Beaver House developer in contractor suit

By David Jones | July 29, 2008 02:49PM

William Beaver House, the high-profile Lower Manhattan condo tower developed by Andre Balazs and SDS Investments, is facing a $5.5 million lawsuit by a Brooklyn contractor that filed a mechanic’s lien against the building over a disputed payment.

DFC Structures filed suit in New York State Supreme Court in February alleging that the owner, SDS William Street, failed to make full payment on about $40 million worth of construction work, which included encasement of steel beams and columns.

SDS William Street is an affiliate of SDS Investments, a private real estate firm led by developers S. Lawrence Davis and Alex Sapir, president of the Sapir Organization. Balazs is partnering with SDS on William Beaver House. The 330-apartment ultra-luxe building is at William and Beaver Streets.

The suit claims that DFC Structures was paid about $34.2 million and that a mechanic’s lien was filed with the New York County Clerk after the owner failed to pay the balance of the funds.

“There’s a dispute over the method of payment for structural steel,” said Allen Ross, an attorney for the contractor.

A hearing related to a motion to Dismiss The Charges Before State Supreme Court Judge Jane Solomon is scheduled for Thursday.

William Beaver House officials were not immediately available to comment.

While the situation at the Beaver House remains unclear, Barry LePatner, a New York-based lawyer and construction expert, said these types of disputes are becoming more common as the real estate boom slows down, leaving contractors with fewer construction contracts and developers with less income to pay them.

“Contractors across the city, across the state, were billing for huge amounts of extras because developers were making substantial profits on almost every project,” said LePatner. “There was not a huge amount of protracted litigation and there were quick settlements without contesting many of these claims.

“This is going to get increasingly more common, as contractors finish off five projects and are lucky to replace them with two, and as developers don’t have enough projects in the pipeline.”

Also named in the case were Travelers Casualty and Surety Co., Federal Insurance Co., Fidelity and Deposit Co. of Maryland, Liberty Mutual Insurance Co. and Istar FM Loans.

The insurance firms in January posted a bond with the New York County Clerk, which would be used to pay the balance of the claim and prevent any long-term claim directly against the building.

“It is typical when a bond is filed that in construction disputes when you sue to dispose a mechanic’s lien, you name the sureties that have issued the bond as the party’s defendant,” said Dan Millstein, attorney for William Beaver House.

Millstein confirmed that the case against iStar FM Loans was dropped earlier this month. He would not comment on specifics of the case against William Beaver House.

The developers say they have sold 71 percent of the building’s 320 units, with one unit reportedly selling for $5.7 million in November 2007, a record for the Financial District. Listed prices range from $945,000 to $3.7 million, according to

Earlier this month, SDS entered into a $14 million second mortgage agreement with iStar Financial.

Department of Buildings records show that William Beaver House was cited in May for operating a seventh floor showroom and sales office without a proper certificate of occupancy.