Extell sues AG and buyers in federal court

Says a number of things.
Extell does not believe it can quickly resell the 41 apartments
Extell does not believe it could sell them at prices equal to the disputed amounts
Extell believes the cost of litigation exceeds reputation risk in the market place this
tactic poses

Extell is hoping that rather than pursue costly litigation, the buyers will cut their losses and foreget about their deposits. The litigation expenses could easily exceed theri deposits. The buyers' best hope is to settle out of court or get the case dismissed. Otherwise they should walk.

http://online.wsj.com/article/SB10001424052748704250104575238712510516670.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsSecond

"This case is challenging something that has been an accepted mechanism in New York state for decades," said Jay Neveloff, an attorney at Kramer Levin Naftalis & Frankel. He said he couldn't recall another time when the attorney general's role has been challenged on constitutional grounds.

alpie, extell is suing the AG here.

The-president, are you kidding me...no way will these purchasers allow this Extell scum bag to take their deposits.

Based on the two articles above, it appears Extell is being disingenous. The 'typo' argument about the closing date is smoke in the mirrors. If this argumnt prevails, buyers can argue theay meant 2007 and not 2008, and certainly not 2009. Extell should own up to its mistake and abide the law. It is disgusting to see how greedy developers are trying to screw people.

Dates are not usually scrivener's errors - tipos are.

If you can't rely on a date - what can you rely on?

Alpie, unlike state courts, federal courts are very generous in recovery of attorneys' fees. It seems unlikely that Extell will prevail.

Speaking as a layman, I would think the bar is pretty high for a successful challenge under Article 78 petition. They may be of the opinion that this is their best shot, so despite the odds it's worth the gamble or perhaps they just are hoping the 41 lose patience and negotiate with Extell. I would not be surprised if olive branches are extended at the same time this challenge is done, but don't really know.

This is really a sh*tstorm now. Extell should have negotiated with these buyers to get them in/out of the bldg. All this lawsuit does is tarnish what many have said is a great product. After this, would you really consider buying in The Rushmore?

Something doesn't make sense. Just recently read two articles which mentioned that sales are now fantastic at the Rushmore and that they have even raised prices.

http://online.wsj.com/article/SB10001424052748704464704575208674239653384.html?mod=WSJ_HomeAndGarden_LEFTTopNews

http://www.theepochtimes.com/n2/content/view/34722/

Makes total sense. They asked brokers for quotes and annecdotal stories. Fluff pieces.

howabout, they are still slightly under 50% sold, i think. they've been marketing since late 2006, and started closings 15 months ago. they still have around 150ish units to close, and it's doubtful that this spring/bonus bounce will continue into the summer. i don't know the financing involved in the building, but the situation might not be so pretty.

Wow, brokers are defendents. So much for market knowledge.

President, you think suing the AG is going to cost the buyers a lot? Extell dragged buyers into this bogus suit, but that will be dismissed even before Extell loses this whole thing. And how much do you think it will cost Extell? Certainly more than buyers since they brought the suit.

Extell lawsuit seems 100% specious. Claim that its plan contained the wrong date is barred by NY law
that prohibits rescission or retroactive modification of the terms of a contract based upon one party's
claim that it made a mistake of fact, the moreso since (1) Extell management and its attornies should
have caught any genuine error, and (2) its buyers relied upon that alleged error. NY law similarly prohibits the introduction of oral testimony and evidence - the basis fo Extell's claim that the AG
treated it improperly - to contradict or modify the terms of an unambiguous contract.

hmmm. a Barnett partner in another project sued him claiming that Barnett was illegally taking money from their partnership to pay Rushmore costs. Makes one wonder if the buyer deposits are properly in escrow. You have to assume it is or Strook would be finished. But at the least, they are clearly trying to "kick the can down the road". They need to continue to sell these apts to foreign buyers. They need to hold on to their "sales" numbers in order to sale to the unknowing investors.

