A former top executive at the Peebles Corporation is suing his erstwhile employer, claiming that CEO Don Peebles personally reneged on a promise to compensate him with ownership interests in properties including 346 Broadway, and ultimately fired him to avoid the sharing agreement.
In a lawsuit filed Wednesday in New York State Supreme Court, Daniel Newhouse, a former director of development and investments at the Peebles Corporation, claims that Don Peebles assured him of a 5 percent ownership interest in properties for which he provided execution services. These included Tribeca’s Landmarked 346 Broadway, which Peebles bought for $160 million on an RFP from New York City and is developing into a hotel and condominiums in a joint venture with Israeli real estate company the Elad Group.
Though Peebles has now closed the company’s interest in the joint venture and made $60 million on the project, he has refused to pay Newhouse his 5 percent, which would amount to $3 million, Newhouse states in the complaint.
Additionally, Newhouse says he is entitled to a portion of the company’s re-invested interest in the project, which he claims could see Peebles make up to $170 million.
Newhouse claims to have been the driving force on 346 Broadway, having recommended the purchase of the property, determined the RFP strategy, sourced all consultants and contractors on the project, and acted as the public face of the project at all hearings.
Rather than disputing the existence of their arrangement, which never took the shape of a formal contract, Newhouse says that Peebles considered his potential profit of millions to be a “windfall,” and therefore backed out, saying that Newhouse’s initial offer letter inoculates the company from any further obligations. When Peebles finally did present a written agreement, it offered a mere 1 percent interest.
Because Newhouse refused to accept this “sham agreement,” he was terminated in Jan. 2014, according to the complaint. Shortly afterward, Peebles hired Tawan Davis, the main negotiator for the city in The 346 Broadway deal.
Peebles hired Newhouse in May 2011 at a starting salary of $72,000, increasing his salary to $115,000 and eventually $150,000 and promoting him to director of development and investments, according to the complaint. Newhouse moved to New York to act as Peebles’ second-in-command in a start-up office in the city with only one other employee, an administrative assistant.
“Defendants induced plaintiff to accept a modest salary with consistent promises of an ownership interest,” the complaint states.
Though Peebles repeatedly goaded Newhouse with promises that they would make a fortune as partners, Newhouse was never paid anything beyond his salary, the complaint alleges.
Newhouse is represented by Richard E. Haftel of Haftel & Silverman PC. His counsel did not immediately respond to a request for comment.
Peebles was not immediately available to comment.