New York developer Joe Bobker is seeking up to $60 million from law firm Herrick Feinstein and Grand Pacific Finance, a Flushing, N.Y.-based lender, claiming they conspired to collect on a loan for a condominium development that he said he has almost entirely paid off.
The dispute stems from a 2009 lawsuit that Grand Pacific filed against Bobker’s sons, Eli and Ben Bobker — principals of the Bobker Group, a New York City development firm — after they allegedly defaulted on $6.5 million in mortgage loans backed by the 127-unit project, called Hale Terraces, in White Plains, N.Y. Grand Pacific sought a total of $8 million, which included a third loan for $1.6 million personally guaranteed by Joe Bobker.
However, Grand Pacific sold the loan in 2007 to an entity called 366 Madison, which was controlled by Michael Lin, the chairman of Grand Pacific, he claims in a lawsuit filed March 18 in New York State Supreme Court. Lin hid his role in the loan deal — a fact he later admitted in a deposition, according to court documents.
Grand Pacific, which was represented in the 2009 suit by Herrick Feinstein partners Scott Tross and Rachel Engelstein, told a court-appointed referee in 2010 that Bobker owed a total of $2.45 million, which included interest and penalties.
However, Bobker claims that he owed a mere $100 following the sale of the note. Moreover, the Herrick Feinstein attorneys also knew the loan had been sold to 366 Madison because the firm had reviewed “all underlying loan documents,” Bobker claims in the lawsuit, citing the law firm’s client billing statements.
Nevertheless, a state Supreme Court judge issued a $2.45 million judgment against him, although discovery — or the sharing of documents and evidence in litigation — had not yet been allowed in the case. According to court documents, Lin was both an officer of the lender, and his firm was considered part of the borrowing group.
Bobker said in court papers that he first learned of the loan payoff a year after the judgment, when the information came out through discovery in a separate lawsuit. Grand Pacific filed that suit, in Westchester County, to foreclose on the original $5.3 million mortgage on the condo development.
“When Herrick Feinstein first got this lawsuit they thought it was a straight, ordinary debt collection and went full steam ahead,” said a source familiar with the litigation. “They really couldn’t come forward, they needed to create a firewall.”
Officials from Grand Pacific could not be reached for comment. Bobker Group officials could not be reached for comment.
“These are baseless claims arising out of a judgment entered against this plaintiff and affiliated entities,” Herrick Feinstein said in an emailed statement. “We shall fight these claims vigorously and prevail.”
The Bobker Group is a Manhattan-based developer behind residential condos including Morgan Lofts, the Andres Escobar-designed development at 11 East 36th Street, and several condo developments in Brooklyn, including Village Terrace in Gravesend and Prospect Terrace in Park Slope.
Joe Bobker is also chairman of the Morgan Investment Fund.
Correction: A previously published version of this story misidentified the relationship between the plaintiff and the principals of the Bobker Group. They are his sons, not his brothers. The earlier version also misstated total damages being sought and the alleged seller of a mezzanine loan to a third-party firm.