Where are the escrow monies? How long can Stroock and Extell keep hiding the truth? Only so many failed legal challeneges til the truth comes out! I bet it wont be pretty!!!!

http://www.courthousenews.com/2010/05/13/27238.htm

CRP/Extell claims the down payments would be placed in escrow pending completion of The Rushmore. It claims that the contract guaranteed that the first closing would take place within 1 year of the projected closing date, but the document listed both dates as the same day: Sept. 1, 2008.
The lawyer had meant to type Sept. 1, 2009, CRP/Extell says.

"Yet more than five months after the projected commencement of operations date of September 1, 2008," one purchaser filed an "Application for a Determination of the Disposition of Down Payments" with the Attorney General based on the error, the complaint states.
"Over the next year, as the downturn in the economy and real-estate market continued, thirty-nine other purchasers" followed suit, the complaint states.

"An attorney for many of the purchasers publicly admitted that they filed their applications with the motivation of 'the chance to buy in at a lower price' and thus opportunistically get out from under their purchase agreements during the downturn," according to the complaint.

In Fairness to Extell's position one of the buyers gave entered into a contract in august 08. There's no way he expected to close in one month. Also in fairness to Extell (no idea if this is a elgal argument) but apparently nobody complained until after they had a closing date. Should not the buyers have taken action closer to SEpt 08?

In fairness to the Aug 08 buyer, maybe he decided to put the down payment on the albatross precisely because he was looking at it as a free option, subject to legal risk. Maybe Extell was fine with it because they wanted to boost their numbers.

It's hard to argue this buyer was relying on the August Sept closing date. And if he did want the free option he should have had it in his agreement. Would be interesting if a judge decides 40 buyers get their money back and one does not..

Uh, he did have it in his agreement. That's the point on the date.

presumably the judge will have a better handle on contract law than RS.

'In Fairness to Extell's position one of the buyers gave entered into a contract in august 08. There's no way he expected to close in one month.'

It is irrelevant what the buyer expected. What is relevant is that Extell did not deliver on the promised date. On other threads, when a renter wants to get out of a lease or cover the last month's rent with a security deposit, there is usually a flurry of entries reminding about an obligation to adhere to a contract. The same applies here. If we are going to be sticklers for rules, then it goes both ways. In this case, Extel, advised by a bunch of lawyers, offered a contract date that it failed to fulfil. The buyers have the right to get their deposits back. That right should be enforced.

On a personal note I hope this dispute turns into a prostate exam with an umbrella for Extel and its principals. Their tactics are harsh and manipulative and they deserve the same in return. Additionally I hope the condos end up sold through an auction -- I could use a nice two bedroom.

"On a personal note I hope this dispute turns into a prostate exam with an umbrella for Extel and its principals. Their tactics are harsh and manipulative and they deserve the same in return. Additionally I hope the condos end up sold through an auction -- I could use a nice two bedroom. "

hahahahah...thats where its headed.

I still think the bar is raised fairly high for Extell. I can't see the A.G's decision getting over-turned. but I do see the otherside.

In everyone's estimation, how long can Extell drag this out...and finally pay the purchasers, which is what they should have done in the beginning.

At least another for days....Article says May 18th.

The parties can hopefully work toward a situation where the buyers complete their purchases at a fair price for both the buyers and the developers. There is a contract in place with the original intent for the developer to sell the apartments and the buyers to purchase them, so the discussion should be exclusively about finding a fair middle price. The developer built a good product and that is ultimately what these buyers wanted.

Disagree.
Some of the early buyers were people accustomed to buying , selling upgrading and repeating the process. Now that it became obvious the economics of this are over they want out, and believe the law was on their side.
A second group of buyers probably just have a bad taste for buying at a high price and would have been happy to renegotiate a lower price, but with lawyers, delays comes bad feelings
I suspect that the number of purchasers willing to negotiate is less than it would have been and that now the best that Extell can hope for is to legally win and force the buyers to either walk from their deposit or close at the agreed pon price. That said, I don't discount Extell's ability to win here, but do not believe that is the most likely outcome. If I had to assign odds I'd say 10-15% chance of Extell winning at most.

