Two former minority owners of a 14-story Midtown office building claim they were tricked into selling their stake and wrongfully cut out of a lucrative deal to convert it into an SLS hotel.
Restaurateur Robert Malta and his brother Diego are accusing David Moinian of Moin Development Corp. and their former business partner Salvatore Gaudio of persuading them to sell their shares in 444 Park Avenue South to make way for a hotel conversion, according to a lawsuit filed in Manhattan Supreme Court. The Maltas allege that Moinian had pressured Gaudio to “get rid of Robert and Diego so that the transaction could be more streamlined and unencumbered with smaller investors.”
Moinian, whose company bought the office building in 2011, declined to discuss the allegations but said they were “totally meritless.” His attorney, Bruce Lederman, said the lawsuit stems from personal animosity between the Maltas and Gaudio and that his client is not involved. Lederman said Robert Malta is trying to make money off the hotel conversion after others have invested time and money in the project.
“He made a decision to sell the property. It’s, in our view, revisionist history,” Lederman said. “To sit and wait and let somebody else do the work, and then say, ‘Hey I could have made money,’ shows the bad judgment in this case.”
Kathleen Kundar, an attorney for Robert Malta, said Robert was not aware of the hotel deal when he filed previous lawsuits against Gaudio, which were settled in 2012. An attorney for Gaudio didn’t respond to requests for comment.
Moin Development and hotel giant SBE, led by Sam Nazarian, acquired the building in 2011 for $45 million. Before the sale, Robert Malta had a 50 percent stake in GMD Realty, which owned a 26 percent share of 444 Park Avenue South, the suit states. Gaudio owned the other 50 percent of GMD, and had an additional 70 percent stake in the building through another LLC, according to the suit. Diego Malta held a 4 percent interest in the building through his own company.
Prior to the sale, in late 2010, Robert Malta discussed the possibility of converting 444 Park Avenue South into a hotel with Moinian. However, Gaudio quashed the talks when he told Malta that he wasn’t interested in a hotel deal and was instead considering selling the building or establishing a triple-net lease, the complaint states.
But, according to the complaint, this wasn’t the case: Gaudio and Moinian were secretly in talks to go through with a hotel deal with SBE to build an SLS Hotel on the property. At Moinian’s urging, Gaudio pressured the Maltas into selling their stakes in the building — for far less than they were worth as part of the hotel deal, the lawsuit alleges. Robert Malta alleges that he should have received $12 million, when he only got $2.5 million by selling his share. He is seeking at least $9.5 million in damages. Diego Malta received $867,072, but could have received an additional $1 million, according to the complaint. He is seeking at $1 million in damages.
The hotel, for which Moin and SBE secured a $109 million development loan in July, is expected to open this spring.
The lawsuit appears to be the latest instance of bad blood between Gaudio and the Maltas. The former business partners have been entangled in a series of legal disputes since 2011.
A settlement agreement in January 2012 is the source of another allegation in the most recent lawsuit. The Maltas claim that Gaudio hid a “lucrative lease” from them at 1420 Second Avenue, an Upper East Side building they had once owned together. Not knowing that Gaudio inked a deal with the nonprofit Kids in Sports, the Maltas signed over rights to the building to Gaudio as part of the 2012 settlement, according to the complaint. Gaudio had allegedly repeatedly referred to the building as “shitty” and told the Maltas that it was vacant. The building was valued at $4 million but would have been worth much more with the lease, according to the complaint.
Source: The Real Deal