Corcoran Sunshine Marketing Group is suing the developers of a supertall condominium at 111 West 57th Street for $30 million, alleging that self-sabotage, infighting and a battery of lawsuits “undermined and frustrated” its ability to market units.
The suit, filed late Wednesday, contends that JDS Development Group and Property Markets Group breached its contract with Corcoran when it allegedly terminated the firm without warning on May 16. Although the developers said Corcoran was terminated because it failed to hit sales benchmarks, the suit claims the developers had only themselves to blame.
In a statement, JDS’ Michael Stern said the lawsuit is “entirely without merit and it is unfortunate that it was filed.”
“We have worked successfully with Corcoran on other developments and hope to do so in the future,” he said, speaking on behalf of JDS and PMG. “We respect the team at Corcoran Sunshine and hope to resolve this matter amicably.”
But Corcoran CEO Pam Liebman said the lawsuit was a “very serious step and one which we don’t take lightly.” She said client relationships are of “utmost importance” to the firm. “We expect that our clients will honor their obligations and if they don’t, we will pursue the legal remedies to which we are entitled,” she said.
Douglas Elliman Development Marketing, which is now marketing the project, hired the building’s former sales director from Corcoran this month. In a statement, Elliman declined to comment on pending litigation but said it was “thrilled to be at the helm of marketing and sales of the extraordinary 111 West 57th Street.”
The skinny, SHoP Architects-designed tower, which has a total projected sellout of nearly $1.5 billion, was “plagued” by construction delays, cost overruns, financing struggles and “internecine quarreling” among partners and investors, the suit states. Those troubles, widely covered in the press, “stigmatized the Building” and spooked potential buyers, Corcoran says.
The agreement, inked in 2015, stipulated that Corcoran would earn $10,000 in monthly consulting fees until the offering plan was accepted. Corcoran was to earn a 2.1 percent commission for each sale — or roughly $30 million of the total projected sellout.
The complaint said the contract was unusual for Corcoran, since it included a conditional right to terminate. Specifically, the brokerage could get the ax if it didn’t sell 25 percent of units within 18 months, or a minimum of 50 percent within 30 months.
According to the suit, Corcoran could stomach that. But then, both the luxury market and its relationship with the developers soured. The brokerage alleges that in 2016, PMG boss Kevin Maloney “commenced a publicity campaign underscoring his lack of desire to market the Building” until the luxury market picked up.
“If the market were red-hot, people would be buying off plans, throwing checks down, and it’d be great,” Maloney told Bloomberg at the time.
According to the complaint, the developers subsequently cut the sales team and cancelled a sales launch event. They effectively stopped advertising and terminated their creative and public relations teams, the suit claims. Out of a $2.5 million marketing budget, they’ve only spent around 20 percent to date, it claims.
Meanwhile, the developers were caught up in a series of lawsuits with a former partner, Ambase Corp., as well as troubles securing additional financing. Corcoran said in the suit that it requested talking points from the developers to assuage buyers’ concerns, but they were rebuffed.
In the suit, Corcoran also accused Elliman of “tortious interference” after it hired Amy Williamson, the former sales director at 111 West 57th, who resigned from Corcoran on June 13. In a letter dated June 18, Corcoran Sunshine demanded that Elliman stop using Williamson to market the building. Elliman has denied any wrongdoing, the suit states.