The retail-focused investment firm the Jackson Group, along with another local owner, used an unusual legal strategy last month to successfully fight off an effort by development company the Rabsky Group to enforce a $33 million sale of two adjacent NoMad buildings.
The Jackson Group, led by brothers Ike, Elliott and Gabriel Chehebar, and Rinel Realty asked a judge to compel the Williamsburg-based Rabsky Group to put up a $3.2 million bond while lawsuits filed in New York State Supreme Court in March over the canceled sales of 273 and 275 Fifth Avenue were pending, court records show. Complex cases of this nature can last for months or even years, meaning that money could be tied up and not available for investment or development.
But just four days after the motion was filed, all three parties agreed to a stipulation signed April 14 withdrawing the Rabsky lawsuit, a review of court documents revealed.
An attorney representing the Rabsky Group did not respond to a request for comment. Peter Sherwin, a partner with the firm Proskauer Rose, who represented the Jackson Group and Rinel Realty, declined to comment.
The NoMad properties are located in one of Manhattan’s many submarkets that have undergone significant development in recent years, and are in line for more. Kushner Real Estate Group has plans to develop a 40-story tower on the block, at 281 Fifth Avenue in partnership with Ironstate Development.
The four-story 273 Fifth Avenue has 8,060 square feet and includes a total of 26,000 square feet of development rights, while the neighboring five-story 275 Fifth Avenue has 9,269 square feet and includes 23,000 square feet of development rights, data from PropertyShark shows.
Rabsky filed the original lawsuit on March 24, along with notices of pendency against both buildings, which make it virtually impossible to sell or lease the buildings. Rabsky Group, led by Simon Dushinsky, claimed in court papers that it had signed an agreement to purchase 275 Fifth Avenue from the Jackson Group for $14.139 million and to Purchase 273 Fifth Avenue from Rinel Realty for $18.861 million.
Both sellers decided not to go forward with the sale, and on March 20 notified Rabsky that the transactions were canceled. Rabsky responded with the lawsuit.
To defeat the lawsuit and the notices of pendency, Jackson Group and Rinel requested that the case simply be dismissed, alleging that the contracts were void an unenforceable. But in an unusual move, the pair also asked the judge to require Rabksy to post the bond to cover monthly costs as well as $2.5 million in one-time capital costs for 273 Fifth Avenue.
The stipulation of discontinuance signed by all parties does not explain the cause for the withdrawal. It was filed on April 14, however, leading some insiders to speculate it was related to the demand for the bond.
This strategy is infrequently used, legal sources said. Darren Oved, a partner with the law firm Oved & Oved said that the specific statute (known as CPLR 6515), has been cited just 50 or so times in the past decade in published decisions.
Because the strategy requires the litigants to put up sizable bonds, it also forces a plaintiff to “put its money where its mouth is,” Oved said.
Therefore, “it is a seldom used litigation tactic, particularly in New York City where property values are high and the figures can peak into 8 or 9 figures,” he added.
The Jackson Group, active as a retail owner, signed a contract last month with partners to buy a grocery store building in Cobble Hill for $18.5 million that they plan to redevelop into a modern retail location.