Douglas Elliman Sues Mandarin Oriental Devs Over Unpaid Fees

Michael Shvo’s Mandarin Oriental Residences is at the center of another lawsuit, this time filed by its former exclusive sales agent, Douglas Elliman.

The brokerage sued the entity behind the development of 685 Fifth Avenue, led by Shvo, alleging the developer paid Elliman just half of its fee after ousting it from the project late last year.

The complaint, filed in New York on Wednesday, accuses the developer of violating its contract with Elliman, including a term requiring it to pay the brokerage $250,000 if it was fired from the project “without cause.” The contract stated that the developer could cut that fee in half if it abandoned the project’s offering plan.

In the lawsuit, Elliman claims the developer, an entity known as BSD 685 New York Propco, sent a letter in September notifying the brokerage it planned to remove them as the project’s sales agent and enclosed a check for $125,000. Elliman’s attorneys state the developer provided no “cause” for which the brokerage was terminated and hasn’t filed any documents with the relevant agencies showing it abandoned the offering plan.

In February, after tapping Serhant to replace Elliman at the Mandarin Oriental, the developer requested the brokerage send a list of all leads generated from the firm’s digital platforms, according to the lawsuit. The contract included a provision requiring the brokerage, if terminated, to provide the developer a “Tail List” with leads generated from their work on the project. If those leads translated to sales, under this term, the developer would owe Elliman a commission.

The lawsuit includes allegations of breach of contract and seeks damages, including the outstanding $125,000 and attorney fees.

It also argues that BSD failed to properly terminate the contract and requests the judge order the developer to pay Elliman commissions on all sales secured before the contract is closed correctly. If the judge doesn’t agree with that conclusion, Elliman asked that the judge order the developer to compensate the brokerage for any deals resulting from the list of leads it provided.

A spokesperson for Shvo did not immediately respond to a request for comment.

Lawsuits on Fifth Avenue

Elliman’s lawsuit adds to a growing number of cases connected to Shvo, including other involving the project, Last year, John and Diane Goodman, the buyers of a $6 million unit at the Mandarin Oriental, sued BSD and the condo board for access to the building’s financial records, alleging “mismanagement” by the board as well as “disregard for Unit Owners’ safety and property interests.”

The Goodmans previously sued the BSD and Shvo individually over alleged construction defects in their unit, though a judge later dismissed Shvo as a defendant. A few months later, the couple filed another lawsuit against the entity and Shvo for fraud and negligence, pointing to unfinished amenities and shoddy construction work.

In the lawsuit filed last year, the Goodmans claimed their apartment was broken into twice and that the building was infested with roaches. They also accused Shvo of using the development’s facilities for personal reasons, including throwing a loud, late-night party.

Attorneys for Shvo pushed back against the couple’s claims in court filings, including in a response to the July 2024 lawsuit, which called the complaint “a kitchen sink of frivolous claims” and a “public hit job.”

Shvo tapped Elliman’s development marketing arm to head sales at the project in 2019 and began marketing units two years later. Since then, only about a third of the building’s 65 units have traded. The developers secured a $120 million inventory loan from the Northwind Group in September 2024, when just 15 of the building’s units had sold.

Shvo and his investors, including Deutsche Finance America and German pension fund Bayerische Versorgungskammer, are also reportedly looking to offload the unsold units in a bulk deal.

Last year, the developers hired commercial brokerage Eastdil Secured to shop for a buyer, though Serhant agent Peter Zaitzeff, now heading sales at the project, said the ultimate goal is to find individual buyers for the apartments.