In Rushmore dispute, Extell, Carlyle ordered to post an additional $5 million bond

Judge says “respondents are clearly being deprived of the use of their money”

New York /
Sep.September 11, 2012 03:30 PM

A State Supreme Court judge ordered Extell Development and Carlyle Realty Partners to post an additional $5 million on top of a previously posted $1 million bond until a final ruling is reached in the protracted legal dispute at the Rushmore condominium.

Extell and Carlyle, which developed the 289-unit condo at 80 Riverside Boulevard on Manhattan’s Upper West Side, had filed suit against former Attorney General Andrew Cuomo’s office to overturn a 2010 order that the developers refund $16 million in escrow deposits to 41 buyers. 

Until now, the developers have refused to refund the deposits — claiming they have a legal ‘stay’ on refunding the money until a ruling on the final appeal comes down from a New York state judicial panel; that ruling is expected by October according to legal sources.

“The respondents are clearly being deprived of the use of their money,” Judge Anil Singh wrote in the order released yesterday. “Under such circumstances, the undertaking must be increased to ensure the purchasers are made whole.”

The buyers demanded the refunds after Extell, the project’s lead developer, failed to close its first sales contract by September 2008. The developers countered that the offering plan was supposed to set a September 2009 deadline and that buyers took advantage of a single-digit typo. They claimed that the buyers were really trying to exit their contracts due to the collapse of the financial markets in September 2008.

Cuomo’s office said that if such a typo existed, the developers failed to correct the error through an amendment to the offering plan and that the buyers had no way of knowing such an error existed. The developers filed suit to overturn the Cuomo order in federal court, but lost that ruling and lost multiple appeals.

Singh previously ordered the developers to post the $1 million bond and the new $5 million judgment will bring the total bond to $6 million — covering 9 percent interest that dates back to the September 2008 deadline. The $16 million in escrow funds are being held by Stroock, Stroock and Lavan, the law firm that wrote the Rushmore offering plan for the developers. The deposits cover apartment sales of about $110 million.

The buyers filed papers earlier this year demanding the additional interest payments as a way to ensure that money would be readily available if they win the appeal.

Lawyers for the buyers said they were “pleased” by the ruling, and felt the deposits were being wrongfully withheld. Carlyle and Extell officials declined to comment. A spokesman for AG Eric Schneiderman declined to comment.


Related Articles

arrow_forward_ios
One Manhattan Square Extell Development CEO Gary Barnett (Credit: Curbed NY)
Extell lands $690M refinancing package for One Manhattan Square
Extell lands $690M refinancing package for One Manhattan Square
Extell's Gary Barnett, Robert Gans and an aerial of 616 11th Avenue (Robert’s Steakhouse, Google Maps)
Investor Robert Gans files for bankruptcy to thwart Barnett, Eli Tabak
Investor Robert Gans files for bankruptcy to thwart Barnett, Eli Tabak
Extell Development's Gary Barnett and 171-179 East 86th Street (Extell Development, iStock)
Checkmate for Papaya King: Extell files demo plans on UES
Checkmate for Papaya King: Extell files demo plans on UES
Gary Barnett along with renderings of 1637 First Avenue (Extell Development, iStock)
Extell lands $125M loan for UES resi project
Extell lands $125M loan for UES resi project
Netflix co-founder Reed Hastings (Getty Images, iStock)
Netflix bids on 289-acre land in New Jersey
Netflix bids on 289-acre land in New Jersey
Gary Barnett and a rendering of 356 Fulton Street in Brooklyn (Extell Development, iStock)
Feil out, Extell in at big Brooklyn development
Feil out, Extell in at big Brooklyn development
Gary Barnett
Gary Barnett has something to say
Gary Barnett has something to say
Extell Development's Gary Barnett. Bluestone Group's Eli Tabak and 605 West 45th Street (Google Maps. LinkedIn, Extell Development)
Gary Barnett hunts lucrative Hell’s Kitchen assemblage
Gary Barnett hunts lucrative Hell’s Kitchen assemblage
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...