Cuomo is suing for dismissal

http://therealdeal.com/newyork/articles/andrew-cuomo-attorney-general-asks-federal-judge-to-dismiss-rushmore-suit-from-extell-development-carlyle-realty-partners-and-gary-barnett

Wow the plot thickens. It sounds like Extell and their lawyers tried to circumvent the state and go right to the Feds...I cannot imagine that this judge tomorrow is going to allow Extell to skip the appropriate path.

This is just ridiculous.

I looked at this place... and anyone looking/watching knows this place was delayed, delayed, delayed.
How about an old press article. They really did say 2008... in 2006. OOOPS.

---------------------------

Marketing starts for the Rushmore at 80 Riverside Boulevard

19-SEP-06

Marketing has begun for The Rushmore, the 41-story, twin-towered residential condominium development at 80 Riverside Boulevard that occupies the blockfront between 64th and 63rdth Streets.

[b]It is across 64th Street from The Avery, a 30-story condominium development and both are projects of the Extell Development Corporation[b/] on land it acquired from Donald Trump, who has developed several residential towers just to the north.

The Rushmore has been designed by Costas Kondylis and Partners, the architectural firm that has also designed the Avery and many of Mr. Trump’s projects.

The Rushmore has a 16-story base with corner windows at the north and south and a setback at the 4th floor in the center of the blockfront. The twin towers are setback and are joined at the lower three floors.

Mr. Kondylis has borrowed a stylistic treatment of the towers from Cesar Pelli’s World Financial Center at Battery Park City where the upper part of the towers have slightly protruding sections with different fenestration patterns.

Mr. Kondylis has kept his towers symmetrical and the protruding sections stop at the 34th story and the top five floors have a banded fenestration pattern reflecting the fact that are “penthouse” units.

A recent advertisement for the building showed the floor plan of the full-floor Penthouse A that is priced at $6,525,000 and it indicated that the apartment has an entrance gallery that leads to a very large living and dining room space with a fireplace and also has four bedrooms and a large family room and kitchen area facing the Hudson River.

The 425-foot-high Rushmore will have 289 one- to five-bedroom apartments priced from $1,000,000 to more than $7,000,000. Completion is planned for 2008.

The building will have 6 duplex apartments entered on the ground floor. Floors 2 and 3 will have 22 apartments. Floors 4, 5 and 6 will have 18 apartments. Floors 7 through 14 will have 10 apartments. Floors 15 through 17 will have 6 apartments. Floors 18 through 36 in each tower will have 2 apartments. Floors 37 through 41 in each tower will have one apartment.

The building will have a swimming pool, La Palestrina Fitness and Wellness Services, a 185-car garage, a children’s playroom designed by Kidville, NY, a billiards room, Abigail Michaels concierge, a bicycle room, and a theater and entertainment suite.

Residents will be offered a choice of three kitchen designs with fixtures by Sub-Zero, Viking, Miele and bathrooms will have fixtures by Kohler and Waterworks.

FACT: I looked at pre-buying at the Rushmore in 2007. An out date of 2009 would have been a HUGE red flag that there were going to be construction delays tying up your money for 2 years.

FACT: I did NOT purchase at the Avery because I thought it would be done "too soon". HA, what a joke because it was like almost a year late.

Wow the plot thickens. It sounds like Extell and their lawyers tried to circumvent the state and go right to the Feds...I cannot imagine that this judge tomorrow is going to allow Extell to skip the appropriate path.

Nope. Barnett asked his lawyers for options. This was the advice he took. Even if it's not a shoe size bet, he clearly feels it is the best option for him. If he loses its the same outcome he gives the money back. There's really not much risk to Extell here.

Still surprised there aren't behind the scenes negotiations(haggling over price). I agree with Extell that the major factor behind buyers cancelling is the underwater contract price. That said, the big boys would do the same here.

no risk to extell? other than continuing to drag its own name through the mud?

