Court denies dismissal of suit against Herrick Feinstein at Turtle Bay crane collapse site

February 28, 2013 10:00AM

A New York state appeals court refused Tuesday to dismiss a lawsuit brought by Arbor Realty Funding against Herrick Feinstein LLP over allegedly bad zoning advice on a Turtle Bay condo project that was the site of a 2008 crane collapse, Law360 reported.

In the 2011 suit, Arbor alleged that it would not have provided $70 million in bridge financing for developer Jim Kennelly’s luxury residential project at 303 East 51st Street, had it not been for Herrick’s bad advice about the zoning regulations for the planned 42-story tower, as The Real Deal previously reported. 

For its part, Herrick contends that Arbor’s losses were caused by other factors, including the crane collapse which led to seven deaths and millions of dollars in structural damage, as well as the housing market crash and Arbor’s sluggishness in responding to Department of Building requests.

The appeals court, however, concluded that there was enough evidence to let the suit stand. “It appears that potential takeout lenders had concerns about the zoning issues even before March 2008,” the court said. “To the extent later events contributed to plaintiff’s loss, they are properly considered by a fact-finder.”

“We’re very pleased with the result,” Vincent Syracuse, an attorney for Arbor, told Law360. “It is a total vindication of the position that we’ve asserted in the trial courtAnd Appellate Court.”

“We are disappointed that the matter was not dismissed summarily without the need for discovery but we expect to prevail on the merits when the case is ultimately decided,” Herrick Feinstein told Law360 in a statement. [Law360]  —Hiten Samtani