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An Albany judge earlier this month tossed the state’s claim that Dumbo-based real estate investor Fortis Property Group must immediately pay $8 million as part of a failed deal to redevelop the old Long Island College Hospital in Cobble Hill.
Judge Richard Platkin of Albany’s Court of Claims on April 5 denied a motion for what’s called summary judgment, which would settle the case without going to trial, and make Fortis pay up the several million in cash to Downstate at LICH—an entity of the State University of New York—saying he cannot yet make a final decision before hearing more from both sides.
The seemingly never-ending saga dates back more than a decade. In 2011 SUNY acquired Long Island College Hospital, which at the time was operating at “dramatic losses,” according to court documents.
Then, in 2014, the state controversially shut down the facility and agreed to sell the Cobble Hill parcels to Louis and Joel Kestenbaum of Fortis for $240 million after a contentious bidding process on the condition that their plans to erect a sprawling, luxury residential complex with affordable housing—later rebranded as River Park—would include a world-class medical facility, to be built by New York University’s Langone Medical Center.
The first closing on 16 of the parcels did in fact take place, in 2015. But the second—the one at the center of the current litigation, including the properties at 363 Hicks St., known as “Polak Pavilion,” along with 97 Amity St. and 340 Henry St., known as the “Henry Street Building”—collapsed in 2023.
And when that happened, SUNY took Fortis to court over the $8 million the state argues the developer had agreed to pay as part of what’s called a guarantee—or a promise to pay the money.
But Fortis’ attorney, George Carpinello of the firm Boies Schiller Flexner, claims that there was a dispute over the final price of the parcels in the second closing and that the guarantee at the heart of the agreement never included the required signatures of now-disgraced former Attorney General Eric Schneiderman, who resigned in 2018 amid sexual harassment allegations, or state Comptroller Thomas DiNapoli.
“Our contention is that they had breached the agreement. The guarantee was not valid because it was never authorized by the AG or comptroller,” Carpinello said. “It’s not clear to us why they didn’t sign. They got signatures afterward—we said it’s too late.”
For now, at least, Platkin has denied SUNY’s motion for summary judgment on the $8 million guarantee, although he has not yet made a final decision, according to Carpinello.
Meanwhile, a separate claim brought by Fortis against NYU for allegedly delaying the construction of the hospital, allegedly costing Fortis damages, according to Carpinello, can continue, the court said.
The parties are next scheduled for a conference in early May. Attorneys for both NYU and SUNY did not respond to requests for comment.
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Julianne Cuba , 2024-04-22 19:36:04
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