The Red Flag at Rushmore was that the sponsor came out with high prices and deviated from an earlier pre-construction practice from a few years before of releasing the first tranche of apartments at discounts to the market in order to build excitement. I took this to mean they felt time was of the essence and needed to sell as many apartments at high prices early on before the market weakened. Further to this point the sales representative Corcoran refused to show prospective buyers the prospectus making full knowledge difficult; The prospectus would only be mailed out after a contract was signed. Another red flag was a high percentage of speculative money. Many Rushmore buyers were people accustomed to buying and selling every two years during the real estate boom, waiting for the next development and enough time to claim the 250/500k deduction. You also had a fair number of pure investor purchcases. Unfortunately these buyers got so accustomed to the profits they blinded themselves to changing market conditions.

no risk to extell? other than continuing to drag its own name through the mud?

There's no proof that Extell has suffered reputational risk. People are always trashing developers. Average Joe views this as a contract dispute.

average joe isn't looking to buy a condo in manhattan.

you're such an apologist for the developers.

Hardly, I think Extell will lose, I also think its shameful when a seller doesn't show a prospectus until the contract is signed. I also don't believe buyers were relying on the closing date as they didn't complain until it was clear market took down market values. Be objective and stop with the champagne socialist values.

A contract is a contract and just as Extell would insist the buyers honor a contract, the buyers have a right to say Extell didn't honor their side. Motives are a side issue.

'A contract is a contract and just as Extell would insist the buyers honor a contract, the buyers have a right to say Extell didn't honor their side. Motives are a side issue.'

Very true (see my post of few boxes above).

What a mess, every attourney must bill time to this. Who ever said this latest tactic wasn't costing the buyers was wrong.

This was not a typo. Clearly, the original timeline was August 2008. If you don't believe me, do your own due diligence and look up old news articles... there are plenty that show this was consistent with original timeline.

Why they didn't put in extra buffer is a good question.
- Maybe they felt it was detrimental to sales to have such a long out time
- Maybe they just didn't think buyer would execute their out so they didn't think too much about it
- Maybe they did put in extra buffer time, but underestimated the NIMBY's and time to build.
- Maybe they were too busy putting out the Avery fires
- Maybe all of the above

It's outrageous that they could be even claiming it was a typo IMHO. They are totally trying to find a loophole and it better not stand in court.

As a buyer I would be very interested in the first increase and the audited finanicals. If it turns out expenses varied by more than the set percentage(10%?) I would speculate a potential concern/liability. Seems Extell could have avoided the whole mess by doing a new budget. Why didnt' they?

It is NOT a typo. It was a marketing ploy to be enable the developer to 'kick out' some early buyers to resell the apartments at higher values because remember, the offering plan was drafted back in late 2005/2006 when the market was high. Extell had similar language in the Avery (100 Riverside) and the Altair. This way, once the market went up (or so planned at the time by Extell), they have a way to get rid of the earlier buyers who got a 'pre-construction deal' and resell it at the higher market value.

The oppsy-daily was when someone along the chain of command FORGOT that was in the offering plan and did not amend it. Extell then tried to play it up as a 'typo'.

HUD - I hope you are reading this and looking into this.

The judge ruled against Extell from the bench right away, which shows how much merit their case has. Yet Extell still claims they don't have to release the down payments. Lawyers are about to get thrown in jail if they down for contempt of court.

can someone fking turn this into a SRO homeless shelter already... I mean I can clearly see it going that way... why take all the intermediary steps?

Is it over?

http://therealdeal.com/newyork/articles/judge-orders-release-of-rushmore-escrow-funds-by-extell-development-and-carlyle-realty-partners

A Manhattan federal judge today ordered the immediate release of $16 million in escrow deposits at the Upper West Side's Rushmore condominium at 80 Riverside Boulevard, after rejecting a temporary restraining order request by Extell Development and Carlyle Realty Partners.

U.S. District Court Judge George Daniels rejected CRP/Extell's argument after more than two hours of presentations during which he repeatedly questioned the developer's lawyers as to what specific evidence they didn't have that would require depositions or additional discovery in court.

"You have to establish for me that there is something out there that you did not already have in your hand," Daniels said.

CRP/Extell has maintained for months that a "scrivenor's error," or typo, led it to mistakenly offer rescission to the buyers if they failed to close the first contract by Sept. 1, 2008, instead of 12 months later on Sept. 1, 2009, which is what they say they really intended.

