The Real Deal New York

Heiberger files restraining order against Sitt

Sitt claims Heiberger has not met financial targets, Heiberger calls Sitt's tactics "thuggish"
By Katherine Clarke | February 26, 2014 06:45PM

Town Residential founder Andrew Heiberger filed an application for a restraining order and a preliminary injunction today against his investment partner at the firm, Joseph Sitt.

The restraining order request, along with an accompanying injunction petition, is the latest development in the ugly battle between the two partners. Late last month Sitt terminated Heiberger’s contract as CEO. The two each own 50 percent of Town, which launched in 2010 and now has more than 600 brokers and 10 offices.

Today’s development is an attempt by Heiberger to prevent Sitt from making any decisions regarding Town without his consent and to stop Sitt from forcing a sale of Heiberger’s stake in the company. It would also allow Heiberger, who has been shut out of Town’s Irving Place headquarters, back into his office.

Heiberger also claimed that Sitt seized his emails and his assistant’s and removed him as an authorized bank signatory for the company, causing “irreparable harm” to the firm.

“Defendants have not and cannot cite any authority to justify their thuggish tactics,” Heiberger said in his restraining order request, which was filed in New York State Supreme Court.

But the latest court documents also provide the first real look at why Sitt terminated Heiberger. According to Sitt’s termination letter, which was included in today’s court filings, Heiberger failed to repay Thor its investment within the three-year timeframe that the two agreed upon in 2011.

“Thor has made capital contributions of $10.4 million, and has received no distributions or preferred return, let alone a return of all of its investment,” the letter states.

Sitt also said in his termination letter that Town did not meet the financial targets it was required to in order to get its 2014 budget approved by Thor. On a more personal front, Sitt alleged that Heiberger paid for unapproved expenses, including a personal driver he allegedly hired and charged the company for retroactively without permission. In addition, Sitt accused Heiberger of making financial commitments to employees, brokers and vendors without Thor’s approval and making plans to open new offices without informing Sitt.

In today’s court filing, Heiberger denied all of Thor’s accusations, arguing that he made all financial information relating to Town available to Thor.

Among other things, Heiberger’s restraining order is an appeal to deny Sitt the right to buy him out of his stake at Town for its “book value,” the value of the stake minus intangible assets and liabilities. Presumably, the book value of the firm would be substantially less than what the company could sell for on the open market.

Thor also alleged that Heiberger fraudulently induced Thor to made an unprecedented capital call in February 2013 to meet the firm’s payroll, when it turned out that the payroll had already been met. And Thor claimed that when it demanded Heiberger enforce a non-compete agreement for a former employee, Heiberger directed the company’s attorneys to back off.

While the employee was not named in the termination letter, Town filed suit against its former new development chief, Reid Price, last year, claiming he owed the firm nearly $500,000 and breached a non-compete agreement by accepting a job offer from rival Douglas Elliman. That litigation is ongoing.

Heiberger said he only directed the attorneys to back off from the non-compete because they’d advised him that there was very little chance of success.

“Mr. Heiberger knows full well that his agreement provided for his termination in numerous events – many of which occurred — and it is unfortunate that he has chosen to go down this path,” said a spokesperson for Sitt. “Town is a special place full of some of the hardest-working, most talented professionals in the business, and they deserve to be fully supported in all of their efforts. We will not be distracted by Mr. Heiberger’s wrong-headed and selfish litigation, and will stay focused on Town’s ascent to the top of the residential brokerage business.”

Attempts to resolve the dispute between he and Sitt were made as late as today, he claimed.

Heiberger alleges in the restraining order request that Sitt assured him in recent conversations that he would be restored as company CEO and that his termination notice would be rescinded. Based on those assurances, the company issued a press release telling its staff that the dispute would soon be resolved, he said. However, no reasonable settlement has been reached.

In the meantime, Town has already begun to see major agent departures. Earlier this week, Patty LaRocco, one of the firm’s top-producing brokers, decamped to Elliman with her five-person team.

