No redemption for developers in dispute with UWS church

Cheever Development had started excavation for condo project at 814-816 Amsterdam Ave. prior to the crash

St. Michael's Church at 225 99th Street on the Upper West Side
St. Michael's Church at 225 99th Street on the Upper West Side

St. Michael’s Church has been absolved of claims that it owed Cheever Development’s Getz Obstfeld and Matthew Lonuzzi $14 million, after it backed out of an agreement to sell them a development site on the Upper West Side.

The developers executed a memorandum of understanding with the church in 2008 saying that they would buy 814-816 Amsterdam Avenue, located at 100th Street, and develop a 14-story, 69-unit condo building. The agreement stated Cheever would give three condo units to the church, and share profits from the project.

Obstfeld and Lonuzzi were so confident in the arrangement that they began excavation on the property and installed a partial foundation in order to secure 421a tax benefits before its expiration that year, even though the parties had no formal sale contract.

But, according to Proverbs 21:5: “Everyone who is hasty comes surely to poverty.” During the recession, they lost financing, and when they tried to move forward with the project years later, St. Michael’s had other ideas. Two other developers had approached the church with unsolicited offers, and its wardens informed Obstfeld and Lonuzzi they thought it responsible to explore other options and drop the old agreement.

The developers sued in 2013, and the New York Supreme Court found last summer that they were not entitled to specific performance under the contract, nor were they owed damages for lost profits. Obstfeld and Lonuzzi lost their appeal Tuesday, though one claim for out-of-pocket damages which could win them $500,000 still remains.

Michael Smith, a governing member of the church, said that the church is working with Jon Epstein of Avison Young to list the property and find another buyer to develop the still-vacant parcel.

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“It’s premature to comment on what we might actually build,” he said.

The church, which is located at 225 West 99th Street, is experienced in real estate transactions. In 2005, it sold 70,000 square feet of air rights to Extell Development for its Ariel West tower.

An attorney for St. Michael’s, Elan Dobbs of Katsky Korins, said he believes both courts got it right.

Representatives for Cheever did not immediately respond to requests for comment. The firm still has the St. Michael’s project listed on its website.