Editor’s note: A conversation with litigious landlords

Lawsuits are part of New York City real estate the same way fireworks are part of the Fourth of July.

To sue or not to sue, that is often the question, and in this issue we bring you plenty of the industry’s biggest moguls who know their way around a deposition — as well as the lawyers who thank them for all the repeat business (see our ranking of the top NYC law firms here).

One of the industry’s biggest blockbuster trials is unfolding right now, with developer Harry Macklowe battling his wife, Linda, over a $2 billion fortune. Lots of dirty laundry is being aired after 58 years of marriage. Linda says Harry hasn’t paid taxes in more than 30 years and that he’s spending a fortune on his new French girlfriend; Harry’s lawyers are arguing that he’s actually hundreds of millions of dollars in debt and his biggest projects haven’t been particularly lucrative over the years, so there’s not much for him to give Linda.

Will Harry’s brazen legal strategy work? Fortunately, I just returned to my desk to find that a mysterious someone left me an overlooked transcript from the case that sheds light on just that. It’s a recording of a dinner Macklowe had at The Grill, in the old Four Seasons space. He and Sheldon Solow are running a master class on the finer points of being a litigation-happy property mogul for two brash younger bucks: Michael Shvo and Raphael Toledano. Waiters wearing Tom Ford tuxes push little trolleys that carry prime rib for tableside carving, perfect fare for these red-blooded real estate players. The mere fact that Macklowe ended up paying the astronomical bill was evidence enough he could afford a sizable settlement, lawyers claimed.

Macklowe: Linda is killing me in this divorce trial. Her lawyers are saying I haven’t paid taxes since 1983. Speaking of which, has anyone seen a wine list? We should order something nice from that year.

Toledano: My dream would be to one day have the lawsuits you have, Harry. The wine’s on me, though — I’m already worth a fuckload of money, bro.

Macklowe: And I’m worth a negative $400 million. Do you know how hard it is to listen to my attorneys talk about how poorly my projects are doing — that only three units are in contract at 200 East 59th Street, and I’ve only got one retail tenant at 432 Park after years of marketing? But Raphael, you’re not going to get anywhere talking like that, with the cursing. You should think about building an art collection. It does wonders for one’s reputation. You can demolish a hotel in the middle of the night and still look cultured.

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Shvo [mournfully]: The whole art collection thing was working for me. I had the sheep sculptures, Peter Marino. But now I’ve got the Manhattan DA on my ass saying I didn’t pay taxes on my art. And my partners just sidelined me on the Crown Building conversion after they found out about the indictment. I need written approval to visit the sales center — and it’s on the same floor as my office (see story on page 54). Can you believe that?

Solow: Don’t take it lying down, Michael. Countersue the bastards. I’d sue over a cup of coffee that was too cold. But I never understood why you were running around screaming from the hilltops, “Let’s Shvo”. You should cultivate an air of mystery like me. Think J.D. Salinger or Leonard Litwin. It scares people. Plus, you need a better lawyer.

Shvo: Who? Marc Dreier?

Solow: Ouch. I still don’t know how that mini-Madoff got into our offices.

Right then, Rupert Murdoch, with wife Jerry Hall in tow, walks by their table. The Aussie media mogul is worth more than Macklowe and Solow combined. A hush falls over the table, and they all nod in Murdoch’s direction agreeably. There is word that Murdoch is moving further into the New York City real estate game with his Realtor.com website, taking direct aim at unseating Zillow and StreetEasy.

At a neighboring table, a prominent lawyer watches closely over this fantasy developer gathering. His mouth is watering. Not because of the prime rib, but because he is imagining the prospect of endless billable hours on any number of other cases — something that can’t be too far off with this group.

Enjoy the issue!