By: Hadassa Kalatizadeh
Billionaire radio talk show host, John Catsimatidis, won a legal battle against tenants in one of his rental buildings in Brooklyn’s Prospect Heights.
As reported by the Real Deal, back in October, tenants filed a class action lawsuit accusing Catsimatidis’ Red Apple Group of illegally overcharging tenants at 670 Pacific Street. This week a justice for state Supreme Court dismissed the case. The victory is one for landlords at large, since the case was one of several, which alleged that landlords were illegally inflating the first rent payments at several new development rental buildings that got 421a tax abatements. Tenants have said they will appeal the decision.
The core of the case was whether landlords could legally offer concessions over the initial rent for units in 421a buildings, without recording the discount. The legal team for the tenants in the cases, namely Newman Ferrara, claimed that doing so unlawfully inflates rental prices. Landlords argued that it’s nothing new. As per Crain’s, on Friday, Judge Debra James ruled in favor of the landlords, in the case of Catsimatidis’ building at 670 Pacific, mentioning the existence of a “one-time construction concession rider” as a main deciding factor.
Catsimatidis and his lawyers celebrated the victory, with the billionaire saying he plans to seek to recover attorney fees for the case “with a vengeance.” But he said he wasn’t after the tenants, rather he would try to recover the fees from their lawyers at Newman Ferrara. “Basically we had a bunch of ambulance-chasing lawyers chasing all the tenants,” Catsimatidis told The Real Deal. “They sent out letters to every tenant in the whole area shopping for one of them to bite and that’s what happened. The tenants were just sucked into this deal, I believe.”
But housing advocates, siding with the tenants, say the celebration is premature, as they plan to appeal the decision. “Appellate determinations are what ultimately matter,” said Lucas Ferrara, a partner at Newman Ferrara, who is handling the case with Roger Sachar. “Tell Catsimatidis, who made his fortune selling poultry, that it’s a bit premature to start counting his chickens.”
Sherwin Belkin, the partner at Belkin Burden Goldman, which represented Red Apple in the case said the decision was a milestone. “This is very important in that it’s the first case that addressed the merits and found for multiple reasons that the complaint was completely lacking in merit,” he said.
Ferrara responded saying, “the judge erroneously thought that a cognizable cause of action wasn’t asserted, but it is not a merits-based determination. Not by any means.”