Lawyers for the development group argued that they wanted to question whether the buyers relied on a Sept. 1, 2008 deadline in the Rushmore offering plan before invoking the missed deadline in order to get their deposits back.

The judge disputed the contention that there was a "scrivenor's error" but said if there was any error it was a unilateral error, because the lawyers did not negotiate the offering plan with anyone before it was presented.

Lawyers for the buyers said they were pleased with the judge's ruling, and argued that CRP/Extell's claims were less than credible.

"We're pleased that the judge saw through the plaintiff's dubious arguments to bring them to the federal court and dismissed all of the claims and ordered the immediate release of the escrow funds," said Richard Cohen, attorney for 33 of the 41 buyers.

I think this is it.

If Extell continues it really will come across as an act of desperation. The odds of winning at this point are between slim and none. They got shot down twice and this time in under two hours. I think they know this, but perhaps the costs is such that they have to keep going on. I hope I'm wrong.

I think that I heard that they appealed again...how long are they allowed to do this? All the way to the Supreme Court. Crazy, disgusting.

They could keep going, but the result seems obvious. Was it really thrown out in two hours. They don't appear to have a legal case. I'd hate to be their lawyer, who I imagine has advised them against continuing, but must listen to their client.
-------------
Extell's argument has a certain basis, just not a legal one.

they hired boies. no pity necessary

maybe they dont have the money to give back

Can Stroock be forced by the purchasers to release the money directly to them, thus circumventing the restraint on stroock by Extell?

If Extell appeals again, as it is rumored, then the buyers should demand an accounting of the funds in escrow. The only real reason Extell would have now to appeal is to hide the fact that the funds are not intact. They have no case. Earlier papers delivered to AG prove that the 2008 date was on earlier documents thereby undermining the claim of typo. If they really believed it was a typo they would be suing Strook. Are they not deposing and harassing Strook because Strook knows the funds are not in tact?

In all sincerity, why does Extell keep appealling this? There is no chance of winning, and they are running up huge legal bills, way more than buyers since AG does most of the work. No one in their right mind would buy in this building with this going on, an irrational developer suing half the buyers over a contract he wrote, and all this bad press. Are they counting on foreign buyers who don't know what's going on? Even if that's the case, any smart domestic buyer will stay a mile away for that exact reason. Too many absentee owners and investors. This building is sure to be a disaster for a long time because of the way this is being handled.

After this, you would have to imagine that any buyers who were hoping to negotiate a lower price would be so disgusted that they would never live in the building -- or trust the validity of Extell's budgets for the building.

It appears losing is not an option they are prepared to deal with. Perhaps they need a home run, for reasons already speculated upon.

Extell is throwing a "hail mary" pass. Cannot see it any other way. The 41 are on the other team and need to let the game play out.

Only possibilities I can think of:
1) The money's not there anymore
2) He wants to set a precedence that he won't go down without a fight
3) He's stalling so he can sell more units
4) He needs the % sold for the building to be above a certain threshold, for which he needs these buyers.
5) He's just poison pilling himself so as to not give the buyers their money back as long as possible

No possibility is a good one.

The money is in escrow. He wants the buyers to close so he can reduce his mortgage on the property or keep the deposity and resell the unit for as much close to original price less deposit as possible. The profit from the project is all on the back end and/or the sponsor needs sufficient equity in unsold units to refinance should they not sell on time. #1 is highly unlikely. #2 suggests this is all ego, dout that too, #3 looks wrong, since he has other units he can sell, #4 well he's selling slowly anway, dobut that, #5 looks wrong too. #6 is he's stalling and floating olive branches out to buyers and seeing if they will compromise on price and settle.

