Sam Boymelgreen’s 255 Butler Associates won a $36 million judgment on Monday, marking the end of a dicey eight-year legal fight between the developer and his landlords in Gowanus.
The feud began in 2015, two years after Sam, who is the son of prolific New York City developer Shaya Boymelgreen, inked a 49-year lease that included air and development rights on the 95,000-square-foot warehouse space. The developer originally planned to transform the Brooklyn lot into a hotel, and spent upwards of $8 million to do so, according to court documents.
However, an offer of interest to sublease the space from the troubled coworking giant WeWork led Boymelgreen to bench his plans. The two entered into a 15-year subleasing agreement, planning to flip the remnants of the 100-year-old defunct printing press into a WeWork space. That’s when things got messy.
The landlord group, 255 Butler, an LLC with family members Ariel Akkad, Nathan Akkad, Solomon Akkad and Benjamin Akkad, wanted in on that deal, according to a civil complaint. Shortly after the Akkads were notified of the arrangement they worked with their attorney to cut Boymelgreen out of the contract, according to the lawsuit.
On July 27, 2015, the landlords filed a notice of default to Boymelgreen’s firm, allegedly claiming falsely that property taxes had gone unpaid and that the proposed multi-unit commercial property did not fulfill the requirements of the original lease, among a slew of other accusations.
Fearing that the notice would scare off WeWork, Boymelgreen demanded that the claims be retracted. When that failed, Boymelgreen was unable to operate on the property, which cost his firm tens of millions of dollars, the lawsuit alleged.
Over the next couple years communications between Boymelgreen and his landlords became increasingly tense.
By 2017, Ariel Akkad admitted that his group was unable to pay off an $11 million mortgage, despite receiving monthly rent payments of $111,000 from Boymelgreen.
This prompted Boymelgreen to accuse the landlords of using 255 Butler as a personal piggy bank, given that the property’s monthly mortgage payments totaled just $65,000.
“While we have been able to draw upon other funds to service the Cathay Mortgage since March, that source of funding is no longer available,” Ariel Akkad told the court when explaining why the landlord group was unable to pay its mortgage.
The lawsuit dragged on through the pandemic, delaying a trial until February 2022, according to Boymelgreen’s attorney, Beatrice Franklin of Susman Godfrey.
The drama came to an end this week when Judge Leon Ruchelsman ruled in favor of Boymelgreen’s claims of extortion, and tacked on a 9-percent interest rate to the payment of the judgment.
Neither Boymelgreen nor the Akkad family could be reached for comment.