Massey Knakal partner dispute sent to arbitration

By Adam Pincus | September 02, 2009 10:41AM

alternate textBroker Timothy King (left) is suing Paul Massey’s firm Massey Knakal

A lawsuit filed last year by a minority partner of the Brooklyn office of Massey Knakal Realty Services was ordered to arbitration this week, in a move one independent observer called a victory for the commercial brokerage.

Timothy King, a former COO with Massey Knakal, sued the brokerage in July 2008, alleging among other things that the company was poorly run, was lending money to itself improperly and made false statements on tax filings.

But those allegations had a slim chance of holding up in court, Brooklyn Supreme Court Justice Carolyn Demarest said in her ruling issued Monday, and instead she sent the case, including charges, to arbitration.

The move to arbitration, sought by Massey Knakal, appeared to be a tactical win for the firm, attorney Darren Oved, a litigation partner with law firm Oved & Oved, said.

Justice Demarest “not only gave the defendants a victory by moving the litigation to a more private forum, but also affirmatively stated that, ‘plaintiff had failed to demonstrate a sufficient likelihood of success on the merits,’ which is not a statement that arbitrators are likely to ignore,” Oved said. His firm is not involved with the litigation.

King, now a principal with Brooklyn sales and leasing firm CPEX Real Estate, declined to comment, citing the ongoing case.

Paul Massey, CEO of Massey Knakal, said, “Ending a partnership is never easy and we wish the best to Tim building a leasing business in Brooklyn.”

King became a partner of the Brooklyn office in 2002 and was given a 10 percent share of that entity. Paul Massey and company chairman Robert Knakal own 70 percent of the Brooklyn entity, while other partners hold the balance, court records indicate.

In 2002, King was the manager of the Brooklyn office, and was then promoted in 2004 to COO for the entire citywide brokerage, based in Manhattan. After a forced, but paid, leave of absence in 2006, he returned as co-manager of the Brooklyn office, but was fired in February 2008, court papers say.

The lawsuit he filed in June 2008 was a so-called derivative suit, meaning King as a shareholder in the company was suing on behalf of all shareholders who are allegedly being harmed by the company’s actions.

Within 90 days of termination of employment, company bylaws say a former employee must sell his shares. King’s share was valued at about $770,000, but he did not accept that sum, the judge wrote.

“Defendants contend that the sole purpose of the [lawsuit] is to put pressure on them to improve their buy-out offer. Such contention has not been denied by [King],” Demarest wrote. King has argued in previous court papers that the firm’s poor management made it difficult to determine the true value of his shares.