Well, legalities aside, the sad truth is those who sued over this issue did so in desperation -- they either wanted out because of the economic meltdown, or, minimally, wanted to renegotiate their purchases. Extell stonewalled: a contract was a contract. Had they tried cutting deals early, giving early buyers the same deal as new ones -- 15-20% discounts -- this would have gone away. Truthfully, before the lawsuit, I do not recall seeing anyone on these boards citing the closing dates as a reason to rescind the contracts (that was a really clever find by the plaintiff's lawyers) but everyone cited the economic meltdown, along with Extell's hubris.The problem with adopting a scorched earth policy is that you can end up getting burned. Thinking over all the 'why-did-they-go-for-broke' theories, let me add another: to keep lenders at bay, to reassure them the plaintiffs had no case -- at least until a large enough number of units closed to calm jittery nerves. Now that there have been 120+ closings, and sales and closings are moving along, albeit slowly, it must remove some of the pressure the lenders were feeling. At this point Barnett is probably more interested in how defaulting on the Rushmore affects his future relationships with bankers, etc., than this one building. Think Riverside South. A final thought...the layouts and sweeping river views from a number of those disputed units are really fine, and if the market is improving, they may well be sold sooner than later, especially at discounted prices. I'm betting there are a number of brokers out there burning their blackberries, calling clients saying a great unit has just come back on the market, at a better price. Law suits come and go and, unfortunately, are pretty much a fact of life in the big city. River views are forever, global warming aside.

Broker

wow. such a broker. its uncanny that broker-speak is so weirdly out of touch.

Mlwest - clearly you sell apartments for a living...and maybe specifically at the Rushmore! I've seen a number of units at the Rushmore, the layouts are terrible and the faux square footage is out of control. A 1500 sq ft apartment feels like 1000 at BEST. In your words, a contract is a contract, so Extell should honor the contract THEY UNILATERALLY wrote...or did you just happen to miss that little detail when you are burning up the dial to your(unlucky) clients?

Oh yea, forgot to mention that Barnett and clan also serrepticiously took away the buyers rights for recission in the 16th amendment (yep - 15 amendments were file and alas, did not find the 'typo') before getting the smack down from the AG's office to tell them to give it back to the buyers in the 17th amendment. This is seriously stuff - a real crime has been committed here and all you brokers seem to just 'miss' that a la 'typo' style.
Oh, and those river views? there are 5 other non-extell buildings that have better views up north.

yes, sefan. and there are a lot of people who bought into that building who were misled by brokers -- like the ones who told me in 09 that the lawsuit had absolutely no merit and would have no effect on the building prices -- who will end up losing a lot of money. the brokers don't seem to have remorse for causing people to lose serious money. they only want to point out the river views and convince themselves that they are not spewing bullshit. and when rushmore buyers have to sell their apts and take hundreds of thousands of dollars worth of losses, I guess they can console themselves with the fact that their river views are forever.

Well, if you ask a salesperson if their product is any good... what do you think the likely response will be? (No matter what it is)

MLWEST makes good points. It's a nice building in a decent location with good views. Advertised amenities are more than sufficient for high end buyers. Lower the price and people will buy. A few years out nobody will remember any of this. Extell's worry is financial. They may be focusing on a construction loan that needs to be paid back or refinanced and paying back the deposits/releasing the 41 buyers may jeopardize that. Take away price and I suspect every buyer who has moved in is reasonably happy with their decision.

"Take away price and I suspect every buyer who has moved in is reasonably happy with their decision."

This is like saying you bought a $100 orange. Outside of dropping a Franklin it was sure sweet and tasty!

Essentially, the poin is buyers enjoy, amenities, service and quality of the apartments they bought. If I bought a chevy corvair, no price would make me happy.

I don't enjoy things I overpay for (when someone else is getting a bargain). I regret those types of decisions. I think most sane people (for whom money does not grow on trees) would concur.

Agreed. But it does suggest that the sole source of buyer disatisfaction is having over-paid and not for a product that doesn't work(i.e. a broken rolex)

Riversider - when your floor plans says you buy a 1800 sq ft place but when you actually see the apartment and the real livable square footage is closer to 1300, i'd say the product is "broken" add on top of that the overpaying, add on top of that the unavoidable rise in maintenance b/c the building is over half empty, add on top of that you'll probably see a barrage of renters moving in b/c extell needs to capitalize those unsold apartments somehow....is the product 'broken' yet? But alas, I take comfort in my viking oven and marble bathrooms...

