L train lawsuit partially settled

Apr5 14th St coalition Schwartz Prentiss

Arthur Z. Schwartz discusses the litigation at an April press conference. (Photo by Sabina Mollot)

By Sabina Mollot

In April, Arthur Z. Schwartz, an attorney for Advocates for Justice, filed a lawsuit in an attempt to stop the L train shutdown planned for 2019. The litigation, filed on behalf of a coalition of West Side residents living on or near 14th Street and disability advocacy groups, was over the lack of access for disabled passengers in the plan to upgrade various stations along the L train route.

The lawsuit is also over area residents’ concerns about traffic congestion, due to a planned “busway” on 14th Street and expanded sidewalks causing traffic to be congested on surrounding streets. The Metropolitan Transportation Authority, the Department of Transportation and the Federal Transportation Authority were named as defendants.

However, Schwartz, who’s also a Greenwich Village Democratic district leader, announced late last month that the suit was partially settled with the MTA proposing to make the Sixth Avenue station accessible to the disabled. Previously only two stations included in the renovation plan (Bedford Avenue and First Avenue) were slated to become compliant with the Americans with Disabilities Act.

In exchange, the part of the lawsuit alleging disregard for disabled New Yorkers has been dropped. This was first reported by The Villager.

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Prescription meds are absolutely worsening opioid crisis: MSBI doc

Mount Sinai Beth Israel has the world’s oldest and largest opioid treatment program. (Photo by Maria Rocha-Buschel)

By Sabina Mollot

On Tuesday, the mayor announced a lawsuit targeting major pharmaceutical companies, who he said have contributed to the city’s opioid explosion by getting people hooked on prescription drugs.

In 2016, more than 1,000 people in New York City died in a drug overdose that involved an opioid, the highest year on record. Additionally, according to city data, more New Yorkers died from opioid overdoses last year than from car accidents and homicides combined.

The suit is asking for a half million dollars to cover current and future costs to combat the crisis at hospitals not to mention costs relating to courtrooms and the morgue.

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When stores denied this disabled woman’s service dog, she sued

Cheryl Krist, pictured with her husband Joseph and her service dog Bocci in Stuyvesant Town last year (Photo by Sabina Mollot)

By Sabina Mollot

Last summer, Town & Village published an interview with Cheryl Krist, a Stuyvesant Town dog owner, who spoke about how her service pooch, Bocci, once saved her life. Krist, who walks with the aid of a cane due to a neurological condition that gives her tremors, had fallen backwards into a dip on the road after becoming started by a wild turkey. (This was in a rural road in Pennsylvania.) When Krist was unable to get back up, Bocci blocked his owner when a car came down the road, by standing up on his hind legs in front of her. Meanwhile, Krist also mentioned then as well as in prior interviews with this newspaper that she’s often had Bocci denied entry to neighborhood stores.

On Sunday, The Post published a story about two disabled New Yorkers who’ve filed lawsuits against various businesses over access issues, including Krist, who, according to the paper, has filed a total of seven.

Reached at home this week, Krist (who recently moved from Stuyvesant Town to Riverdale), declined to get into detail about specifics for the cases that are pending. One, however, she said she won last year against Gracefully. The store paid her a sum she said she isn’t allowed to discuss as well as a fine to the city. (A call to Gracefully wasn’t returned.) Another suit, against a local diner, she lost. But, according to Krist, there’s never a reason to deny her dog entry because Bocci wears a jacket that identifies him as a service dog.

“It saves a lot of questions,” she said.

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Lenders withdraw lawsuit against CW

Apr11 Greg Cross

CWCapital attorney Greg Cross (Photo courtesy of Venable)

By Sabina Mollot

It was the biggest bust of the last real estate boom, but a lawyer battling over Stuyvesant Town money claimed everybody won.

“Listen, everybody connected with this property is making a lot of money,” said Greg Cross, an attorney for CWCapital.

Cross was in court earlier this month defending his client’s right to a half-billion-dollar payment for services rendered during the period when CWCapital ran the complex and serviced the debt on the original $3 billion mortgage rung up by Tishman Speyer and BlackRock Realty which was sold to investors in five securitized tranches.

