The developers of a troubled Turtle Bay condominium tower filed a $100 million malpractice lawsuit June 13 against two high-powered law firms, Cozen O'Connor and Blank Rome, for allegedly giving them bad zoning advice prior to the fatal March 2008 crane collapse that killed seven people at the 303-9 East 51st Street site, according to an article today at therealdeal.com by David Jones.
The developers, led by former firefighter James Kennelly of Kennelly Development, alleged in the suit filed June 13 in New York state Supreme Court that their former zoning lawyers provided flawed legal opinions, which led them to overestimate the value of the property, leading to the eventual default of $70 million in loans with Arbor Realty Trust, the article said.
The article noted that "Cozen and Blank Rome's incorrect analysis of the applicable zoning regulations and their failure to conduct sufficient and adequate due diligence caused plaintiff to overestimate the value or potential value of the project," attorney Rex Whitehorn, representing Kennelly, wrote in the complaint, "and plaintiff made irreversible decisions with respect to financing while relying on plaintiff's advice."
"The case," the article continued, "centers on whether the project could be developed under a so called 'tower-on-base' configuration, in which a high- rise building is built on top of a smaller, denser building that acts like an anchor or could be built as a stand-alone tower 'as of right,' without going through any additional modification or demolition work that would require public hearings or approval from regulatory boards."
The article said that "neighborhood critics argued that Kennelly's project violated several zoning ordinances prior to the accident and raised questions about how the Department of Buildings approved such a project in the first place," adding that "DOB Commissioner Patricia Lancaster resigned about six weeks after the crane collapse."
The suit, the article added, "follows a similar action in May, when Arbor Realty Funding, the lender on the project, filed a $69 million suit against the law firm of Herrick Feinstein."
"In that suit," the article said, "Arbor accused Herrick of malpractice for allowing it to make $70 million in short-term bridge loans, which the bank later had to foreclose on after the accident. Herrick officials countered that they were not the developer's official land use lawyers, and warned Kennelly to get a full analysis from a land-use specialist to advise it on whether it could build the tower on a split lot. Herrick filed an answer to the complaint last month. Following the accident, DOB ruled that it approved the site 'in error' and would not allow completion of the project under its current configuration. Arbor later foreclosed on the project, losing more than $32 million on the sale of the debt to investor Ziel Feldman of HFZ Capital."
The developers, led by former firefighter James Kennelly of Kennelly Development, alleged in the suit filed June 13 in New York state Supreme Court that their former zoning lawyers provided flawed legal opinions, which led them to overestimate the value of the property, leading to the eventual default of $70 million in loans with Arbor Realty Trust, the article said.
The article noted that "Cozen and Blank Rome's incorrect analysis of the applicable zoning regulations and their failure to conduct sufficient and adequate due diligence caused plaintiff to overestimate the value or potential value of the project," attorney Rex Whitehorn, representing Kennelly, wrote in the complaint, "and plaintiff made irreversible decisions with respect to financing while relying on plaintiff's advice."
"The case," the article continued, "centers on whether the project could be developed under a so called 'tower-on-base' configuration, in which a high- rise building is built on top of a smaller, denser building that acts like an anchor or could be built as a stand-alone tower 'as of right,' without going through any additional modification or demolition work that would require public hearings or approval from regulatory boards."
The article said that "neighborhood critics argued that Kennelly's project violated several zoning ordinances prior to the accident and raised questions about how the Department of Buildings approved such a project in the first place," adding that "DOB Commissioner Patricia Lancaster resigned about six weeks after the crane collapse."
The suit, the article added, "follows a similar action in May, when Arbor Realty Funding, the lender on the project, filed a $69 million suit against the law firm of Herrick Feinstein."
"In that suit," the article said, "Arbor accused Herrick of malpractice for allowing it to make $70 million in short-term bridge loans, which the bank later had to foreclose on after the accident. Herrick officials countered that they were not the developer's official land use lawyers, and warned Kennelly to get a full analysis from a land-use specialist to advise it on whether it could build the tower on a split lot. Herrick filed an answer to the complaint last month. Following the accident, DOB ruled that it approved the site 'in error' and would not allow completion of the project under its current configuration. Arbor later foreclosed on the project, losing more than $32 million on the sale of the debt to investor Ziel Feldman of HFZ Capital."
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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