OUT hotel co-founder sues former business partner over ownership stake

Developers of NYC's first gay hotel are feuding
By Hayley Kaplan | May 31, 2013 12:30PM

The three co-owners of the OUT NYC, the city’s first gay hotel, have had a falling out, as it were. Architect Paul Dominguez sued his former business partner, developer Ian Reisner, claiming that he refused to hand over a promised ownership stake in the 105-room hotel, at 510 West 42nd Street.

Dominguez filed the suit Wednesday in New York State Supreme Court alleging Reisner, the co-founder of Parkview Developers, violated a Feb. 1 contract that required him to transfer shares of 42nd Street Holdings, the entity that owns the OUT, to Dominguez.

Dominguez contended in court documents that he held up his end of the bargain — to release Reisner from other business claims — bringing an end to their business dealings from 1995 to 2010. But Reisner allegedly failed to make the transfer. Dominguez is seeking $625,000 in damages, or what he said in court documents was the value of the ownership interest.

Reisner declined to comment on the suit, as did Dominguez.

The OUT, situated on 42nd Street between 10th and 11th avenues, also includes the XL Nightclub, Ktchn restaurant and a 5,000-square-foot spa. The three-story hotel opened in early 2012 and has advertised itself as “New York’s first gay urban resort.”

Dominguez and Reisner, along with Parkview’s Mati Weiderpass, have been in business together for over 17 years, the firm’s website shows.

But it appears that the partners’ disagreements over the OUT go back several years. Dominguez formally left the project about a year ago but still owns profit shares of 42nd Street Holdings, according to a source familiar with the situation.

The hotel was originally set to be five stories, with 127 rooms and an 11,000-square-foot wellness center, spa and gym, according to a 2010 prospectus of the building obtained by The Real Deal. The final hotel turned out to be a significantly smaller operation because of budget overruns, the source said.

However, the Reisner and Weiderpass are planning to open another OUT location in Chicago.