Aby Rosen says Tod Waterman stabbed him in back on Lever House deal

Lawsuit alleges fraud and breach of contract

Nov.November 12, 2019 05:12 PM
Aby Rosen and Lever House at 390 Park Avenue (Credit: Getty Images and Google Maps)

Aby Rosen and Lever House at 390 Park Avenue (Credit: Getty Images and Google Maps)

Beware of competitors offering to help you out.

That is the lesson of a lawsuit filed Tuesday by RFR Realty founders Aby Rosen and Michael Fuchs against Philip M. “Tod” Waterman III over the ground lease to the prestigious Lever House building at 390 Park Avenue.

RFR Realty entered into a ground lease for the famed property in the late 1990s and has had trouble with it since at least 2015, when the company defaulted on a $110 million loan on the Midtown site. Brookfield Properties and Waterman Interests wedged their way into the situation in 2018, but the suit argues that Waterman did so fraudulently.

With RFR having sunk tens of millions of dollars into the building over the years and facing tricky negotiations to renew its lease, the plaintiffs claim, Waterman emailed Fuchs in January 2017: “Should we talk about Lever? Makes no sense to me…maybe we can help? If not, I will keep completely away from this.”

Fuchs agreed to discuss RFR’s plan if Waterman kept it confidential, according to the lawsuit. Waterman agreed, and Fuchs told him sensitive information including his financial status and strategy for the lease negotiations, the suit says.

RFR claims that Waterman used the information he learned from his discussions with RFR to “negotiate separate and secret agreements” with the owners of the land under 390 Park Avenue, the Korein family.

Waterman and Brookfield created a new ownership entity called a “sandwich lease” between the Koreins’ stake and RFR’s ground lease, which effectively made Waterman and Brookfield RFR’s new landlord.

“Armed with all the confidential information supplied to him by Fuchs, Waterman covertly angled to insert himself as [RFR’s] landlord and improperly used the very information that Fuchs had shared with him in confidence,” the lawsuit reads.

Rosen and Fuchs were notified in July 2018 that Waterman was now their landlord, according to the suit. Instead of seeking terms with the Koreins, RFR would have to negotiate a lease with Waterman.

Waterman and attorneys for Rosen and Fuchs did not respond to requests for comment. The Korein family could not be reached.

The suit accuses Waterman of fraud and unfair competition, and Waterman and the Korein family of breach of contract. It asks the court to ban Waterman from lease negotiations and for damages to be determined at trial.

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