In October, investment giants Blackstone and Ivanhoe Cambridge agreed to buy the East Side development for $5.3 billion and signed a deal with the city to preserve 5,000 affordable apartments.

Ahead of the sale closing, the latest in a long line of lawsuits surrounding the complicated financing deals negotiated for the property drew to an end with the plaintiffs withdrawing their complaints.

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Judge sends lenders’ suit back to state court

Stuyvesant Town leasing office (Photo by Sabina Mollot)

Stuyvesant Town leasing office (Photo by Sabina Mollot)

By Sabina Mollot

A federal court judge has decided that the lawsuit against CWCapital by a group of junior lenders involved in Stuyvesant Town should be handled by a state court, as the lenders had been hoping.

It was on Monday when United States District Judge Alison Nathan remanded the litigation to the New York State court where it was originally filed.

In the decision, Nathan wrote that “this case invokes no comparable federal interest, scheme or agency. Rather it is a contract dispute between private parties, turning almost entirely on construction of a private contract, and failing to present any dispositive question of federal law.”

The lawsuit was filed last summer after CWCapital took ownership of Stuyvesant Town and Peter Cooper through a deed, rather than holding a planned foreclosure sale on mezzanine debt. A group of lenders represented by Centerbridge Partners had hoped for a chance to buy a key piece of the mezzanine or junior debt and accused CW of violating an intercreditor agreement. The deed-in-lieu of auction wipes out the value of the junior debt, they’d argued, allowing CW to reap an “unearned windfall” when the property is sold.

They also accused CW of inflating the interest it was owed to calculate the total senior debt at $4.4 billion.

However, in its arguments, the lenders said that even though they believe CW’s figures are wrong, they still stand to “reap windfall profits regardless of how the interest rate is calculated on the senior loan.”

Even when using CW’s “incorrect and vastly overstated senior loan payoff amount of $4.4 billion, the value of Stuy Town is still worth hundreds of millions of dollars more,” the lenders said.

News of the court action was first reported on Tuesday by Law360, a legal news service.

Michele de Milly, a spokesperson for Centerbridge, declined to comment on the latest court action. Brian Moriarty, a spokesperson for CWCapital, didn’t respond to a request for comment.

Last month, the total amount of debt as calculated by CW reached $4.7 billion, a figure announced at a Tenants Association meeting by Council Member Dan Garodnick. He explained the amount was due to interest and fees. It’s also the amount that was reportedly being prepared as a bid by CWCapital’s parent company, Fortress. The Tenants Association has since said it is still hoping for a tenant-led condo conversion with partner Brookfield.

Following the suit being remanded, Susan Steinberg, chair of the ST-PCV Tenants Association said it basically just means more waiting around for would-be buyers.

“The decision to remand the case back to state court means that if CWCapital is waiting to settle with Centerbridge et. al. before proceeding with plans to sell, it will have a longer wait,” said Steinberg. “Ultimately, so will would-be buyers, including the tenants here. Whether the remand is a good or a bad thing for either the plaintiffs or the defendants will depend on which judge the case comes before. We will stay tuned.”

Cheating claims spark new lenders lawsuit

Stuyvesant Town leasing office (Photo by Sabina Mollot)

Stuyvesant Town leasing office (Photo by Sabina Mollot)

