Bauhouse just won’t bow out.
Two years after losing control of the development at 3 Sutton Place to lender Gamma Real Estate, Bauhouse Group’s Joseph Beninati filed another lawsuit against law firm Herrick Feinstein on Monday seeking at least $270 million in damages, Crain’s reported.
There was an “inherent unconsentable conflict” between Bauhouse and Gamma, the complaint alleges, “due to the close personal relationship between the Kalikow Attorney and Kalikow Lender, as they were cousins and the Lender had helped the Attorney attain his job at the Herrick firm.”
The “Kalikow Attorney” is Herrick partner Richard R. Kalikow, while the “Kalikow lender” is N. Richard Kalikow, chairman and CEO of Gamma Real Estate. Beninati alleges that the two conspired to persuade him to take on a loan from Gamma, rather from another lender, Inbursa Bank.
The $270 million in damages represents Bauhouse’s estimate of the peak value of the development.
The latest lawsuit is the third in which Bauhouse has alleged a “loan-to-own” scheme on Gamma’s part. The first was a 2016 lawsuit against Gamma prior to the foreclosure, which was mostly rejected – although a judge did rule that the interest rate on the loan violated usury statutes, and would be reduced to the statutory maximum.
Gamma subsequently took control of the property for $86 million at a foreclosure auction. Soon after, a judge found that Bauhouse’s principals were personally on the hook for $24 million in loans because of personal guarantees they had signed, and Beninati’s partner Chris Jones fled to Spain a few months later.
Beninati then sued Herrick Feinstein last year for malpractice, but those claims were dismissed in December. Herrick says the latest lawsuit largely rehashes the same accusations.
“We believe that the new action is essentially based on the same facts and legal theories that the court already rejected; they lack merit and we expect this lawsuit to be dismissed,” Herrick said in an emailed statement to Crain’s. [Crain’s] — Kevin Sun