The Real Deal New York

Gladstone suit against Maloney tossed by Manhattan judge

Madison Equities founder had argued PMG sabotaged their joint condo development
By Will Parker | January 11, 2018 06:10PM

Kevin Maloney, Robert Gladston and 10 Sullivan Street (Credit: Getty Images and 10 Sullivan)

UPDATED: Mon., Jan. 15 @ 2:39 p.m:A Manhattan State Supreme Court judge dismissed a lawsuit brought by Madison Equities’ Robert Gladstone against Property Markets Group boss Kevin Maloney on Thursday. The suit alleged that Maloney and PMG’s negligence and mismanagement of a joint condo development at 10 Sullivan Street resulted in construction delays that caused the partners to miss out on $30 million in profits.

But that partnership is precisely why the lawsuit’s claims didn’t make sense, Judge Shirley Werner Kornreich argued in the dismissal, because “the scheme posited by Madison would reduce PMG’s own profit — the amount of which was identical to Madison’s share.”

Gladstone and Madison had further argued that PMG “acted in a self-serving manner by advancing their own interests… at expense of the [Project].”

In her decision, Kornreich said Gladstone shared in some of the blame for the delays, as construction work was put off in part because of his slowness in producing architectural drawings.

Another source of Gladstone’s ire could be touch more personal. Gladstone’s wife, Corcoran Group broker Marie-Claire Gladstone, had been running sales at 10 Sullivan but PMG insisted on swapping Corcoran for Douglas Elliman. Gladstone seemed to want PMG to take responsibility for what Gladstone saw as Elliman’s poor sales performance, according to the decision order.

“It was a ridiculous case to begin with,” Maloney said of the decision. “It was a great return, it was a great project.”

Maloney said he closed the sale of the last unit he owned in project just this morning. Maloney previously told The Real Deal that the partners made a “4X return” on the project.

The approved projected sellout at the 19-unit condo was $201.5 million, according to the New York Attorney General’s office.

In a statement after this story was originally published, Gladstone said “Kevin Maloney should not take a victory lap for any profit at 10 Sullivan, especially since the land was contributed at a cost 50% below its value which was a principal factor in the the ultimate profitability of the project… Construction delays on the building did not stem from a lag in completing architectural drawings, but from a clear absence of oversight by a qualified general contractor. This is a skill set that does not speak to Mr. Maloney’s background.”