Georgetown Co. Seeks More Than $20M In Damages From Contractor Found Guilty Of Fraud
Contractor J.T. Magen may have been hoping an appellate court ruling last month would end the legal saga over a Hell’s Kitchen office tower.
But the story of 787 11th Ave. isn’t over, Bisnow has learned. Majority owner Georgetown Co. is now seeking punitive damages amounting to roughly double the sum it was unsuccessfully sued for by J.T. Magen in 2017.
Georgetown is asking a judge for a $20M-plus award from J.T. Magen, the contractor that has built out offices for clients such as TikTok and Capital One, following a January appellate court ruling that it defrauded the building owner.
“We are gratified that J.T. Magen is being held accountable for its egregious conduct, and look forward to presenting our evidence at a damages trial, where we will be seeking tens of millions of dollars, in both compensatory and punitive damages, related to J.T. Magen’s fraud,” said Kasowtiz Benson Torres partner Mark Ressler, who is representing Georgetown, in a statement.
Georgetown began renovating 787 11th Ave. in 2015, bringing world-famous architect Rafael Viñoly on board to oversee the 500M SF office tower’s redevelopment.
By 2018, investors in the property included LeBron James and Arnold Schwarzenegger, Page Six reported at the time. Three years later, the property was fully leased and tenants included Bill Ackman’s hedge fund Pershing Square Capital Management, Mount Sinai’s Icahn School of Medicine and a Jaguar Land Rover dealership, according to The Wall Street Journal.
But behind the scenes of the property’s commercial success, its ownership was embroiled in a fiery legal battle that kicked off when J.T. Magen placed $11M in mechanics liens on the building, according to reporting by The Real Deal.
The contractor, whose work also includes build-outs of Nike’s Fifth Avenue retail store and the National Football League’s broadcast studio, sued 787 11th Ave. ownership over the liens in 2017, court records show.
Months later, in 2018, Georgetown countersued, ultimately winning the case in August 2022, per court documents.
In the appellate court decision delivered last month, Justice Joel Cohen ruled that J.T. Magen had conspired with BICOM, an auto dealership and tenant in the building, to falsify documents and defraud building ownership.
J.T. Magen and BICOM tried to extract cash that they claimed was for the construction of dealerships “as part of an undisclosed side-deal scheme designed to obtain Georgetown’s release of certain funds,” according to the ruling. The pair also defrauded Georgetown out of $6M in tenant improvement allowances, which Georgetown is also hoping to recoup in the damages suit, lawyers for the developer said.
The decision cleared the way for Georgetown to pursue more aggressive measures, including punitive damages. The typical amount sought in punitive damages cases is roughly double the initial amount for which a defendant was sued.
“Two courts, having carefully reviewed the evidence, correctly found that J.T. Magen engaged in a blatant fraudulent scheme, including falsifying documents, to obtain funds it had no right to obtain,” Kasowtiz Benson Torres partner Joshua Hollander told Bisnow in a statement.
J.T. Magen strongly disputed the allegations and will fight the ask for damages, the company said in an email statement provided to Bisnow.
"We performed $18 million worth of work at 787 11th Avenue to build a high-end auto showroom but were only paid $7 million in all," the contractor said. "In keeping with longstanding industry practice, we put a lien on the building for the full $11 million we were owed. To say we committed fraud, when we are the ones who haven’t been paid $11 million, and then seek 'damages' on top of that, defies logic, fairness and upends the lien law. We will fight this to the end and will be appealing the decision."
UPDATE, Feb. 8, 4:10 P.M. ET: This article has been updated to include comment from J.T. Magen.
