Kushner Companies would have done well to let sleeping dogs lie.
An appeals court ruled against the firm this week in a case stemming from a $186 million multifamily deal that fell apart in February 2022.
Kushner sued the seller — the First Real Estate Investment Trust of New Jersey, or FREIT — to force the deal through and lost. But the would-be buyer did notch a small win when a New Jersey judge ruled Kushner could recoup its $15 million deposit.
Now, after a two-year legal tennis match, Kushner has lost out on that $15 million, too.
The dispute dates back to early 2020 when Kushner agreed to pay the New Jersey REIT $186 million for six apartment properties across northern New Jersey and the Hudson Valley.
When the pandemic lockdowns hit, Kushner asked FREIT for more time to inspect the assets and to push out the closing date. FREIT declined and told Kushner the deal was off, but Kushner sued for breach of contract.
The New York-based firm won back its deposit but not its deal to buy the properties. Then both sides went in for round two.
Kushner filed a motion to hold FREIT accountable for attorney’s fees. FREIT did the same. In December 2022, FREIT came out on top, as a court denied Kushner’s motion and ordered it to pay FREIT $3.4 million in legal fees.
Neither side was satisfied. Kushner appealed the finding of breach and the order to pay legal fees. FREIT appealed the court’s decision about returning the $15 million deposit.
Last year, FREIT filed a new suit, alleging Kushner failed to pay the legal fees and was using its affiliate as “a shell to evade its debts and obligations.”
FREIT asked the court to “pierce the corporate veil and hold Kushner liable,” an SEC filing reads. Kushner, in September, filed a motion to dismiss.
On May 1, FREIT won again. An appellate court affirmed the ruling that Kushner’s affiliate had breached the deal. The judges also held the firm responsible for FREIT’s legal fees and rolled back Kushner’s sole win — on the $15 million.
The Appellate Division directed the trial court to order Kushner or its escrow agent to pay FREIT $15 million in damages. It also denied Kushner’s motion asking for reconsideration of the breach-of-contract ruling.
Neither firm immediately responded to requests for comment.
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