A legal battle between the developers of the Rushmore and 41 condominium owners looking to get their deposits back is heating up, following the rejection of the developers’ case by the New York attorney general and a federal district court, the Wall Street Journal reported. The developers of the Rushmore, at 80 Riverside Boulevard, a partnership between Extell Development and Carlyle Realty Partners operating under the name CRP/Extell, were slated to petition the court today to review what they call Attorney General Andrew Cuomo’s “arbitrary and capricious” ruling in April, when the AG ordered the return of $16 million in security deposits, according to Gary Barnett, president of Extell. The deposits equal more than $100 million in sales and would amount to one of the largest refunds ever. The case focuses on sales contracts which said that buyers would be entitled to the return of their deposits if at least one sale didn’t close by Sept. 1, 2008. The first closing didn’t occur until February 2009. The developers have said the date was intended to be Sept. 1, 2009, and that the documents contained a clerical error. Attorneys representing the buyers have argued that the contracts need to be enforced as written. [WSJ]

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A federal District Court judge dismissed a lawsuit by Carlyle Realty Partners and Extell Development against Attorney General Andrew Cuomo and ordered the release of $16 million in escrow deposits to buyers at the Rushmore condominium.

The combined entity, CRP/Extell, filed suit against Cuomo in May after he allowed 41 buyers to back out of their contracts at the condo, at 80 Riverside Boulevard. CRP/Extell argued that Cuomo deprived them of their 14th amendment rights when he ordered the rescission of the contracts. Judge George Daniels sided with the AG, who contended that the proper forum for an appeal was a so-called Article 78 lawsuit in New York State Supreme Court, and that federal court had no jurisdiction over the matter.

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The Rushmore and Gary Barnett, head of Extell

In a last minute and stunning move, the developers of the Upper West Side’s Rushmore condominium filed a federal lawsuit yesterday against state Attorney General Andrew Cuomo seeking to reverse his April rescission order to refund more than $16 million in escrow funds to buyers.

The developers, Extell Development and Carlyle Realty Partners, operating under the name CRP/Extell, also filed a motion in U.S. District Court seeking a temporary restraining order that would block the release of the funds, which include down payments for more than $110 million worth of apartments.

The developers expanded on their previous claims by arguing that a drafting attorney committed a typo or “scrivener’s error,” and claimed that Cuomo’s office failed to allow them to collect evidence or cross-examine the condo buyers on their true motivations for filing the claims, which CRP/Extell claims were to negotiate lower prices in a down market. [more]

Lawyers for Carlyle Realty Partners and Extell Development, the sponsors of the Rushmore condominium on the Upper West Side, said they plan to challenge last week’s order by Attorney General Andrew Cuomo to refund the deposits of 41 buyers, according to a court filing obtained by The Real Deal. In a letter to state Supreme Court Judge Debra James, lawyers for the sponsor, CRP/Extell, said they plan to file a so-called Article 78 that will challenge the AG ruling, and continue to argue that the disputed Sept. 1, 2008 rescission date was a “typographical error,” that should have been excused. “The AG decision concludes that certain purchasers have a right of rescission based on an obvious typographical error in a single digit in the 757-page offering plan for the Rushmore,” said Simpson Thatcher attorney Laura Murphy, who represents the two companies. The letter was in response to a demand by lawyers for Rushmore buyer Kelly Coffey to get documents and other evidence from CRP/Extell. Coffey, a managing director at JPMorgan Chase, is not one of the 41 buyers that complained to the AG, but filed a lawsuit in state Supreme Court seeking a return of her deposit. [more]