Nothing goes hand in hand with New York real estate quite like litigation – and 2015 was no exception.
Real estate’s biggest players were sued this year for allegations ranging from commission disputes to broker poaching, racism and even wrongful death.
The Real Deal was there to document these messy legal battles. Read on to take a look at some of the year’s juiciest cases.
Corcoran takes on Compass
The Corcoran Group waged war on Compass this year, suing the startup firm for allegedly raiding its offices and using what it described as “unlawful methods” to poach some of its top agents. At the time of the March suit, Compass had hired 51 agents from Corcoran. Compass called the legal action “a misguided attempt by Corcoran to block independent contractors from choosing where to work.” The suit was settled in August, and Compass CEO Robert Reffkin is advocating for the end of noncompete clauses in the industry.
Aaron Jungreis sues nephew Raphael Toledano
In August, top multifamily broker Aaron Jungreis sued his nephew Raphael Toledano, alleging that the upstart real estate investor squeezed him out of a $97 million East Village portfolio deal. The Rosewood Realty chief claimed Brookhill Properties’ Toledano betrayed a joint venture agreement and went into the lucrative deal solo.
Jungreis dropped the suit before Toledano was forced to answer the allegations. (TRD reported in December that Toledano may have ties to Truman & Wildes, a bogus law firm.)
Eddie Sitt sues brothers and Sitt Asset
Eddie Sitt
Sitt Asset Management’s family feud makes our list for the second year in a row, and this year it was all about Eddie. The former Sitt Asset principal accused his brothers Jack and David of abusing company funds and tapping into the Manhattan firm’s account to pay for extravagant purchases, including a $6,000 per month Bentley. Eddie sued his brothers and the company for $30 million, alleging they made unauthorized sales and finance deals. A judge threw out the original complaint on technicalities, but Eddie is still pursuing legal action.
Architect Peter Marino hit with racism, sexism claims
Peter Marino, best known for designing the homes of billionaire clients, was accused of being sexist and racist by former employee Deirdre O’Brien. O’Brien claimed that Marino had called her a “c***” and even made racist statements about black and Asian people in the office. “Marino is as adept at creating an intimidating and bullying culture targeting women and people of color on the inside of his company as he is at creating an edgy architectural esthetic on the outside,” she said. Marino has not commented on the allegations.
Nicholas Schorsch
Nicholas Schorsch sued by American Realty Capital investors
Investors in real estate investment trust American Realty Capital came together to file a class-action suit against former chair Nicholas Schorsch, alleging that he perpetuated a scheme that resulted in manager fees and bonuses totaling over $900 million, effectively turning the company into a moneymaking machine for himself and his buddies. Schorsch resigned from the firm in December 2014, after a major Manhattan real estate acquisition spree was brought to a halt by an accounting scandal.
Sean Ludwick hit with wrongful death suit
Sean Ludwick
Blackhouse Development chief Sean Ludwick was indicted on three counts of aggravated vehicular homicide following a fatal crash that killed Douglas Elliman broker Paul Hansen in Sag Harbor.
In November, Hansen’s widow filed a wrongful death suit against Ludwick, accusing him of being negligent and reckless when he drove his Porsche into a utility pole, partially ejecting Hansen from the car. Ludwick then reportedly fled the scene, and police picked him up a few blocks from the crash.
Kuafu, Siras and Blackhouse deadlocked over Hudson Rise
Hudson Rise developer Kuafu Properties asked a judge to dismantle a frayed partnership with Blackhouse Development and Siras Development. The Shang Dai-led Kuafu claimed his partners were deadlocked over plans to complete the 47-story luxury condo tower. Blackhouse and Siras fought back, filing separate lawsuits against one another. Kuafu accused Blackhouse’s Ludwick of problematic behavior and alleged Saif Sumaida and Ashwin Verma of Siras served no functional purpose other than as investors.
Joseph Chetrit accused of money laundering
In October, Joseph Chetrit, whose Chetrit Group is redeveloping 550 Madison Avenue and the Cabrini Medical Center, was accused of participating in an international money-laundering scheme. BTA Bank JSC, which is based in Kazakhstan, claimed that Chetrit conspired to hide $40 million in real estate deals with two men who stole enormous sums from the oil-rich nation.
BTA’s suit claimed that Chetrit illegally allowed the men, former BTA Bank chair Mukhtar Ablyazov and former Almaty mayor Victor Khrapunov, to invest in two of his New York City projects, the Flatotel at 135 West 52nd Street and the Cabrini Medical Center conversion at 227 East 19th Street. The suit was settled out of court soon after.
Stuy-Town investors take on CWCapital
CWCapital President David Iannarone
The biggest deal of the year came with its fair share of litigation. A group of four investors in Stuyvesant Town-Peter Cooper Village took legal action against special servicer CWCapital and Wells Fargo in November, in an effort to prevent CWCapital from receiving a $560 million windfall from the sale of the complex to the Blackstone Group and Ivanhoe Cambridge. CWCapital was slated to collect the money on top of its regular fees because of a special contractual clause that entitled it to 3 percent of the property’s in-default debt. The investors argued that the money was rightfully theirs.
The litigation that didn’t happen was just as interesting. SL Green Realty, the city’s largest commercial landlord, was reportedly given $10 million to walk away after it threatened to file a suit to stop the sale.
Cushman exec alleges gender discrimination
Maria Sicola, Cushman & Wakefield’s former head of research in the Americas, filed a $40 million suit against the company in October, alleging that she was fired without cause and replaced by Kevin Thorpe of DTZ, a man that she alleged didn’t have anywhere close to the same level of experience. “Ms. Sicola’s unceremonious termination is textbook discrimination,” said her attorney, David Sanford. “[Cushman] passed her up for promotion and terminated her in favor of a younger and less qualified male employee.” Cushman denied the allegations.