BY LIANA GREY
Developer Isaac Katan has filed a second lawsuit against the Community Preservation Corporation (CPC), his partner in the re-development of the Domino Sugar factory site along the Williamsburg waterfront.
The suit comes after the New York State Supreme Court ruled against Katan in his attempt to block the CPC from handing a majority stake in the troubled project to primary lender, Pacific Coast Capital Partners (PCCP), a California-based firm.
“This new suit was filed to vindicate Katan Group’s right of first refusal which exists to protect Katan Group’s rights in the event of a sale,” said Katan’s lawyer Y. David Scharf, a partner at Morrison Cohen LLP. “This is separate from the prior lawsuit.”
The first lawsuit, Scharf explained, was brought to prevent the CPC from finalizing a deal with the PCCP. The decision to recapitalize the project came about after the CPC defaulted on a $120 million loan.
So far, Katan and the CPC have spent $100 million preparing for construction on the 160-year-old site, which the partners hope to transform into a mixed-use community of rental towers, retail space, and an esplanade. The project’s total cost is estimated to be $1.2 billion.
Last month, Katan was rumored to have located a potential “White Knight” investor to save the project from foreclosure.
Katan declined to name anyone he’d spoken with, but made clear that he opposed handing over significant control to a firm headquartered on the West Coast.
“To give a California-based fund control is going to be a disaster,” he told Real Estate Weekly.
Susan Pollock, a senior vice president in CPC’s for-profit development wing, told Real Estate Weekly last month that Katan never had control of financing sources to begin with.
“He has a consultation right,” she said, adding that CPC has consulted with him consistently over the years. “He’s chosen to go to court to exercise control he doesn’t have.”
The latest lawsuit is challenging Katan’s lack of control. “The new suit is brought to force CPC to accept Katan’s Group right to take the same deal CPC is prepared to take from PCCP under its right of first refusal,” said Scharf.
“The new suit is not redundant because it seeks a different remedy and is based on different legal principles,” adding that the Supreme Court decision “supports this lawsuit.”