Judge denies Bauhouse’s bid to block 3 Sutton Place foreclosure sale

Court strikes down developer's request for injunction against lender Gamma Real Estate

New York /
Feb.February 23, 2016 06:05 PM

A Manhattan judge has struck down Bauhouse Group’s request for an injunction against Gamma Real Estate and its planned foreclosure auction of Bauhouse’s 3 Sutton Place condo project.

The ruling means that Gamma Real Estate is, for now, allowed to proceed with a foreclosure sale of the 3 Sutton Place development site, at 428-432 East 58th Street in Midtown, currently scheduled for Feb. 29.

Bauhouse Group, led by Joseph Beninati, defaulted on nearly $129 million in loans last month that it had received from lender Gamma, led by Richard Kalikow, for its planned 68-story, Norman Foster-designed condo tower at 3 Sutton Place.

Bauhouse then filed suit in New York State Supreme Court against Gamma last week, and successfully received a temporary restraining order against the lender and its foreclosure auction of the site.

But the two sides met again in court on Tuesday, where a state Supreme Court judge lifted the temporary restraining order and ruled against Bauhouse’s bid for a preliminary injunction against the foreclosure sale, sources said.

It’s unclear whether Bauhouse will seek to appeal the ruling, possibly through the court’s appellate division. While Bauhouse’s lawsuit against Gamma was not dismissed and is still ongoing, the injunction sought against the foreclosure auction – which could very well see the developer lose control of the Midtown property – was a critical aspect of the complaint.

Representatives for Bauhouse did not return requests for comment, while representatives for Gamma declined comment.

Gamma has retained Eastdil Secured to market the 3 Sutton Place development site to potential bidders in advance of the foreclosure sale.

Bauhouse’s lawsuit against Gamma claimed the lender had made it “extremely difficult to access information” about the property in advance of the auction, with the goal of “chilling any bids” and assuring the lender was the sole bidder for the property.

Such difficulties included a confidential agreement implemented by Eastdil that “does not permit a bidder [on 3 Sutton Place] to give information about the project to his own lender” in advance of the foreclosure auction, Bauhouse’s attorney Stephen Meister told The Real Deal last week.

Gamma had provided Bauhouse with a roughly $127 million mortgage loan and a $20 million mezzanine loan to fund the planned 113-unit, 283,000-square-foot condo tower, which according to the developer’s complaint has an estimated market value “approaching $1 billion.”

Bauhouse has actively sought additional funding in recent months to finance the development, as TRD reported, as well as a joint venture partner to help bring the project to fruition. The developer received demolition permits for the Midtown site late last year.


Related Articles

arrow_forward_ios
From left: Bert H. Dweck and Joe Sitt with 790 Madison Avenue (
Joe Sitt, Bert Dweck settle Madison Ave dispute with fashion house
Joe Sitt, Bert Dweck settle Madison Ave dispute with fashion house
A photo illustration of the Ram's Head Inn at 107 South Ram Island Drive in Shelter Island Heights (LoopNet, iStock)
On the dock-et: Shelter Island inn owner sues town
On the dock-et: Shelter Island inn owner sues town
From left: Brookfield’s Brian Kingston and Hospitality Investors Trust's Jonathan P. Mehlman with Hilton Garden Inn Monterey (Brookfield, Hospitality Investors, Hilton)
Brookfield hotel REIT sues insurers for denying pandemic claims
Brookfield hotel REIT sues insurers for denying pandemic claims
790 Madison Avenue, Thor Equities CEO Joe Sitt and Bert Dweck (Google Maps, Thor and Premier Equities)
Fashion house: After 2 years and 2 lawsuits, Sitt and Dweck still haven’t paid
Fashion house: After 2 years and 2 lawsuits, Sitt and Dweck still haven’t paid
Morgan Stanley's Ron Vinder and 212 West 18th Street (CORE Real Estate, Morgan Stanley, iStock)
Condo board fails to evict buyer of discounted 1MDB penthouse
Condo board fails to evict buyer of discounted 1MDB penthouse
Sovcombank board member Mikhail Vasilyevich Klyukin and renderings of 238 East 3rd Street (left) and 192 8th Avenue (right) (Sovcombank, Compass, iStock)
Sanctioned Russian’s disputed developer in attempt to “blow up” projects, suit says
Sanctioned Russian’s disputed developer in attempt to “blow up” projects, suit says
L+M's Ron Moelis with Knickerbocker Village, Lawsuit
Tenants’ civil war threatens L+M plan to buy 1,590 apartments
Tenants’ civil war threatens L+M plan to buy 1,590 apartments
From left: Jeffrey Simpson and Jared Chassen with 164 West 74th Street, Judge rejects Greystone’s
Judge rejects Greystone’s motion to dismiss condo conversion fraud case
Judge rejects Greystone’s motion to dismiss condo conversion fraud case
arrow_forward_ios

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

Loading...