The Real Deal New York

Extell faces contempt charge in escrow dispute with banker

JP Morgan exec says developer failed to return $440K after UWS condo purchase fell through

July 30, 2014 04:15PM
By David Jones

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From left: Gary Barnett and 80 Riverside Drive

Gary Barnett and 80 Riverside Boulevard

Lawyers for Extell Development are scheduled to appear in court next month on a possible civil contempt charge amid claims that the developer is refusing to hand over $440,000 to a bank executive in a long-running dispute at the Rushmore condominium on the Upper West Side.

Lawyers for Kelly Coffey, deputy CEO (U.S. Private Bank) at JP Morgan, allege that Extell has refused to return more than $440,000 in interest and other expenses after the firm lost an escrow case where Coffey backed out of a $6.9 million apartment purchase at the Rushmore, located at 80 Riverside Boulevard.

Attorney Marc Held, who represents Coffey, says that lawyers for Extell as well as the escrow agent, Stroock, Stroock and Lavan, have defied repeated court orders to release the money. He also claims that the lawyers for Extell have given direct instructions to the bond company not to release the funds.

“Despite the plaintiff’s unanimous victory in the Appellate Division, with costs, the defendants continue to disregard the order of the court and release the bond to the plaintiff in payment of the judgment,” Held said in a statement. “As such, it has necessitated the plaintiff to file a motion to the Supreme Court ordering the defendants to be held in contempt and accountable for their blatant disregard of the court’s directives.”

According to court documents filed July 25 in Manhattan Supreme Court, lawyers for Extell, as well as Stroock, Stroock & Lavan and U.S. Specialty Insurance Co. have been ordered to appear for questioning at the Aug. 25 hearing.

Jason Cyrulnik, a Boies Schiller partner who represents Extell in the case, denied the allegations, noting that the funds are being held pending the end of any legal challenges.

“There is some money being held by a court approved bond company,” he said. “There‘s no issue apart from procedures being followed.”

Bruce Schneider, a partner at Stroock, Stroock & Lavan, also denied the allegations, saying his firm was just the escrow agent.

The counsel for U.S. Specialty Insurance declined to comment, as did a spokesperson for Extell.

According to court filings, Manhattan Supreme Court Justice Debra James ordered a refund of Coffey’s $1 million down payment, plus interest, in April 2013. By May of this year an Appellate Court panel unanimously affirmed that order, which means there would be no additional legal remedies.

The $440,000 is based on a penalty of 9 percent interest dating back to September 2008, the original closing date for condo purchasers at the Rushmore, according to court documents. Extell, which is headed by Gary Barnett, lost a similar case against 33 prospective condo buyers, who demanded more than $16 million in refunds of their down payments after Extell failed to begin closing sales with these buyers by the September deadline.

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