Core wins termination fee at stalled site

Award may be hard to collect as Midtown project’s investors face $33M lawsuit

TRD New York /
Mar.March 31, 2010 03:42 PM
From left: Shaun Osher, head of Core Group, the site at 158 Madison Avenue and the exterior of the building at 158 Madison Avenue (building photo source: PropertyShark)

Shaun Osher’s Core Group Marketing won a 17-month battle for a $113,800 termination fee it said it was owed after being fired in 2008 as the exclusive sales and marketing agent on a stalled condominium project at 158 Madison Avenue

The ruling may be hollow, however, because investors in the vacant, T-shaped parcel that has frontage on Madison Avenue and 32nd and 33rd streets, are fighting a private lender seeking to recover $33 million from a loan that is in default on the property.   

In October 2008, Core residential real estate brokerage sued the property owner, an affiliate of John Rice and Joseph Ingrassia’s Capstone Business Credit for the termination fee, calculated at $27,777 per month as laid out in a written agreement from when it was hired in November 2007 until it was fired in March 2008. 

State Supreme Court Justice Marcy Friedman sided with Core against the ownership entity, 158 Madison Ave Associates, awarding the $113,800 fee plus interest and legal expenses, the ruling published March 25 shows.  

The amount of money was just a fraction of the potential $4 million that Core could have earned had the project gone forward, the decision says. 

Osher was traveling and was not available for comment, a spokesperson with the company said.  

Scott Brody, a partner with Brody O’Connor & O’Connor, representing the owner, said Core had not provided good service in its short stint at marketing, leading to the firing after just five months.  

“My client terminated Core because Core was not doing a satisfactory job and unfortunately [the developer] will be stuck paying them because they agreed to the termination fees,” Brody said. 

But Brody added it may be hard to collect because the project is in financial distress. 

In September 2009, Midtown private lender North Hill Capital Management, through its fund called North Hill Funding of New York, sued the project’s investors to recover guarantees over a defaulted $34 million loan. 

North Hill Capital is a direct lender as well as buyer of distressed notes, according to its Web site.  

The owner  assembled the site through the purchase of four parcels between April 2007 and January 2008 from four sellers, for a total cost of $42.9 million, city property records show. 

In March 2008, the developer won approval from the Department of Buildings for an Ismael Leyva-designed building with 38 floors and 101 apartments. The T-shaped site has 92 feet of frontage on 33rd Street, 25 feet on 32nd Street and nearly 25 feet on Madison. 

Construction never advanced, however, and today the city includes the parcels on its stalled sites list, but not as one posing a hazard. A recent visit to the location revealed that about a half-dozen computer monitors have been dumped on the site, along with large pieces of concrete. 

The North Hill suit, filed in New York State Supreme Court, is seeking the payment of guarantees from Capstone, Rice, Ingrassia and three other related entities, following the default in January 2009 of the $34 million loan, the suit says. 

The suit, claiming a breach of contract, is seeking a $32.8 million judgment against the guarantors. It is not a foreclosure suit, which would seek the sale of the property. 

Vladimir Shneyder, a principal with North Hill, declined to comment. 

Capstone did not respond to a request for comment.

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