So you beleive the square foot calculation for Rushmore differs from that of Trump Heritage, The Element or pick your favorite condo on the west side built last ten years....

I agree the maintenace could be an issue. 10+% rise first year? But thiat can happen.

Unsold apartments cannot increase maintenace.

Riversider - you are wrong on "Unsold apartments cannot increase maintenace"

the offering plan does say that the sponsor is responsible for maintenance on unsold units. BUT, the offering plan ALSO says that buyers will have a right of rescission if the first closing does not occur by 9/1/08 and we all know that contractual clause is going down.

so, if extell say "sorry guys - gotta stick you with the bill" to the apartment owners (which BTW, the board is for 2 years sponsor controlled) - what recourse does a buyer have? the only thing you can do is drag extell to court for breach of contract and then extell will come back and sue each of the buyers in that instance for something totally ridiculous at that point. you've seen this movie - it's in theaters now.

Not sure I agree with that....

In Extell's case - action speaks (much!) louder than words. I'd rather put my money in Greek bonds than in Extell (contractual!) promises.

reasonable..

http://online.wsj.com/article/SB10001424052748704250104575238712510516670.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsSecond

Real-estate developers are suing Attorney General Andrew Cuomo in federal court, alleging that his office violated the U.S. Constitution when ordering a refund of $16 million to 41 condo owners at a West Side building.

In the lawsuit, Extell Development Co. and Carlyle Realty Partners claim that they were denied due process of law when the attorney general ruled for the owners last month. They are asking the court for a temporary restraining order on the refund.

While other developers have appealed decisions to New York state court, Extell and Carlyle took the unusual step of bringing their case to federal court. The developers are represented by Boies Schiller & Flexner, a well-known litigation firm whose co-founder, David Boies, represented Vice President Al Gore in Gore v. Bush, the Supreme Court case that effectively resolved the 2000 presidential election.

The attorney general evaluates submissions from each side in a dispute before offering a decision. In the complaint to the U.S. District Court of New York, the developers argue they were denied due process of the law because they were not permitted to contest and evaluate the charges against them.

Offering plans for all new co-ops and condos are filed with the attorney general's office, and officials there have authority to settle down-payment disputes. The process was initially intended to settle relatively small disputes to assist owners who might find the court system too cumbersome or expensive.

http://therealdeal.com/newyork/articles/small-victory-for-extell-development-and-gary-barnett-and-carlyle-as-judge-blocks-release-of-rushmore-funds

A federal appeals court has blocked the release of $16 million in escrow funds to buyers at the Rushmore condominium on the Upper West Side, allowing the developers to further argue their case against Attorney General Andrew Cuomo before a three-judge panel.

Lawyers familiar with the case said the panel review may not happen until July.

streeteasyfan -- First, I do not sell apartments for a living, period. That sort of personal attack only cheapens a discussion, besides being erroneous. Second, you did not read my post carefully or completely, or you would read that I said Extell is eating its just deserts because, rather than offer existing buyers the same price breaks they were offering new buyers, they insisted on taking a "contract-is-a-contract" approach, thinking theirs was unbreachable, which it clearly isn't (unless the 3-judge panel says otherwise). But anyone who pretends that the issue of the contract date was the real reason for most of the buyers' remorse has only been reading this board, well, since the commencement of the lawsuit and not earlier. Go back to the earliest critical posts of the Rushmore and it is obvious people were upset at the high asking prices (many because they thought it was driving overall prices insanely high)and at Extell's high handed 'our-stuff-don't-stink' marketing approach -- but mostly because when the economy started going south, Extell would not cut existing buyers deals, nor let them out of their contracts without losing deposits. In fact, until the plaintiffs' lawyers brought up the date issue, it was never mentioned -- at least not on these boards. As for unit measurements, well, I can't see how yours can be correct because differences that large would be a prima face reason to cancel a contract and is an obvious first place to look for any first year associate. I certainly respect those who feel the units are not designed well, are inferior, etc., but looking at some of the layouts, I humbly disagree and will leave it at that.

