Extell, Carlyle face contempt motion over $5M in Rushmore interest payments

TRD New York /
Mar.March 29, 2013 06:00 PM

After winning a high-profile fight against Extell Development and Carlyle Realty Partners, a group of 33 would-be buyers at the Rushmore condominium have filed a contempt motion alleging the developers flouted a 2012 court order to hand over $5 million in interest payments.

The dispute focuses on the buyers’ attempt to have Extell and Carlyle refund a collective $16 million they put down on apartments at the Rushmore, at 80 Riverside Boulevard.

In April 2010, Andrew Cuomo, then the New York Attorney General, ordered the developers to refund the deposits, saying they had missed a September 2008 deadline to close the first apartment sale. The developers disputed the ruling, saying that the date was a typographical error that should have read 2009, rather than 2008. They claimed the buyers were trying to circumvent their contracts out of fear of the economic collapse.

Cuomo’s order prompted Extell and Carlyle to file a flurry of appeals in state and federal court, arguing that the Attorney General had refused to let them cross examine the buyers to determine their true motives. But the courts rejected the legal arguments, and Cuomo’s office said it had never received such a request.

In September 2012, New York State Supreme Court Judge Anil Singh ordered the developers to hand over an additional $5 million — representing 9 percent interest on the deposits going back to Cuomo’s ruling — citing their repeated refusals to release the funds.

The developers had previously posted a $1 million bond as insurance against returning the deposits.

Extell and Carlyle claimed that they were entitled to hold on to the deposits in escrow until they had exhausted the appeals process. Lawyers for the buyers, meanwhile, argued that appealing the earlier decision did not give the developers the right to defy several judicial orders.

“Despite numerous attempts to have Extell and Carlyle Realty Partners pay interest to the court as required by Judge Singh, they’ve refused to do so, claiming they don’t have to obey court orders,” said John Coleman, a partner at Cohen & Coleman, which represents the 33 buyers.

A spokesperson for Extell said the company would have no comment, as it was closed for the holiday. Ed Normand, a partner at Boies Schiller & Flexner, which represents the developers, was in a meeting this morning and did not return calls. A spokesperson for Eric Schneiderman, who succeeded Cuomo as Attorney General, declined to comment.

A hearing is scheduled for April 5.

Schneiderman has since taken steps to move escrow disputes to state courts, in part because of this case. The dispute process had been considered a major burden on the Attorney General’s office, which also lacks the transparency of an open courtroom.

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