Judge tosses Katan’s fourth lawsuit over Domino Sugar deal

A five-building complex on the site of the Domino Sugar Factory in Williamsburg is beginning to rise, but for the Katan Group, the site’s former co-owner that repeatedly tried to halt the sale, the dominoes have fallen.

Late last week, the Katan Group, a Downtown Brooklyn-based development firm, lost its appeal of the New York State Supreme Court’s dismissal of the fourth and final lawsuit in protest of the factory’s sale.

Katan teamed up with CPC Resources, a for-profit subsidiary of the Community Preservation Corporation, in 2006 to buy the historic sugar refinery on the 11-acre site for $55 million and develop residential towers. But by 2011, the partners defaulted on more than $125 million in financing for the project.

Katan, led by Isaac Katan, then filed a suit against CPC Resources in 2012, alleging mismanagement of the project through inaction and misdirection. Then, Katan filed two additional suits to block the sale of the development site to Two Trees Management, headed by David and Jed Walentas, for $185 million. The suit accused CPC Resources of failing to engage “in a process to maximize value” and not accepting high offers from buyers including Joseph Chetrit’s the Chetrit Group.

The New York State Court of Appeals rejected a temporary injunction against the sale that was previously granted by a New York State Supreme Court judge. This allowed Two Trees to close on the purchase in 2012.

In the wake of the closed sale, Katan again filed a lawsuit seeking damages.

The Appellate Division of The Supreme Court recently affirmed the court’s decision last year to dismiss Katan’s claims in the fourth lawsuit.

“Having chosen to concentrate on a particular issue arising out of the Two Trees transaction in the third action, plaintiff ‘must accept the consequences of its … litigation strategy,” the Appellate Division stated in an opinion dated April 16. “Contrary to plaintiff’s contention, it could have brought – and, indeed, did bring – a breach of contract claim after CPCR caused Refinery [LLC tied to Katan] to sign an agreement to sell the property; plaintiff did not have to wait for the closing.”

Although Two Trees bought the site and is now developing a megaproject, the firm was not named as a defendant in any of the suits. Two Trees broke ground on the project last month.

“The suit was not even on our radar,” said David Lombino, a spokesperson for Two Trees. “We’ve been busy preparing the site for market-rate and affordable housing, commercial office space and a five-acre public park.”

Mitchell Shapiro, lawyer for Katan, could not be reached for comment.