Buyers at 685 Fifth sue Shvo, alleging closets too large

Couple accuse Mandarin Oriental developer of “wholly inappropriate” behavior

Mandarin Oriental Buyers Sue Michael Shvo Over Big Closets

Michael Shvo and 685 Fifth Avenue (Getty, Mandarin Oriental Residences, BSD)

Michael Shvo has a pair of unhappy customers.

A couple who purchased a one-bedroom apartment at the Mandarin Oriental Residences sued Shvo on Monday, alleging construction defects.

John and Diane Goodman, who paid $6.1 million for their new pad, were among the first buyers to move into the 69-unit development at 685 Fifth Avenue, once the site of Gucci’s flagship store in the city.

The couple claim the developer — a shell company known as BSD — failed to deliver on some of the unit’s finishing touches and refused to do so once alerted.

The alleged errors include a lack of agreed-upon custom millwork and closets that exceeded the advertised dimensions and blocked ceiling lights in the bedroom.

The complaint details a back-and-forth between the couple and Shvo about correcting the discrepancies, which the Goodmans claim the developer has refused to do.

Despite the Goodmans’ repeated attempts to address the issues after closing on the unit, BSD and Shvo “met these requests with lies and silence,” the complaint says.

However, a spokesperson for Shvo said the developer never heard back from the buyer “after agreeing to make the requested changes — which they admit were not required and [were] not addressed at closing.”

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“We went above and beyond our obligations to accommodate a buyer who raised minor issues after moving into the unit,” the spokesperson added.

Shvo is singled out in the complaint for what it describes as “wholly inappropriate and intolerable” behavior, including “foul language, refusal to acknowledge errors and outright toxic conduct.”

The Goodmans, who are seeking damages of roughly $1 million, also allege the developer “imposed unreasonable charges and financial burdens” on them, including “exorbitant charges for basic items such as placemats.”

“This nickel-and-diming was inconsistent with the luxury and value promised in a $6.3 million transaction,” their complaint says. Crain’s first reported the lawsuit.

Shvo and Turkish investor Bilgili Group paid $135 million in 2018 for the upper floors of the Midtown building, which they converted from offices into luxury apartments.

Since sales launched three years ago, only 12 apartments have sold, representing about 15 percent of units. The project’s projected sellout is $343 million, according to its offering plan.

The 29-story building is home to the city’s priciest studio sale, a $3.9 million, all-cash deal that closed last year. That unit is now listed for rent at $16,000 per month, down from $38,000 last September, according to Streeteasy.

Correction: A previous version of this story incorrectly identified Bilgili Group as part of the shell company involved in the lawsuit.