Normandy Real Estate Partners is suing developer Gerald Rosengarten and fashion designer Elie Tahari over an unsuccessful Greenwich Village deal, claiming it was cheated out of a property it negotiated exclusive rights to buy a day prior.
The lawsuit, filed in New York State Supreme Court, claims Normandy entered an agreement with Rosengarten’s 24 East 12th Street Associates LLC earlier this year to acquire the 75,000-square-foot building’s ground’s lease and a $70 million purchase option with the owner, Himmel + Meringoff Properties.
Normandy alleges that a day after signing a letter of intent on the deal and posting a $500,000 escrow deposit, Rosengarten instead opted to sell 88 University Place’s lease and purchase option to Tahari, who along with his fashion business is an active real estate investor. Normandy claims Rosengarten used its offer as “a stalking horse to get Tahari to sign a contract” and is seeking no less than $10 million in damages. Tahari’s bid, according to Commercial Mortgage Alert, is about $100 million.
The building in question is a 11-story commercial and retail property located between East 11th and East 12th streets. Himmel + Meringoff, which is not named as a defendant in the suit, purchased the property for $5.6 million in 2008, according to city property records. The property will soon be home to a Kabbalah Centre and WeWork, according to Commercial Mortgage Alert.
The suit states that Normandy’s agreement with Rosengarten contained a binding “exclusivity” provision that prohibited Rosengarten from entertaining or soliciting rival offers for the property. The provision exempted Tahari, however, stating that Rosengarten could “continue discussions” with the designer until Normandy posted its escrow deposit.
But Rosengarten and Tahari claim Normandy never did so, according to a motion to dismiss the lawsuit filed last week, and allege that the $500,000 wire posted by Normandy was sent to a “third party” law firm and “did not satisfy the express requirements for characterization as an escrow payment.”
The defendants’ motion to dismiss describes Normandy’s lawsuit as “baseless and improper” and claims the letter of intent with Normandy “repeatedly emphasizes its narrow scope, contains no binding duty to negotiate, and expressly carved out Tahari as the one party with whom [Rosengarten] could transact business during the exclusivity period.”
Stephen Meister of Mester Seelig & Fein LLP, which represents Normandy, confirmed the lawsuit and reiterated its claim that Rosengarten “used Normandy’s offer as a stalking horse” in negotiations with Tahari.
A legal representative for Rosengarten and Tahari could not be reached for comment. Representatives for Himmel + Meringoff did not respond to requests for comment.
Normandy recently partnered with Royalton Capital and Sciame Development to acquire a 160,000-square-foot industrial property in Bushwick with plans for a mixed-use development. Rosengarten and Bowery Hotel co-owner Richard Born have waged a legal battle over Rosengarten’s stake in the hotel.