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Developer of Sutton Place Skyscraper Plan Faces Towering Legal Challenges

By Noah Hurowitz | February 26, 2016 5:32pm | Updated on February 29, 2016 8:28am
 A view of East 58th Street, the site of a planned new condo tower in Sutton Place. On the left is the Sovereign condos.
A view of East 58th Street, the site of a planned new condo tower in Sutton Place. On the left is the Sovereign condos.
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DNAinfo/Shaye Weaver

MIDTOWN EAST — The developer of a planned 900-foot skyscraper in Sutton Place refused to pay nearly $2 million to a brokerage firm that helped it secure financing, according to a lawsuit, adding to mounting legal roadblocks that could doom the project.

JLL, a commercial brokerage, accused Bauhouse Group of reneging on a $1.9 million commission the developer agreed to pay in return for JLL’s help in getting financing for the luxury condo tower Bauhouse is hoping to build on East 58th Street, according to the complaint.

The lawsuit, filed on Thursday, came just days after a judge dismissed Bauhouse founder Joseph Beninati’s bid to block an upcoming foreclosure auction of his properties at 428-432 E. 58th St., which creditor Gamma Real Estate is looking to sell after Beninati defaulted on a $147 million loan, court records show.

According to the lawsuit, Bauhouse hired JLL in July 2014 to secure funding for the Sutton Place project, eventually receiving more than $200 million in loans thanks to the broker’s efforts. 

JLL held up its side of the bargain with an initial $63 million loan from investor Gamma Real Estate in January 2015. Beninati allegedly promised to pay JLL upon receiving a second loan, the complaint said.

JLL came through with the second loan of $147.25 million from Gamma in June bringing the total owed commission to $1.9 million, but in August Beninati summarily terminated his deal with the broker and refused to pay the commission, according to a lawsuit filed Thursday.

When JLL tried to collect, Beninati was defiant, according to the complaint.

“We will do what we want— and if you don’t like it, sue us,” Beninati taunted, according to the lawsuit.

Bauhouse has spent the past year buying up and preparing to demolish buildings on East 58th Street to make way for its planned skyscraper, facing stiff resistance from neighbors. A community group in January filed an application to rezone the area and impose a height limit, but with a foreclosure auction set for Feb. 29, according to Crains, Beninati’s tussle with his creditor and broker appear to present a more direct threat to the project.

A representative of Bauhouse Group and lawyers for the firm did not respond to multiple requests for comment, nor did lawyers for Gamma and JLL.