Town sues Shlomi Reuveni for $25M over alleged breach of noncompete

Former new development chief sued the brokerage for $16M earlier this year

New York /
Apr.April 27, 2017 11:35 AM

Town Residential has slapped its former managing director of new development Shlomi Reuveni with a $25 million lawsuit, alleging he breached the terms of his noncompete agreement by trying to woo away clients and brokers for his own new venture.

The suit comes two months after Reuveni filed his own suit against Town, for $16.3 million, alleging he’d been forced to terminate his agreement with Town due to the company’s “numerous breaches and other inappropriate conduct.” In April, Reuveni launched his own new development brokerage, Reuveni Real Estate, which he said would focus on high-end development projects for local and foreign private clients and institutions.

Town TRData LogoTINY now claims that Reuveni’s new venture breaches the terms of his contract with the company, which allegedly stated that he could not compete with the firm or solicit customers or clients for two years after his departure. Reuveni left the firm in December, two months after Town named Elaine Diratz, an alumnus of Corcoran Sunshine and Extell Development, as his co-managing director of new development.

The company also alleges that, while still at Town, Reuveni “misled senior management with false information, budgets, explanations, projections and assurances concerning sales, revenues and profits.” He allegedly tried to cozy up to developer clients and inserted “key man” clauses in contracts with developers in an attempt to gain leverage.

In the case of 212 Fifth Avenue, one of Town’s former projects, the company alleges that Reuveni colluded with the developer, Robert Gladstone of Madison Equities, to conceal accepted and pending offers.

In his new role, Reuveni is “uniquely positioned to injure Town New Development,” the complaint alleges.

Reuveni disputed that characterization.

“In no way is Reuveni violating any obligation to Town in starting his own venture, as the suit claims,” his spokesperson said. “Reuveni was forced to terminate his agreement. The litany of overblown claims and baseless accusations in Town’s filing are nothing more than an attempt to intimidate Reuveni and create unnecessary hurdles for him to move forward with his career.”

She added: “Reuveni today filed an additional complaint in his action for substantial damages against Town, and refuses to be bullied and slandered. We’re looking forward to the real facts coming out in court.”
A spokesperson for Town said the firm’s hand was forced in the matter.

“In this case, Reuveni was paid millions of dollars to manage our new development division and now he is trying to abscond with some of our multimillion dollar assignments and interfere with our contracts,” a spokesperson said. “Additionally, Reuveni has self-dealt and, in turn, hurt many of his supposed clients and Town colleagues just so he can breach his contract.”

“We will win but we all lose,” the spokesperson said.

It’s not the first time Town has gone after former employees over their noncompetes. Nicole Oge, a former marketing executive at Mercedes Benz who spent three years at Town, was forced to settle after a judge ruled that she had violated her noncompete agreement when she made the switch to Douglas Elliman in 2014. Wendy Maitland, now a broker at Brown Harris Stevens, also sued Town to be released from her noncompete. That case was settled in September.


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