The word on the street has always been that it’s a dog-eat-dog world in the city’s largest commercial brokerage firms, but brokers rarely reveal how the cutthroat maneuvering plays out.
But now, in a bombshell lawsuit filed this month, former CBRE Group broker Jon Zuckerman provides an inside account claiming he was forced to resign and give up his lucrative MetLife account while CBRE allegedly sought to consolidate control over his clients.
The suit only names the commercial property firm CBRE (under the name CB Richard Ellis Real Estate Services) and Zuckerman’s former partner, broker Keith Caggiano, and does not name MetLife or other CBRE executives as defendants.
While similar complaints about top executives are often whispered at other firms, there are few lawsuits that tread on such a sensitive subject.
The 40-page complaint, filed in New York State Supreme Court Nov. 21, details how top CBRE brokers Mary Ann Tighe and Stephen Siegel, as well as former tri-state President Mitchell Rudin, operated in a competitive work environment that allegedly included promoting an agent who Zuckerman says stole nearly $100,000 in commissions from him between 2007 and 2008.
In the 10-count complaint he alleges interference with contracts, breach of contract and unjust enrichment among other claims. He is seeking $24 million from lost commissions and lost potential income.
“This place is a cesspool,” Matthew Van Buren, president of the tri-state office of the global commercial firm and a manager of brokers, allegedly told Zuckerman at one point, explaining why he could not help the situation.
Zuckerman, a veteran broker and attorney in his mid-50s, brokered one of the largest deals in 2010 for Avon Products while at CBRE. Now an executive managing director at Newmark Knight Frank, he declined to comment.
CBRE said in response to the litigation that Zuckerman is a disgruntled former employee, who voluntarily resigned 18 months ago to work for a competitor.
“Now he has opportunistically constructed an elaborate tale that distorts facts, casts aspersions on the good reputations of our firm and several of our senior New York professionals, and seeks compensation for prospective transactions that result from his former team’s continued success,” company spokesperson Bob McGrath, said in a statement. “Mr. Zuckerman’s claims are baseless, false and extortive in their objectives, and we look forward to vigorously contesting them in the proper forum.”
Zuckerman’s attorney, Nicholas Gravante, a partner at law firm Boies, Schiller & Flexner, would only say, “We intend to try this case in the courtroom, not in the press, and the facts will speak for themselves.” The suit was first reported by legal newswire Law360.
Zuckerman joined CBRE’s predecessor in the New York market, Insignia Financial Group in January 2002, having previously worked with Jones Lang LaSalle and later Shorenstein Realty Services. He came over with a major client in tow, insurance giant MetLife. At the same time, he brought along Caggiano, his junior associate, now a vice president at CBRE. The two formed a partnership to split deals, with Zuckerman taking 60 percent, and Caggiano 40 percent. Caggiano declined to comment.
The first sign of trouble the complaint mentions came sometime before MetLife sold One Madison Avenue to SL Green Realty for nearly $1 billion in 2005. Tighe, the complaint says, had a leasing tenant she wanted to put in the building, but that deal was blocked because of the impending sale.
“Tighe became enraged and excoriated several MetLife employees,” the suit says. “As a result, several MetLife executives told Zuckerman that Tighe was at the core of their souring relationship with CBRE in New York.”
In another flare up, the court papers say Siegel, Zuckerman, Rudin and others, at some point between 2005 and 2007 pitched to win the leasing agency for the 1.2 million-square-foot 85 Broad Street, owned by MetLife.
They lost to Jones Lang LaSalle, and were told that was in part because the firm had too many conflicts of interest Downtown between agency and tenant representatives accounts.
As a result of losing, “Mitch Rudin was irrationally angry with Zuckerman,” the complaint says, and wanted to take Zuckerman off another one of his other accounts, Avon Products. But he was not taken off the account. Rudin is now president of U.S. operations for landlord Brookfield Properties.
But that loss was followed by a win in 2007, with MetLife awarding Zuckerman the agency of 575 Fifth Avenue, a 569,000-square-foot tower at 47th Street.
Then the next year the court papers say the relationship between Zuckerman and Caggiano soured, and in early 2009 the two divided up their accounts, although remained partners on MetLife. MetLife declined to comment, noting it was not a party to the litigation.
But because the accounts were split up, Zuckerman could not see what was happening with a few deals in which he was still owed money. He says that in January 2010, he discovered that Caggiano allegedly diverted Zuckerman’s share of four lease commissions at 1 Metrotech Center in Brooklyn, to himself, totaling $98,251.
Zuckerman felt his trust was violated, and wanted Caggiano punished. Instead, the complaint says, the junior partner was given a better office closer to Zuckerman. Siegel, the papers allege, downplayed the loss, and said an improper diversion was unlikely because changing splits was “impossible without everyone being in the room and signing off,” however Siegel agreed to investigate.
Ultimately, Caggiano repaid the money to CBRE and Zuckerman was paid the sum that was allegedly absconded, the complaint says, and Caggiano faced “disciplinary action.”
A source familiar with the dispute described it as an administrative error, not an intentional theft.
Having lost faith in Caggiano, Zuckerman no longer wanted to work with him, and wanted him off the account. CBRE refused, and said it would leave it up to the client to decide. That appealed to Zuckerman, as long as MetLife was told about the alleged theft, but CBRE refused to do that, the complaint says.
Thus, given the option of working with Caggiano or resigning from CBRE, he chose the latter, he says in the complaint. And then in August 2010, Newmark announced it had hired him as an executive managing director.