Gamma Real Estate has largely triumphed in a legal battle with onetime 3 Sutton Place developer Joseph Beninati of the Bauhouse Group, who had accused the firm of of devising a “calculated scheme” to take control of his Midtown East condo project, according to Gamma’s attorney.
A New York bankruptcy court judge issued a preliminary ruling Wednesday that mostly rejects Beninati’s claims against the company, run by N. Richard Kalikow and Jonathan Kalikow. The court agreed that Gamma had not engaged in any inequitable conduct warranting subordination of its loans and said the company had not breached any of its contractual obligations.
A foreclosure auction scheduled for the property Dec. 13 will now likely proceed. A written decision in the case is expected Thursday.
“The judge said these were a baseless set of accusations meant to buy time and hope,” said Jay Neveloff, Gamma’s attorney. “It cost a year.”
Beninati could not immediately be reached for comment.
Beninati argued that Gamma’s true goal as a lender on the project was to take control of the site, which had allowed him to take on such a heavy load of debt. A hefty exit fee of $45 million pushed the loan’s effective interest rate to 30 percent.
The judge did make one ruling in Beninati’s favor, determining that the interest rate on $1.4 million of Gamma’s total $147.25 million total loan on the project violated usury statutes and would be reduced to the statutory maximum.
To expedite that process, “Gamma stipulated to waive all of the building loan interest, which only amounts to a few hundred thousand dollars,” Neveloff said.
He claimed his attorney served akin to a double agent on his cousin’s behalf while working for Bauhouse, feeding Gamma information and manipulating loan documents to make it easier for Gamma to foreclose on the property. He compared the Kalikows’ alleged behavior to “insider trading.”