HAP Investment Developers – best known for its eye-popping collaborations with architect Karim Rashid – is facing a lawsuit from contractors who claim the firm failed to pay them for work on two projects.
Airitan Management Corp., a Queens-based construction company, and Danya Cebus Construction LLC, a public subsidiary of Africa Israel Investments, argued that HAP owes them a total of $3.5 million, according to a lawsuit filed Jan. 5 in New York State Supreme Court. The class action lawsuit was filed on behalf of Airitan and Danya by Maverick Real Estate Partners, a private equity fund manager that acquires loans, liens and judgments. Maverick purchased the mechanic’s liens that Airitan and Danya filed against HAP.
According to the lawsuit, the dispute stems from construction work performed at two of HAP’s residential projects — a 39-unit rental at 446 West 167th Street in Washington Heights and a 30-unit rental at 2338 Second Avenue in East Harlem. The latter project previously came under fire after neighbors complained that shoddy construction had damaged their properties. Both buildings remain under construction.
The suit stated that HAP hired Airitan in 2012 to be the construction manager for the two projects, and Danya Cebus joined the projects in 2013. In court documents, the construction firms claimed that HAP did not pay them for their services. Between 2014 and 2015, Airitan and Danya filed mechanic’s liens seeking to recover the money they were owed.
In the suit, Maverick Real Estate, which later acquired those liens, argued that HAP had the funds to pay Airitan and Danya, given that the developer received building loans from Bank Leumi totaling nearly $12 million in 2012 and 2013 for the two projects. It received $4.9 million for the Second Avenue project and just over $7 million for 167th Street.
HAP, however, has a different view of things.
Andrea Lawrence, HAP’s general counsel, said in a statement that Airitan filed a lawsuit after it was terminated by HAP for “defective performance on three separate development projects.”
In a legal counterclaim, HAP is seeking damages of $7.7 million from both Airitan and Danya. Lawrence said HAP’s claims against both parties will be resolved in arbitration.
HAP, led by CEO Eran Polack, was founded in the 1990s with investments in Kiev, Budapest, Hungary and Tel Aviv. In New York, where it launched operations in 2010, HAP specializes in mid-sized projects and the firm has reportedly spent $100 million on six projects in East Harlem. The developer is also working on a $400 million residential tower in Jersey City.
In court documents, HAP claimed that Airitan’s work was “defective, improperly performed” and “were never completed.” The contractor failed to hold construction meetings, submitted fraudulent excavation documents to the Department of Buildings and did not pay subcontractors, court documents said.
Instead, court documents described, “Airitan elected to walk off of the three HAP projects simultaneously and without notice in January 2014.”
Source: The Real Deal