Skip to main content

Snag in AY? Appeals court upholds decision that said Boymelgreen improperly assigned lease of footprint building to Ratner

In a unanimous decision that may crimp the state’s pursuit of eminent domain on the Atlantic Yards site, a state appeals court has upheld a judge’s March 2007 decision that Henry Weinstein’s tenant, developer Shaya Boymelgreen, improperly assigned leases to a Pacific Street building and adjacent parking lot to an affiliate of Forest City Ratner.

The Appellate Division: Second Judicial Department, in one case, known as 752 PACIFIC, LLC v PACIFIC CARLTON DEVELOPMENT CORP. and argued 11/17/08 stated:
The Supreme Court properly awarded the landlords summary judgment on their third and fourth counterclaims to the extent of declaring that the tenants’ assignment of their respective leases violated the leases and that the leases are terminated.... The terms of the subject leases are clear and unambiguous.

The court further bolstered Weinstein’s case, ruling that the Supreme Court erred in not giving Weinstein back possession of the properties at issue:
Having found that the tenants breached the leases, and the landlords thereafter terminated the leases, the Supreme Court should have granted the landlords such relief.

“I couldn’t be more pleased. I’m happy that the rule of law prevailed,” Weinstein said this morning, adding that he thought the previous ruling, which did not give him back the premises, might have indicated that the judge wanted him to settle the dispute with Forest City Ratner.

As with the previous iteration of the case, an appeal seems likely, though I haven’t confirmed that. Still, the unanimity of the decision makes it less likely it’ll be overturned.

Implications for AY

Boymelgreen has remained a tenant in the six-story building on Pacific Street just east of Carlton Avenue. (The space had been leased back from AY 535 Carlton, a Forest City Ratner affiliate.)

As I wrote in March 2007, the ruling can't stop the state from using eminent domain to take the properties, but it might make it more costly, as Weinstein has contended that Boymelgreen’s deal with Ratner would diminish the value of his property.

Forest City Ratner told the New York Times in 2007 that it did not believe the ruling would have an impact on the project. Because this property is in Phase 2, the eastern portion of the project site, it might be thought that condemnation could begin on the arena block while this case remains in litigation. However, the General Project Plan states (p. 2 of this [URL corrected May 11] PDF):
All of the properties within the Project Site would be acquired by ESDC... at the outset of Project implementation.


After all, Weinstein's property is needed for the interim surface parking for construction workers and the arena.

Now, said Weinstein, there should be a hearing on damages, in which the tenants have to pay fair market rent, which would be much higher than the rent in the previous lease. “We’re going to demand that they put up money,” Weinstein said, regarding the rent. “With all these economic problems going on, we’re very concerned there are not going to be assets to collect from a judgment.”

ESDC role

The lease assignment, Weinstein argued, allowed the Empire State Development Corporation (ESDC) to deceptively portray—since October 2005—that Forest City Ratner “controlled” the land, thus suggesting a lesser need for eminent domain. Weinstein’s companies are plaintiffs in the pending state eminent domain case regarding AY.

According to this oudated map (right) from the ESDC, the asterixes indicated: FCRC has closed on an option to take by assignment the lessee's interests under the ground leases for these properties. However, the property owner has objected to such assignments.


The latest ownership map is more accurate.

Second case: mixed decision

In a companion case, which also involved Forest City Ratner along with Boymelgreen, PACIFIC CARLTON DEVELOPMENT CORP v 752 PACIFIC, LLC, the appeals court ruled that it was appropriate for the lower court to grant the portion of the motion in which Forest City Ratner and affiliates argued they were not liable to a breach of contract, because they were not actual parties to the contract alleged to have been breached.

The court also ruled that it was appropriate for the lower court to grant the portion of the motion in which Boymelgreen himself was not personally responsible, because his personal guarantee of the leases had already expired.

Weinstein did win a partial victory, however. The appeals court stated:
However, the court erred in granting those branches of the motions which were to dismiss the second cause of action alleging tortious interference with the leases insofar as asserted against Boymelgreen and the Forest City defendants.

[Clarification 5/10]: I'd written that Weinstein can pursue damages. He still has to win in trial court.

Original decision

State Supreme Court Justice Ira B. Harkavy more than two years ago ruled (PDF) that Boymelgreen’s lease assignment to Ratner violated the terms of the original leases with Weinstein, which required the landlord’s “written consent,” and declaring the latter leases “terminated.”

Companies controlled by Weinstein own the six-story yellow former manufacturing building at 752-766 Pacific Street, as well as two adjacent lots, used as a parking lot. They make up about one acre of the planned 22-acre site.

The leases between Weinstein and Boymelgreen, for just under 49 years, were signed in October 1999, long before the Atlantic Yards plan was contemplated, and about six months after Boymelgreen bought the nearby former Daily News printing plant, which was subsequently converted to the Newswalk building of luxury condos. (Boymelgreen also sold the Ward Bakery, seen as a potential hotel, to Forest City.)

The leases provide that the tenants may assign their leases with the consents of the landlord, which “shall not be unreasonably withheld or delayed.” At issue was whether Weinstein unreasonably withheld the lease.

Around 3/31/05, Boymelgreen and Ratner agreed on a one-year option for Ratner to acquire Boymelgreen’s lease. (That was about the same time that Boymelgreen agreed to sell two nearby properties to Ratner for $44 million.)

On 2/16/06, they asked Weinstein by letter to consent to the agreement, according to Boymelgreen’s complaint. Weinstein didn’t reply--Boymelgreen mailed the request to an outdated address for Weinstein--so on 3/2/06, two weeks later, they closed the transaction, contending there was no reasonable basis to any objection.

The courts have disagreed.

Comments

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website Matzav.com explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…

Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

"There is no alternative": DM Glen on de Blasio's affordable housing strategy

As I've written, Mayor Bill de Blasio sure knows how to steer and spin coverage of his affordable housing initiatives.

Indeed, his latest announcement, claiming significant progress, came with a pre-press release op-ed in the New York Daily News and then a friendly photo-op press conference with an understandably grateful--and very lucky--winner of an affordable housing lottery.

To me, though, the most significant quote came from Deputy Mayor Alicia Glen, who, as the Wall Street Journal reported:
said public housing had been “starved” of federal support for years now, leaving the city with fewer ways of creating affordable housing. “Are we relying too heavily on the private sector?” she said. “There is no alternative.” Though Glen was using what she surely sees as a common-sense phrase, it recalls the slogan of a politician with whom I doubt de Blasio identifies: former British Prime Minister Margaret Thatcher, a Conservative who believed in free markets.

It suggests the limits to …