Real Estate Firm Sues Over Lost Commission In $147 Million East Hampton Sale - 27 East

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Real Estate Firm Sues Over Lost Commission In $147 Million East Hampton Sale

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author on Jul 28, 2014

The Corcoran Group has filed an $8.8 million claim against both the buyer and the sellers of what was reputed to be the most expensive sale in the nation of a single-family residential property—$147 million for an estate on Further Lane in East Hampton.

The suit claims that Corcoran’s top broker, Tim Davis, was cut out of the deal in May, three months after being awarded an exclusive listing for the approximately 18-acre property, and after structuring its sale.

Filed on July 22 in State Supreme Court, the complaint alleges that the defendants not only breached a contract but also acted fraudulently. It seeks $4 million in damages, as well as a $4 million commission fee.

Barry Rosenstein of Jana Partners, whom Forbes magazine describes as one of the wealthiest hedge fund managers in the country, is a defendant in the suit, as the property’s purchaser. Also named in the suit are trustees of the two estates that sold him the property.

“This dispute is between the sellers of the property and a broker claiming to represent them,” said a representative of Mr. Rosenstein who was not identified by name by the public relations company. “Mr. Rosenstein, as the buyer, should not be a party to the complaint,” the statement continued, “and we are confident the court will see it that way as well.”

Mr. Rosenstein bought the oceanfront mansion at 62 Further Lane, as well as two vacant properties at 60 and 64 Further Lane—all marketed together at Corcoran’s suggestion, according to the suit—from the estates of Andrew Gordon (62 Further Lane) and Christopher Browne (60 and 64 Further Lane), who lived together.

A partner in Tweedy, Browne, a New York investment firm, Mr. Browne reportedly spent about 10 years landscaping the estate with Mr. Gordon, including putting in a large pond behind the oceanfront mansion, which backs up to 60 Further Lane, which in turn backs up to 64 Further Lane. Neither of the latter two properties could be developed alone, according to East Hampton Village zoning.

Mr. Browne died at the end of 2009, leaving Mr. Gordon as his disputed heir, before Mr. Gordon died as well, last September. Not long afterward, in January 2014, a lawyer for both of their estates invited Corcoran to “make a listing presentation” for the three properties, which Mr. Davis and Corcoran President Pamela Liebman attended, according to the lawsuit.

Corcoran said its agents suggested an overall price of $150 million as the best selling strategy after establishing the relative value of the three separate lots, and that Mr. Rosenstein offered $75 million and then $125 million directly through his attorney to the estates’ attorney in March, telling Mr. Davis, the broker, that he thought $150 million was too high.

The complaint goes on to say that in April, Corcoran had an offer of $155 million from a qualified buyer, but that Mr. Rosenstein and trustees of Mr. Gordon’s and Mr. Browne’s estates privately negotiated a $147 million deal instead. That deal went to contract in April and closed on July 7, according to the complaint.

“How can anyone believe that the highest-priced sale in the country (involving two estates and multiple trustees) could possibly have happened without a broker being involved in the transaction?” Mr. Davis said on Friday when asked to comment.

Also named in the lawsuit are two trustees of the estate of Mr. Browne—hedge fund manager Scott Bessent, who is the chief investment officer of George Soros’s Soros Fund Management, and William H. Wright II, retired managing director of Morgan Stanley.

Yet another defendant is a trustee of Mr. Gordon’s estate—Elizabeth Dellenbaugh, vice president of investment management firm Van Liew Trust.

Ken Halcom, the attorney representing the estates’ trustees, did not immediately return a message seeking comment, and Leonard Ackerman, whom the suit names as Mr. Rosenstein’s local attorney, could not be reached late Friday afternoon.

Mr. Gordon’s property at 62 Further Lane was sold for $97 million as of June 30, according to the Long Island Real Estate Report, through which sales of the other two properties, and how much they sold for, could not yet be independently confirmed.

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