Heiberger did not respond to a request for comment.

  • Victim of his own culture

    Funny that Heiberger is claiming that he is a victim of “thuggish” behavior from Sitt.
    I don’t know anything about Town, but I do know from very intimate, personal experience that in 2007-2010 there was a very distinct a culture of “thuggishness” prevailing amongst almost all of the Managing Directors at Andrew’s former firm, Citi Habitats. Some of those Managing Directors actually went to Town with Andrew. Therefore, I have to assume that they just continued their thuggish ways at Town. I wonder who instilled that culture into the Managing Directors? Usually, it’s from the top down. Oh, how the tables have turned. No employee or agent likes the boss to be a thug. Now Andrew, as Sitt’s junior partner, will learn that lesson the hard way. He is now a victim of the attitude he fostered or turned a blind eye to when it came to the way his Managing Directors treated his agents.

  • BetterCallSaul

    Get the popcorn this is just getting started folks!

  • REalRapper

    Heiberger lost 6 million Sitt lost ten don’t need to be a founder of urban compass to see how this is gonna end
    Sitt called Heiberger a thug come on guys we are from the same Town where is the love
    Andrew got locked out of his office and his emails went poof
    i just got a flash back is this a spoof
    history repeats itself its wild and
    somewhere Igal Feibush is smilin’

  • REalRapper

    Heiberger lost 6 million Sitt lost ten
    don’t need to be a founder of urban compass
    to see how this is gonna end!
    Sitt called Heiberger a thug?
    come on guys we are from the same Town
    where is the love????
    Andrew got locked out of his office
    and his emails went poof
    i just got a flash back is this a spoof
    history repeats itself its wild and
    somewhere Igal Feibush is smilin’

  • hmmmm

    Great non compete coverage. I’m sure all of the current executives/managers who are being hawked by every other firm will take note of this! Perhaps the real deal will get sued for informing everyone that their non compete is not enforceable

  • Pity

    Joe Sitt is the most despicable person in NYC real estate- Andrew made a deal with the devil

  • Whistleman

    The jaded millionaire & the jaded billionaire swinging their you-know-whats around publicly with no regard for the agents working at Town who are being affected by their inability to handle this situation behind closed doors like everyone else. Yes, folks, the other firms have all had nasty disputes, but they didn’t go public with them. Thanks to these two, all of the unethical agents out there at other firms will use this press to slander Town & win pitches against its agents. Good job guys. Both are great examples of the fact that money doesn’t buy you class. Although, I guess that doesn’t say muchc. Just look at Pam Leibman – who would eat her own young, Lorber who gives agents listings in exchange for sexual favors & Herman who snaps her gum while making a speech.

  • DavidVsGoliath

    Read the injunction here:
    Reads very well. My belief is that Heiberger will 100% be back in charge once a judge dissects this.

  • Sam

    Who knows the true story but at citi habitats heiberger was always a slimy business man.

  • Anonymous

    They also did not go after Matthew Van Damm when he violated his non compete. Why all the drama over Reid?


    TOWN is Officially a SITT Show….

  • shoe on the other foot

    I’m shocked Andrew would put himself in this position over a loan that amounts to short money. Better to grow the company organically than to take on a financial partner that could show you the door if the wind blows that wrong way. This is Manhattan where money is everywhere. Was the arrangement with Sitt the only option? Just a terrible decision from someone who’s own MO was keeping everyone around him on edge with short term employment contracts.

  • “Shark Tank”

    In real estate money talks, BS walks… Sitt has terminated Andrew?
    Go figure!!!

  • younglucifier

    this is a shame town has so many rising stars…. I wish them the best on their journey to the top without these knuckle heads fighting over the amount of money of their summer homes in the hamptons…

  • guest

    Airing the “dirty” laundry like this does not bode well for a young company. In my experience, the one who whines the most is the one that needs to go.

  • confucius

    That which make you, can also break you.