By Sabina Mollot
Last week, CWCapital was sued by holders of Stuyvesant Town’s mezzanine debt who claimed that the new owner cheated them out of hundreds of millions of dollars.
The lawsuit, which was first reported by Bloomberg, is being led by Centerbridge Partners, which is representing six limited liability companies who are named as plaintiffs.
The suit follows a decision by CW last month to take title to Stuyvesant Town/Peter Cooper Village through a deed rather than hold a foreclosure sale that had been scheduled for June 13.
By doing this, Centerbridge accused CW of a “continuing pattern of misconduct” to keep control of the property and “reap an unjust windfall of $1 billion” that should go to lower level lenders, who’ve received nothing.
The report went on to say the lenders, in their complaint, called CWCapital’s takeover “executed on the flawed premise that the amount owed on the senior loan was greater than the value of the property.” CW represented that $4.4 billion was owed on the mortgage when the amount was really $3.45 billion, the lenders said.
A spokesperson for Centerbridge, Michele de Milly, said the lawsuit shouldn’t impact the tenants.
In an official statement, Centerbridge said, “We believe that Stuyvesant Town is and will continue to be a unique and extraordinarily important property, both for the City of New York and for the thousands of tenants who make it such a robust community. This legal matter is an inter-creditor dispute and we do not expect it to affect Stuyvesant Town or its residents. Funds affiliated with Centerbridge Partners, which have owned mezzanine loans of Stuyvesant Town and Peter Cooper Village, have been forced to commence this lawsuit because of the actions taken by CW Capital, in violation of an inter-creditor agreement.”
CWCapital, however, denied this and called the suit “without merit.”
“The assertions made in the lawsuit are utterly baseless and without merit,” spokesperson Brian Moriarty said. “The fact that the complaint centers on a deed in lieu transaction completed before the plaintiff acquired their position exposes the plaintiff’s specific intent to wrest a quick profit from ‘purchased litigation.’ Centerbridge acquired this position at a deep discount in hopes of reaping a windfall at the expense of the bondholders we represent and residents who deserve a timely resolution that will provide certainty and a path forward for the community.”
The litigation, which also names commercial-mortgage trusts set up by Wachovia Bank, may slow down a sale process. However, it shouldn’t stop the city from its current plan of trying to work with CW to maintain affordability at the property while satisfying the bondholders.
When CW canceled the foreclosure auction it also agreed to hold off on a sale for two months while working with the de Blasio administration along with local elected officials representing ST/PCV to come up with a plan. According to Council Member Dan Garodnick, this litigation doesn’t change that.
“This is largely a dispute between lenders and it does not affect our strategy,” he said. “The only question is whether this has the effect of slowing things down further, which is not at all clear at this moment.”
A New York Times story on June 11 had quoted Deputy Mayor Alicia Glen as saying a plan was being explored that would keep as many as 6,000 units in ST/PCV affordable in exchange for a tax exemption.
However, as of late June, Garodnick told Town & Village there aren’t yet any numbers figured out and city officials stressed that was just one possibility.
“The numbers that have been floated were hypothetical and not based on the substance of any negotiation,” Garodnick said.
Lenders Fannie Mae and Freddie Mac have already committed to not financing a deal that would be unacceptable to the tenants or the city.

Beth Israel sued over Medicaid payments

Beth Israel's First Avenue building (Photo by Sabina Mollot)

Beth Israel’s First Avenue building (Photo by Sabina Mollot)

By Sabina Mollot
On Friday, Attorney General Eric Schneiderman announced that he was filing a lawsuit against Beth Israel and St. Luke’s-Roosevelt hospitals as well as Continuum Health Partners, accusing all three of accepting Medicaid payments they were not entitled to. Continuum is the company that owned both hospitals prior to a recent merger with Mt. Sinai.
The lawsuit accuses the hospitals and Continuum of failing to return money to Medicaid they knew was only received due to a computer error in 2009 and 2010. According to the suit, the hospitals submitted improper claims to Medicaid due to the error until the New York State comptroller notified Continuum in 2010 that there were problems with those claims.
The complaint also said that in February of 2011, Continuum found over 900 potentially improper claims to Medicaid after conducting an internal investigation. The total of those claims was over one million dollars. But according to the A.G., the hospitals’ parent company then failed to repay it all within 60 days, instead only repaying “small batches of affected claims” over the next two years. The rest were finally paid by March, 2013, but, the A.G. said, repayments for over 300 of those claims were only made after federal involvement.
This was in June, 2012, when the United States Attorneys’ Office for the Southern District of New York issued a Civil Investigative Demand to Continuum. The complaint against Continuum, Beth Israel and St. Luke’s-Roosevelt was filed under the New York False Claims Act and other statutes in U.S. District Court for the Southern District of New York.
A spokesperson for Mt. Sinai, Gregory Williams, said the company doesn’t comment on pending litigation. However, Williams added, “We intend to argue our case vigorously in court.”