The Case of the Costly Typo
It was the difference between an eight and a nine—a so-called scrivener’s error at the center of a 732-page offering plan—that inspired a legal feud that grew to involve $70 million in prime Hudson River property, 41 affluent complainants, an attorney general in the throes of a political campaign and one of New York City’s most unpredictable real estate developers.
Not to mention the very future of the trophy asset at the center of the dispute.
The case began in 2009, months after Extell Development and the Carlyle Group missed a Sept. 1, 2008, closing deadline tied to new condos at the Rushmore, the 289-unit luxury building at 80 Riverside Boulevard that, two years earlier, drew intense interest at the height of the bubble.
But when the economy soured shortly after a Sept. 15 bankruptcy claim by Lehman Brothers, jittery buyers—initially 23 of them, paying some $10 million in deposits on nearly $70 million in condominiums—demanded refunds, insisting that after missing the Sept. 1 closing date printed in offering plans, Extell Development was required not only to submit a new operating budget for the building but also to allow jittery buyers the right to rescind their contracts.
Lawyers from Stroock & Stroock representing Extell fought back, arguing that Sept. 1, 2008, was the first day of the budget year, not the last, and was therefore a typographical error. Instead, it should have stated that buyers had the right to back out if a closing didn’t occur by Sept. 1, 2009.
In April 2010, then-New York State Attorney General Andrew Cuomo, already in the process of campaigning for governor, ruled in favor of the buyers, now numbering more than 40. For those complainants, the decision capped what had, by then, spiraled into an 16-month feud.
For Extell Development and president Gary Barnett, however, the case was just warming up. Calling for a reversal of the April 2010 ruling, Mr. Barnett, through the law firm Boies, Schiller & Flexner LLP, argued that the developer had never been given an opportunity to cross-examine buyers or collect evidence to bolster its defense.
But despite the lawsuits that followed, it’s possible that today—two years after the AG ruling—more people know the luxury property for its satisfied buyers: After all, when Yankees slugger Alex Rodriguez left 15 Central Park West, he headed east, to the Rushmore.