Most of my post was trying to discuss, rationally, without heat, the reasons Extell is pushing ahead. I suggested it might have something to do with reassuring its lenders long enough to close on a high enough number of apartments to keep the bankers and investors calm. Most of the money at a closing goes to the lending bank, no? And if the banks are getting paid albeit slowly, it is better than a lot of other situations around the country (think Florida or Las Vegas). From street easy's analysis, the average closing price is around $1,400/foot. That's a substantial discount to the $1,800/foot asking prices but still a big number when apartments in other RSB buildings are going for $1,100-$1,200/foot. And does anyone doubt that the day the refunds are returned, before the ink is dry on the refund checks, brokers will be calling their customers about the new units that have "just come back on the market"? My final point was, people will forget about the nastiness and the lawsuit, just as thousands and thousands of people have snapped up foreclosed homes around the country.

http://www.law.com/jsp/article.jsp?id=1202458646249&Stroock_Wins_Reprieve_on__Million_Escrow_Release

The mistake in the offering documents that triggered the dispute said the buyers could get their deposits back if the first closing in the building did not occur by Sept. 1, 2008, when, in fact, the year was supposed to read 2009, according to Carlyle/Extell. Edward Normand of Boies Schiller has argued that the mistake was harmless and does not reflect the intent of the parties. Normand declined comment.

what do you THINK carlyle's attorneys are going to say? how is this in any way new news?

Such a curmudgeon

is that your favoritist word today? i don't view my comment that way at all. i'm asking you a question. how is this new or adding anything? repeating the position of the developers? duh they are calling it a typo.

Whether a typo or not, buyers could rightfully claim they signed contracts based on the contents, all of the contents. So the date becomes material. Extell is pissed because it was not allowed by the AG to introduce "evidence" (depositions, for example) that would have, in their view, demonstrated that the date issue was, in fact, not relevant to the law suit, which was really started out of buyers' remorse over the high prices/poor economy/etc. So that would mean the date issue per se did not cause buyers any "harm", but is a legal smokescreen. I assume that is what Carlyle's attorney was getting at.

More to this point, so far the AG's office, a state court judge and a federal court judge have ruled that Extell's argument is specious and that ...wait for it ... wait for it ... a contract is a contract. Ya gotta luv the irony here.

Any speculation as to whether this is still a priority for the A.G. now that Andy Cuomo will be busy campaigning?

why do you assume it ever was a "priority"? it doesn't take long to make a ruling. and now it doesn't matter if it's a priority or not. extell has made sure it remains one by suing.

I think it wends its way through the appeals process, like a mouse through a snake's gullet. All sides will have to prepare submissions/statements/presentations for the 3-judge panel. Then, the court will decide in its own good time.

Interesting case out. Where a developer was sued for not paying commission to referring broker. Apparently the rate increased on Rushmore vs Avery. Is the broker obligated to tell a client if he is steering them to the new development paying the highest rate?

With this appeals process getting so much public attention, who would want to buy Extell's grand West 57th St development? My read is that Gary Barnett, or whatever his new name is, has an ego that cannot accept defeat. Anyhow, this well conceived building is sure taking a long time to sell. What kind of financing does he have?

Banks are lined up. The problem is the financing tends to come from foreign players that don't know the local market.

yet another figment of your imagination. what banks are lined up and for how much?

riversider, if I am doing buyer's brokerage and a building is paying an abnormally high commission, I always point that out to my clients. It doesn't tend to matter to them because sometimes it's the "good" buiildings that pay high marketing fees -- the Visionaire in BPC was at 4% for a very long time, higher than much of its competition but it's arguably the best building in the neighborhood -- but they certainly deserve to know.

ali r.
DG Neary Realty

RS: The financing on Rushmore came from the Carlyle Group which is hardly a foreign player. As to the rest of his buildings and dreams, I haven't seen any reference to the banks. Do you have information on the financing say on west 58th street or the gem buildings etc?

No Rushmore came in with equity. The construction loans on Rushmore came from Hypo. The newer loans I recall hearing something about sovereign funds...

Carlyle was an equity investor...I'm speaking construction loans...