The Real Deal New York

Stroock moves to toss Tribeca Summit malpractice claims

Law firm calls suit “wishful thinking” from failed developers

January 02, 2014 08:00AM
By David Jones

Tribeca Summit at 415 Greenwich Street

Tribeca Summit at 415 Greenwich Street

The law firm Stroock Stroock & Lavan has asked a state judge to dismiss an $80 million legal malpractice suit filed by Tribeca Summit developers Joel Silver and Ethan Eldon, contending that they failed to outline the firm’s specific missteps.

Silver and Eldon, the original co-developers of the troubled condominium project at 415 Greenwich Street, filed suit in October claiming that the law firm provided an inexperienced lawyer who failed to advise them of a bankruptcy option after they defaulted on a $47.1 million loan from KBS Capital in 2009.

KBS gave the developers eight months to repay the funds, but later took control of the property’s mezzanine and mortgage debt from lenders AIG and Sun America.

However, Stroock, in a Dec. 26 filing in New York State Supreme Court, argued that the case represents little more than “wishful thinking” from a pair of unsuccessful developers looking to pin the blame on somebody — after losing an arbitration case against the main construction firm and a suit against their lenders.

“The bankruptcy route to this pot of gold that they postulate is, in fact, an obstacle course with one steep challenge after another,” Stroock said in its motion. “Of necessity, the complaint assumes success at every step of the way. … [A] malpractice complaint cannot simply rest on this type of speculation.”

Silver referred calls to his and Eldon’s lawyers, who were not immediately available for comment.

Silver and Eldon, operating through a company called Heritage Partners, originally hired Stroock in 2003 for the project. The developers acquired the landmark 205,000-square-foot building for $60 million, and signed a deal to convert it to 63 apartments, including 53 lofts, seven townhouses and three penthouses, plus commercial space and a parking garage.

The property ran into extensive construction delays and the New York State Attorney General eventually ordered the developers to rescind buyers’ contracts.

The developers pledged their “membership interests” in the loans used to develop the property, which effectively meant that once they defaulted, any profits they could have claimed go directly to the lenders, according to Stroock’s court papers.

Stroock attorney Bruce Schneider declined to comment.

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