Eastern Consolidated wins commission in lawsuit with ex-Playboy Club owners

Lawsuit claims brokerage was cut out of $37M deal for 5 East 59th Street

5 East 59th Street in Midtown (inset: Jérôme Simon Benayoun)
5 East 59th Street in Midtown (inset: Jérôme Simon Benayoun)

Eastern Consolidated won a judgment Monday in a lawsuit seeking a commission on the sale of the former Playboy Club building at 5 East 59th Street.

The nine-story Midtown office property sold last month for $85 million. However, this dispute concerned the previous sale in 2012, when Brazilian billionaire Paulo Malzoni purchased it for $37.3 million from fur mogul Alex Demetriades and his son Tommy.

Eastern Consolidated sued the father and son in February 2013 when it became clear that they did not intend to pay a commission, despite the fact that former Eastern broker Jerome Simon Benayoun introduced them to Malzoni and that there was an uncontested commission agreement between the parties.

In the agreement, signed by Tommy Demetriades and Eastern Consolidated CEO Peter Hauspurg, the Demetriadeses agreed to pay Eastern a 1.75 percent commission if a deal was reached with a buyer to whom Eastern introduced them. This would have resulted in a $650,000 commission on the sale to Malzoni.

Instead, the owners awarded the commission to Kevin Leahey, president of KRL Real Estate Consulting Corporation, who they said sealed the deal by successfully negotiating terms with the ground-floor tenant in the building.

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A New York State Supreme Court judge determined Monday that the contract between Eastern and the Demetriadeses only required the brokerage to make an introduction — not to successfully negotiate all the terms of the agreement. Eastern will be awarded the $650,000 commission plus interest and court costs.

“I am gratified that the court recognized that this was an agreement in which our only obligation was to introduce the parties,” said Howard Rubin, an attorney representing Eastern.

Emails procured in the case also revealed that the sellers anticipated a challenge by Eastern, and briefly considered trying to obscure the identity of Malzoni as the buyer by listing him as “Lincoln Financial” in the public records.

Counsel for the defendants did not immediately respond to a request for comment.