Construction firm Leeding Builders Group has sued Naftali Group and Rockefeller Group, claiming the developers owe about $15 million for work on an Upper East Side luxury condo development that has raked in more than $550 million in sales.
The developers stopped paying the builder in May 2023 – at first by making partial payments and then by not paying at all – as the work at 200 East 83rd Street neared completion, according to a complaint filed in state Supreme Court. The construction firm alleges that the nonpayment was “part of a consciously devised and executed plan” that was “timed to coincide with the completion of the project.”
The builder, also called LBG, is demanding $15 million plus interest, attorney fees and other expenses. It is also seeking to foreclose on several liens it filed against the property.
A lawyer for Naftali and Rockefeller fired back, saying the contractor failed to deliver work on time and abandoned the job, leaving the developers to complete the work. They filed a complaint against the contractor in September to recover damages.
“200 East 83rd was developed by two of New York City’s most respected developers, who are committed to delivering the highest quality residences, and therefore expect the same from their contractors,” said Aaron Abraham, a partner at Troutman Pepper. “It is unfortunate that the developers were forced into legal action; however, we are confident that New York state’s legal system will uphold the developers’ rights.”
The developers hired LBG in December 2019 to manage the construction of the Robert A.M. Stern-designed building and oversee about 40 subcontractors. Work was originally supposed to be finished three years later. But delays caused by Covid and design changes from the developer, among other factors, pushed back the completion date to August 2023, the new lawsuit alleges.
By then, many of the units had sold. The building was the top-selling development in 2021. Unit PHA sold for $28 million in August 2023 and PHB sold for $24 million the following month.
As the condos flew off the shelves, the developers paid off the construction loan “while simultaneously refusing to make timely payments to LBG, which saved (the) owner millions of dollars on interest payments,” the suit claims.
“By all accounts, the completion of the project has been a staggering success,” the suit says. The 35-story building sold out in less than 20 months.
The contractor filed four mechanic’s liens against the property and the developer paid off the first two, the suit says. The third and fourth are outstanding. The builder submitted a final request for payment in November after telling its subcontractors to suspend all remaining work at the building.
The suit alleges that the developers began to “improperly” contact LBG’s subcontractors “in an attempt to circumvent LBG and vitiate LBG’s contractual right to suspend work based upon owner’s non-payment.”
The attorney for LBG declined to comment.
Naftali Group and Rockefeller Group partnered to bring the luxury condo tower to the site after purchasing the property from Muss Development and the Aryeh family in 2019 for $167 million.
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