M commission fight

April 10, 2013 11:00AM
By Adam Pincus

From left: Ziel Feldman and Barry Farchi

Two boutique Manhattan commercial brokerage firms are suing the sellers of a high-profile Bryant Park development for up to $4.98 million for a commission that they claim they were denied when HFZ Capital Group, one of the sellers, spearheaded an inside deal for the same $83 million price.

Azad Property Group and Broadway West Enterprises, in papers filed Monday in New York Supreme Court, contend their buyer – Stillman Development International – was used to determine a fair market price for the 20 West 40th Street site and are owed either $830,000 or $4.98 million even though the sale wasn’t made. The lower figure represents a 1 percent commission the co-brokers say they agreed to; the higher amount is based on a standard 6 percent rate if the court finds there was no commission figure agreed to.

Stillman Development International lost out when HFZ led a group to buy out one or more of HFZ’s prior partners in a deal also valued at $83 million, according to the court filing.

The lawsuit is the second in just over a month tied to the condominium hotel project expected for the site, which Ziel Feldman’s HFZ Capital, Acro Group and the Taiber family acquired in 2010 for about $46 million.

Azad and Broadway argue their potential buyer was “ready, willing and able” to purchase and the parties had “reached a deal,” making them entitled to the commission from the sellers, a group that included Ziel Feldman’s HFZ Capital, Acro Group and the Taiber family.

“In effect, [the sellers] used the services of co-brokers to procure an offer by a buyer (in this case Stillman Development) in order to fix the price at which an insider (Feldman) would purchase the property,” the complaint states.

HFZ’s general counsel and COO, Laurie Golub, broadly disputed the claims in the lawsuit, noting that other brokers had marketed the property as well and had received “numerous” offers.

“The seller strongly denies that it ever engaged these brokers or had any agreement to pay them any amount,” Golub said in a statement to The Real Deal. “In view of these facts, the seller vigorously denies the claims alleged in the complaint and will aggressively defend the action.”

Farchi, Lieblich and Stillman Development declined to comment. Acro Group did not immediately respond to a request for comment, and Taiber could not be reached.

It was not clear when the sale closed, and if one or both of Feldman’s prior partners, Acro Group and the Taiber family, sold their stake. It was also now known who the new partner was. HFZ declined to comment on these specifics.

The first lawsuit tied to the property was filed Feb. 21 by Jacqueline Finkelstein, a former senior vice president at HFZ Capital. She is seeking $12 million from HFZ for commissions she claims she was not paid for several financing deals, including one for $50 million tied to the West 40th Street site that she allegedly arranged before she was fired.

Also in February, Azad filed a lawsuit similar to the one filed Monday. The firm is suing the former owners of 131-137 Spring Street for allegedly backing out of a deal with its buyer, Vornado Realty Trust. SL Green Realty ended up buying the property for $122.3 million.

New York State law allows a broker to claim a commission even if there is no contract or if a deal is not concluded as long as they can prove they brought a “ready, willing and able” buyer and the seller agrees to sell. But insiders said it is a high burden to prove a buyer was actually able to complete the deal, especially if no contract laying out the fine points of a deal was executed.

“Legally you can [make the claim], but as a practical matter it is almost impossible to prove,” without a clear paper trail, said Howard Rubin, a partner at the law firm Goetz Fitzpatrick, who was not involved in the HFZ dispute.

The suit alleges that Azad principal Barry Farchi and Broadway principal Gerald Lieblich spoke with Israel Taiber, as a representative of the seller in November 2012, and Taiber allegedly said he could authorize the sale of the parcel.

Over the next few weeks, Farchi and Lieblich found Stillman Development, which allegedly agreed to the $83 million price, and in a Jan. 7 conference call with Taiber, the brokers and Taiber agreed to the terms of the deal, court papers show.

To formalize the deal, on Jan. 10 the brokers sent a letter of intent from Stillman Development to the seller stating the terms of the deal as laid out by the seller, the complaint says.

But then the next day, Jan. 11, Feldman allegedly called Stillman Development and notified the firm that Feldman would be leading a new group to buy the property.

To publicly note a claim of the commission, Farchi and Lieblich on March 14 recorded an affidavit of entitlement to commission for completed brokerage services, which is similar to a lien, on the property, city records show.

  • come on

    Did these guys never loose out on a deal before? Jeez….

  • Sal

    This is what happens when greedy owners try to screw brokers, good for them stand up for your right.

  • Peter

    3 different groups suing for commissions not paid, Hmmm… it don’t not pay to be a crook people. Honesty is less expensive in NYC with attorney fees of over $400

  • Jake

    How many Lawsuits is HFZ involved with? It looks like they are getting sued once a week, I like to me their attorney.

  • MAF53

    Azad sound like they are a bunch of rookies

    • Peter

      And you sound like you lost a bunch of deals to them…lol

  • ykber

    Hope everyone gets what they deserve

  • Pathetic

    If brokers got paid for delivering an LOI there would be a lot of broke landlords. This is a joke.

    • Jake

      You are a joke sir, when owners shop around an LOI that is a joke. First read then comment. HFZ deserves what is coming to them, they screw buyers, brokers and whomever they want, every dog has his day.

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