Lawyers for developer at McDonald's site say they've been stiffed $176K, seek to withdraw from legal battle.

In another twist in the long-running battle between the landlord/developer of a site at Vanderbilt and Atlantic avenues and McDonald's, the tenant of the main parcel, the developer's lawyer has filed a request to withdraw as counsel, claiming Vanderbilt Atlantic Holdings (VAH) owes his firm  $176,139.58 and their relationship "has irrevocably broken down."

That comes on top of a judge's ruling denying VAH's request for summary judgment--a full decision in their favor without a trial--on its claim that McDonald's failed to follow contractual rules for setting a new rent.

McDonald's charges the opposite, saying VAH attempted to raise the rent significantly, in an effort to get McDonald's to leave. Because of litigation, the rent has since been stalled at the extension figure. 

A trial awaits--unless VAH pays McDonald's to leave, thus allowing it to build an 18-story building, permission for which was granted in a rezoning. The site includes other parcels at the southeast corner of Vanderbilt and Atlantic avenues.

In a letter to the court, Stephen B. Meister of Meister Seelig & Fein, sought permission to be relieved as counsel. "Defendant has not responded to our request for payment of a trial retainer as provided for in our engagement agreement with Defendant," he wrote. "We also seek a [60-day] stay to give Defendant time to engage new counsel and for that counsel to familiarize itself with this matter.

Big gap

McDonald's had asked that a Fair Market Value (FMV) of $350,000, as calculated by its appraiser be used to determine the rent during the extension periods, with rent--at 80% of FMV--thus $23,333 per month for the first five-year period from April 9, 2019 through April 8, 2024.

VAH sought a FMV of $1,348,000, with rent at $89,866 per month.

"Delay will not prejudice Plaintiff as it continues to pay rent at the rate for the period that expired in 2019"--$16,032.58--"which is less than the minimum amount set forth in the Option Rent Addendum," Meister wrote. 

Lawyer-client dispute

An Engagement Letter with VAH, dated Nov. 5, 2019, allows Meister's firm, MSF, to stop all legal work if an outstanding balance is owed for longer than 30 days.

Though MSF issued regular monthly invoices, "Defendant has consistently failed to pay MSF’s invoices within 30 days of billing," Meister wrote, "often requiring MSF attorneys to participate in time-consuming and disruptive communications with Defendant."

"Defendant has maintained an 'evergreen' outstanding balance approaching $200,000 throughout the entirety of MSF’s representation of Defendant," he wrote. Nor has VAH paid a requested trial retainer.

VAH has no cash flow, since it is required to pass through the McDonald's lease payments to M.M.B. Associates, from which it has leased the premises. Thus it needs a development deal and/or to build the tower to generate cash flow.

Hearing next week

Leaving the case requires an order of the Court. Meister's letter states that "a persistent failure to pay legal fees" has long been seen as a legitimate reason.

In an Oct. 11 Order, Magistrate Judge Steven Tiscione deferred a ruling on the motion pending a telephonic hearing on Oct. 20.

"Counsel for all parties must participate along with a principal for Defendant Vanderbilt Atlantic Holdings LLC," Tiscione wrote.