Jones Lang caught in $2M leasing fee dispute

Queens firm seeks REBNY arbitration with JLL to resolve Brooklyn commission fight
By Adam Pincus | February 15, 2012 05:47PM

Global services firm Jones Lang LaSalle is embroiled in a $2 million office leasing commission dispute with a top outer-borough brokerage, Sholom & Zuckerbrot Realty, over the largest lease deal struck in Brooklyn last year, court records show.

The city’s Human Resources Administration, represented by former JLL executive Peter Hennessy, inked the 400,000-square-foot lease at 470 Vanderbilt Avenue in October 2011 as part of a citywide initiative to consolidate space.

That deal generated an estimated $4 million commission, court papers say, and Sholom & Zuckerbrot claims it is owed half of that because of an agreement it signed 10 years ago with the Staubach Company, which JLL acquired in 2008. Sholom & Zuckerbrot filed a demand for arbitration with the Real Estate Board of New York last month to settle the controversy.

But instead of submitting to arbitration, JLL filed a suit in New York State Supreme Court Feb. 7 to block the process. Yesterday, Sholom & Zuckerbrot won an interim victory, when Justice Doris Ling-Cohan ruled against JLL’s petition for a temporary restraining order to halt the arbitration. The case remains ongoing, insiders said.

Hennessy, now president of the tri-state region for commercial firm Cassidy Turley, and Frank Zuckerbrot, president of Sholom & Zuckerbrot, declined to comment. JLL and REBNY did not immediately respond to a request for comment.

JLL is currently in control of the commission, a source said.

But the dispute is nuanced, said several people familiar with the case who did not want to be identified talking about active litigation.

Papers filed by JLL Feb. 7 say Hennessy, then at Staubach, signed an agreement in 2001, to represent the city in lease transactions. To assist in that work, in February 2002 Staubach signed the deal with Sholom & Zuckerbrot, which generally gave the Queens firm a 50 percent share of lease deals. Sources said the smaller brokerage was brought on because of its deep relationships in the outer boroughs.

Sholom & Zuckerbrot said it has a right to a portion of the commission even though the contract with Staubach – and Staubach’s contract with the city — expired in 2007. That’s because the Queens firm has rights to “all surviving transactions arising from that expired/terminated contract,” its demand for arbitration said.

But the idea that the city would consolidate multiple locations in one space was not made until 2008, after the 2007 contract had expired, JLL papers say. In 2008, Hennessy, representing the city, began searching for ways to consolidate space, and ultimately concluded with the 400,000-square-foot lease at 470 Vanderbilt Avenue.