Maverick handed court win in battle over stalled hotel

Panel's ruling paves way for foreclosure on DAB's troubled Allen Street project

New York /
Feb.February 27, 2014 10:55 AM

A five-judge appellate court panel ruled unanimously in favor of Maverick Real Estate Partners, which fought a three-year legal battle to foreclose on DAB Group’s stalled Allen Street hotel project on the Lower East Side, according to lawyers for the plaintiff.

Maverick, a distressed asset specialist led by David Aviram and Ted Martell, originally acquired a defaulted $5.5 million loan from Brooklyn Federal Savings Bank in 2011, and filed the suit to foreclose after brokers were unable to sell the stalled 16-story project.

Lawyers for DAB won an earlier ruling from Manhattan Supreme Court Judge Charles Ramos after successfully arguing that lenders reneged on a promise to extend the loan deadline. But the appellate court ruled that the extension was only mentioned in an internal ’workout committee memo,’ and the developer failed to secure a promise in writing.

“The record indicates that the document on which DAB relied to change the prior determination, an action plan, dated Feb. 15, 2011, was unenforceable because it was an internal bank document that the Office of Thrift Supervision, the federal oversight agency, never approved — an unfulfilled condition precedent,” Associate Justice John Sweeny wrote for the panel.

Lawyers for Maverick said the ruling will move the case back to Judge Charles Ramos, who would then move the foreclosure case towards a conclusion, possibly by March.

“There was no bad conduct,” said Morrison Cohen partner Y. David Scharf, representing Maverick. “The court said we’re on the path to foreclosure as there are no counterclaims that are viable.”

Neither DAB owner Ben Zhavian, nor attorney William Wallace, was immediately available for comment. Aviram declined to comment.

The project involved a 98 room hotel located at 139 Orchard Street, at the corner of Rivington Street, the site of a major boom in hotel, restaurant and residential development up through the real estate crash in 2008.

The loan was initially due in December 2008. The borrower subsequently received a extension to pay $19 million by September 2009, followed by three six-month extensions, until March 2011.  After the foreclosure, the property was taken over by Simon Miller, court appointed receiver and a partner at Thompson Hine, and was litigated before Manhattan Supreme Court Judge Bernard Fried, who then retired. After that, the case was transferred to Ramos.

In 2012, Massey Knakal put the site up for sale for $28 million or, in combination with a five-story mixed-use building at 77-79 Rivington Street, $35 million.

In January, the case took an apparent nasty turn when Zhavian allegedly made death threats against the new developers. In an article in the New York Post, however, Zhavian denied making any threats.

The receiver, Miller, has retained Manhattan-based builder Richter + Ratner to develop the property once it gets through the court system.


Related Articles

arrow_forward_ios
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
 Fredrik Eklund and the property (Getty, Steve Frankel)
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Gordon Ramsey and his Lucky Cat restaurant (Lucky Cat)
Gordon Ramsay to open first South Florida restaurant in Miami Beach
Gordon Ramsay to open first South Florida restaurant in Miami Beach
Grammy winner Pharrell Williams and David Grutman of Groot Hospitality (Getty Images, Groot Hospitality, TripAdvisor)
Pharrell, David Grutman teaming up on 400-key Bahamas resort
Pharrell, David Grutman teaming up on 400-key Bahamas resort
From left: Edith Hsu-Chen, Dan Garodnick, and Eric Adams (Getty Images, Department of City Planning)
Adams taps new leaders for City Planning
Adams taps new leaders for City Planning
1107 Fifth Avenue and Richard Eisner (CityRealty, The New Jewish Home)
EisnerAmper co-founder sells Carnegie Hill co-op for $35M
EisnerAmper co-founder sells Carnegie Hill co-op for $35M
Michael Gronager, chief executive officer, Chainalysis, in front of 114 Fifth Avenue (Chainalysis, LoopNet/Illustration by Steven Dilakian for The Real Deal)
Crypto data firm doubles space at Flatiron office
Crypto data firm doubles space at Flatiron office
24-09 Jackson Avenue in Long Island City, Queens (Google Maps, Wikipedia)
Stalled LIC hotel development site up for sale
Stalled LIC hotel development site up for sale
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...