Town accuses developers of 212 Fifth of illegally withholding commissions

Company says Madison CEO Bob Gladstone is concealing offers, holding back units

New York /
Mar.March 23, 2017 09:00 AM

Town Residential is fighting back against a lawsuit brought against it in January by the developers of 212 Fifth Avenue.

In an answer filed this week in New York State Supreme Court, Town accuses the luxury condominium project’s sponsors of preemptively bringing a “sham action” against its new development division after wrongfully terminating its exclusive contract to market the apartments by falsely claiming it hadn’t met sales targets.

Town also alleges that the developers have been improperly withholding more than $2.5 million in commissions its new development team earned from closings and contracts inked at the 48-unit building. Sotheby’s International Realty has since taken over sales. Town wants $7.5 million in commissions and damages.

In a statement, a Town spokesperson accused the sponsors of “bullying.”

“Despite numerous good faith efforts to resolve this matter out of court, we were left with no other alternative,” the spokesperson said. “The sponsor offered to pay us the fees we earned if we would ignore the wrongful termination. Attorneys advised us not to accept.”

The development team, a partnership between Madison Equities, Building and Land Technology and Thor Equities, sued Town in January, alleging the brokerage resisted being replaced although it failed to hit sales benchmarks.

A spokesperson for Madison denied the allegations made by Town.

“Town was terminated pursuant to the terms of our agreement, and we simply intend to enforce those terms. We expect to demonstrate in the court proceedings that Town’s allegations in response are utterly without merit,” he said.

At the time of the original suit, Town had sold 23 units, or just under 50 percent of the project. But the agreement with the developer provided that the deal could be terminated if the project wasn’t 56 percent sold by Oct. 15.

Town contends that the developers failed to provide a usable sales office or adequate marketing materials, failed to pay construction contractors thereby delaying marketing, and unreasonably increased prices for units in excess of those laid out in the offering plan.

The company also claims that at least 14 units were not listed for sale until after the developers accused the Town team of missing sales targets, thereby reducing the number of sellable units to just 32. At least one of those units was set aside for personal use by Madison CEO Robert Gladstone, according to the lawsuit.

Town also alleges that Gladstone concealed accepted and pending offers from the sales team and even referred potential buyers to his wife, who is a broker at the Corcoran Group.

Town alleges that BLT may have been behind the shift in marketing teams, since Sotheby’s is its affiliate.

Joseph Sitt of Thor, who was formerly an owner of Town, is staying out of the fray.

“We’re sorry to see these two parties in conflict,” a spokesperson for Thor told The Real Deal. “We know Town to be an excellent firm, and we also know BLT and Madison to be very good companies. We hope the parties work amicably to resolve their issues.”

Buyers at the NoMad building include real estate developer Charles Kushner and Ed Bass, the Fort Worth billionaire best known for bankrolling a “Biosphere” experiment.


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