Dewey Landlord Pursues Former Partners
Dewey & LeBoeuf's former New York landlord sued 450 former partners of the now-bankrupt firm in Manhattan Supreme Court Thursday, claiming the lawyers should be held responsible for debts left behind when Dewey collapsed in May 2012.
In its 17-page complaint—10 pages of which are filled with the defendants' names—the landlord, 1301 Properties Owner, claims the former Dewey partners "are jointly and severally liable for all amounts that are due and will become due" under a lease for the firm's midtown Manhattan headquarters at 1301 Avenue of the Americas that was initially intended to run until 2020. The landlord points to a clause in the lease, originally entered into by Dewey predecessor firm Dewey, Ballantine, Bushby, Palmer & Wood in 1989, that holds each Dewey partner personally liable in the event of default.
In an October 2012 filing, the landlord said Dewey still owed $45.45 million over the life of the lease and it planned to pursue former partners for the money.
Beyond saying it is owed "the amounts due under the Lease that have not been paid," with interest—as well as attorney fees—the suit does not specify the damages being sought, aside from $1.6 million in unpaid rent that had accumulated as of April 2012. The landlord, which does business as Paramount Group but is referenced in court filings as 1301 Properties, terminated Dewey's lease on May 25, 2012.
Under real estate law, a landlord cannot recover money from a delinquent tenant if the space is leased out to a new tenant. Chadbourne & Parke is set to take over six floors of the space previously occupied by Dewey, once it is demolished and redesigned.
The lease provision at the heart of the suit has been contested by former Dewey partners—particularly those who joined the firm in 2007 when their firm, LeBoeuf, Lamb, Greene & MacRae, merged with what was then Dewey Ballantine—who say that they never agreed to be personally liable for the real estate. The clause appears to be a remnant from a bygone era, before law firms became limited liability partnerships and landlords began making concessions to woo them as reliable long-term tenants.
The suit does not make clear how it chose the partners named as defendants, but says they are residents of Arizona, California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Utah, Vermont, Virginia, and Washington, D.C.
Howard Kingsley, a partner with Rosenberg & Estis who represents 1301 Properties in the suit, declined to comment Thursday. (The suit notes that Tishman Speyer Trammell Crow originally owned the building).
Since the Dewey bankruptcy began, the firm's estate has paid 1301 Properties $78,913 as the result of an order issued by U.S. Bankruptcy Court Judge Martin Glenn (See Profile) in August 2012, according to the suit. The landlord hinted last year that it might wind up suing former Dewey partners around the time that Glenn was in the process of approving a $70 million settlement plan that insulated many of those partners from certain Dewey-related liability. Against that backdrop, the company filed papers to preserve its right to sue, and Glenn agreed that the partner settlement plan did not prohibit 1301 Properties and other third parties from bringing suits.
The suit is 1301 Properties Owner v. Abelson, 653342/2013.
@|Sara Randazzo is a reporter for AmLaw Daily, an affiliate of the Law Journal. She can be contacted at firstname.lastname@example.org.