A longtime lawyer on real estate deals involving government and apartment buildings, Mr. Grunstein said he knew about this issue for years but was never in a position to bring a case. “This is a very arcane, esoteric area—if you don’t know it, you don’t know to look for it.”
TENANTS AND ELECTED OFFICIALS sought to slow the sale, but longtime owner MetLife proceeded at its quick pace and unloaded the property to the Tishman Speyer team on Oct. 16, 2006, seemingly closing the issue and wiping its hands of the property. (The tenants made it to the final round with a bid of about $4.5 billion.)
But in the weeks after the sale, some members of the tenants association, by Mr. Grunstein’s telling, wanted to revisit the concerns their attorney had raised in the bidding process, as they were worried the high sales price would lead to rapid deregulation of apartments.
“We had a meting, and they said, ‘Can you do something about it?’ And, I said, ‘There’s this claim, let’s see if we can get some plaintiffs,’” he said.
From there, a second attorney entered the scene—Mr. Grunstein said he had a potential conflict with MetLife that could have precluded him from bringing a lawsuit—who effectively took over the case. Stuart Saft, then a partner at the firm Wolf Haldenstein, had worked for two losing teams during the bidding process. An experienced lawyer who frequently dealt with rent stabilization law and conversions, he said he, too, had seen the J-51 issue as a red flag while he prepared the bids.
“I went through the whole due diligence package, and it occurred to me that this was a potential problem,” said Mr. Saft, who described himself as an old friend of Mr. Grunstein’s. “We both had the same realization, and we started talking about it, and I went back to my then-firm and suggested we could bring it as a class action.”
On Jan. 22, 2007, with a set of market-rate tenants as the plaintiffs, the class action suit—Roberts v. Tishman Speyer Properties—was filed in State Supreme Court, setting it down the road to last week’s win at the Court of Appeals. (Mr. Saft later left his firm, as did a litigator who filed the suit. Alexander Schmidt took over at the appellate level and argued the case in the Court of Appeals.)
Interestingly, Mr. Grunstein is insistent that there were far more legitimate problems with the Stuyvesant Town sale that were never challenged legally. He contends, for instance, that MetLife should not have been allowed to sell the property in the first place because it never filed a required disclosure document, an issue he seemed far more interested in talking about than the J-51 lawsuit.
“The funniest part is,” he said of the J-51 issue, “this is the least of what we talked about.”
ebrown@observer.com
More from Eliot Brown on the Stuyvesant Town decision:
