After bizarre rent-stabilization case,
Simon Baron says UES penthouse occupant owes millions in rent

Lawsuit stems out of lengthy legal battle between landlord and attorney Barry Fox

Dec.December 19, 2018 10:46 AM

12 East 88th Street and Jonathan Simon of Simon Baron Development

Simon Baron Development wants the attorney living in the penthouse at one of its Upper East Side properties to cough up millions in “unpaid” rent following a lengthy lawsuit over whether the unit qualifies as rent-stabilized.

The landlord, which controls the property at 12 East 88th Street through an LLC, wants attorney Barry Fox to pay roughly $2.6 million in overdue rent and damages, according to a new complaint filed in New York Supreme Court. Simon Baron also wants about $560,000 in prejudgment interest.

The move comes after an appellate court earlier this year ruled against Fox’s claims that the penthouse is subject to rent stabilization. The 13-story pre-war building is steps from the Guggenheim Museum and Central Park.

Paul Coppe, an attorney representing the landlord, said the filing stemmed after the New York Court of Appeals denied more appeals in the case, ending the rent-stabilization question for good and entitling his client to certain remedies under the lease.

“Mr. Fox and/or his corporation paid no rent whatsoever for roughly three years and at other times paid less than they were obligated to pay pursuant to the lease,” Coppe said.

Richard Emery, Fox’s attorney, said the new filing is premature.

“There is a case pending in the Appellate Division that is likely to give Fox the right to purchase the apartment. In any event, there are major disputes about all the allegations in the complaint,” Emery said.

Fox is willing to pay about $5.5 million; Simon Baron believes the price is closer to $9.3 million, according to appellate division filings.

Regardless, Coppe said Fox doesn’t have a right to buy the unit to begin with.

J-51 claims

The legal troubles started in 2014, after Simon Baron Development bought the building, with plans to convert it into condos.

Fox sued Baron’s entity, 12 East 88th Street LLC and the building’s prior owner, Nostra Realty Corp., after the new landlord did not renew his lease.

Fox alleged that his unit applied for rent stabilization and that he was overcharged for rent. He had moved into the apartment in the 1970s and in 1996 combined his unit with a neighboring one, paying $500,000 out-of-pocket for renovations. The understanding was that Fox would get unlimited lease renewals, according to his original complaint.

That was when he entered a lease to pay $9,500 a month for the combined unit, and it was also when Nostra de-registered the unit for rent stabilization.

Unknown to Fox, however, the building was still receiving J-51 tax benefits. The rent kept going up; Fox was paying $25,000 a month by 2008. That’s when he created MBE Ltd. to become the signatory of his lease.

A later appellate filing from Coppe, however, states that Fox formed MBE “for reasons that Fox steadfastly refuses to divulge (he claims it was so he could “do some work”), but presumably so that Fox could write off several million dollars of rent on his home.”

The lease didn’t say who would live in the apartment but the understanding, according to Fox, was that Nostra knew it would be him.

Lease renewals happened under that arrangement until the new owner stepped in. A lower court first ruled that the penthouse is subject to the rent stabilization law.

But an appellate court overturned that, finding that because the lease in 2008 did not have Fox as a signatory, “Fox was thereby deemed to have vacated the apartment.”

In the new filing, Simon Baron alleges that MBE has been occupying the unit without a lease and against the consent of the owner.

The last monthly rent signed for the apartment was $27,500, according to the complaint.

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