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From left: Josephe Moshe, co-owner of Rutenberg Realty, and Paul Purcell and Kathy Braddock, heads of the brokerage

A co-owner of Rutenberg Realty is suing the brokerage and firm heads Paul Purcell and Kathy Braddock for almost million, claiming they have failed to pay him any dividends since the company’s founding, a new lawsuit filed in New York State Supreme Court says.

The suit was filed last Friday by Joseph Moshe, who heads the large Long Island branch of the Rutenberg franchise and is a co-owner of the New York City office. He claims in the suit that Braddock and Purcell are improperly siphoning funds from the New York Rutenberg office, and that they are competing against the firm with their own consulting company, Braddock + Purcell.

According to the complaint, Moshe is seeking at least .9 million in monies he says he is owed, including distributions paid to Braddock and Purcell that he claims should have been directed to Moshe.

Braddock declined to comment, but Purcell said he anticipates the dispute will be resolved amicably.

“I have every expectation that we can have a swift resolution to this,” he said. “All I want to do is run a business and make everybody money.”

Moshe and his attorney did not respond to requests for comment.

Moshe is the trustee and sole beneficiary of an entity called the Krug Family Trust, which controls the Rutenberg name in New York state, according to court papers. Moshe owns one-third of New York City’s Rutenberg Realty, while Purcell, Braddock and two other investors each own one-sixth of the brokerage.

The lawsuit underscores the tension between outside partners who expect a certain return on their investment and believe they are not being paid their fair share. In a similar suit filed in 2008, Timothy King, as a minority partner with the Brooklyn office of investment sales firm Massey Knakal Realty Services, sued to discover how much the firm was making to know with certainty his ownership stake. State court records show that case was disposed of in 2009, when the dispute was sent to arbitration. Such court actions are known as derivative lawsuits, because the plaintiff, as an owner of the company, is suing on behalf of all owners who are allegedly being harmed by the actions of those leading the company.

The dispute also raises questions about the profitability of the “100-percent commission” brokerage model, which has grown in popularity in recent years, due in large part to Rutenberg Realty. Founded in 2006, Rutenberg has become one of the fastest growing firms in the city under the leadership of Prudential Douglas Elliman veterans Purcell and Braddock. The firm charges set transaction and monthly fees rather than taking a percentage of agents’ commission checks.

The firm expected to begin quarterly profit distributions in February 2008, the lawsuit says, but no money was ever sent to the Krug Family Trust. The suit claims that 0,000 was improperly distributed to Purcell, Braddock and others, under the “guise of general business expenses and/or consulting fees.”

To check up on the situation, Moshe asked to review the financial records, but claims he has not been given access.

In addition, the lawsuit alleges that Braddock + Purcell is competing for business with Rutenberg Realty, and is not paying rent although it operates out of the same office space.

Terrence Oved, a partner with the law firm Oved & Oved who is not involved with the litigation, said those claims are particularly biting.

“It’s a very reprehensible allegation to say that not only are [Braddock and Purcell] not diligently and faithfully and accurately performing their duties to [Rutenberg Realty], but they have formed a competing business in breach of fiduciary duties at the cost and expense of [Rutenberg Realty],” he said.

But real estate insiders had high praise for Purcell and Braddock.

“They are fantastic people and experienced brokers,” said Lawrence Link, president of the residential firm the Level Group, which operates under a 100-percent-commission plus transaction fee model, like Rutenberg. Because of the similar model, they speak frequently, Link said, adding: “I have the utmost respect for them.”

But Link noted that the high-commission-split model, by definition, is less profitable for firms than the tradition model, in which the house often takes around 50 percent of each broker’s commission.

“The transaction fees don’t come anywhere near 50 percent,” Link said. “You try and provide a high-quality, well-designed platform for a lower margin. You just know that at the outset.”

The Real Deal New York

From left: Devlin McNiff East Hampton office, Stuart Epstein, owner of Devlin McNiff, and Diane
Ramirez, president of Halstead Property

Halstead Property is expanding into the Hamptons by joining with the local firm Devlin McNiff, Halstead announced today. The new company will be known as Devlin McNiff Halstead Property. This will be Halstead’s only presence in the Hamptons.

Devlin McNiff Halstead Property will be based at 3 North Main Street in East Hampton, the 2,500-square-foot current home of Devlin McNiff will, and will continue to run under the direction of husband-and-wife team Stuart Epstein and Lynn Epstein.

Because of Halstead’s status as a privately held company, Diane Ramirez, president of Halstead Property, said she could not disclose details about the deal. There was a transfer of equity, Stuart Epstein said, but it was not an 100 percent acquisition.

The Real Deal New York – Latest News

There’s controversy in Queens over a proposed College Point hotel and trouble in the Bronx over an allegedly discriminating landlord. Along Fifth Avenue, cosmetic company La Praire takes more space in 680 Fifth, agency CAA stays at 162 Fifth and Colub Capital leaves the Avenue for 551 Madison. Lewis Ranieri and Wilbur Ross combine forces for multi-family loan portfolio, but Blackstone Group remains most active among world’s private equity firms. Click here for these stories and more.

The Real Deal New York – Latest News

International law firm Morrison & Foerster has signed a 15-year lease to take 180,000 square feet, or seven floors, of space at 250 West 55th Street, Boston Properties’ planned .05 billion, one million-square-foot office building in Midtown, Boston Properties announced today.

Construction on the 39-story building, designed by Skidmore, Owings & Merrill, began in late 2007, but was suspended as a result of the recession in 2009, after the completion of excavation and foundations. It is slated to resume in the fall of this year and be completed by 2014.

Mortimer Zuckerman, chairman and CEO of Boston Properties, said the company’s decision to proceed with construction reflected the city’s improving overall economy, particularly the office market. “Upon its completion,” he said in a statement, “[the building] will be considered among the elite office buildings in Manhattan… We are delighted that the prestigious law firm… has selected 250 West 55th Street for its new state-of-the-art home.” 

The Real Deal New York – Latest News

Arbor Realty Funding, the lender at the site of a fatal 2008 crane collapse in Turtle Bay, has filed a million malpractice suit against Herrick Feinstein, alleging the law firm provided bad advice about the zoning regulations for the planned 42-story tower. Manhattan-based Arbor provided million in short-term bridge loans to help developer Jim Kennelly convert the several parcels at 303 East 51st Street into a luxury condominium, but a crane collapsed onto a residential building across the street, killing seven people, causing millions of dollars in structural damage and criminal convictions.

The Real Deal New York – Latest News

Admiral’s Row at the Brooklyn Navy Yard

The non-profit Brooklyn Navy Yard Development removed PA Associates as a designated developer on its high-profile Admiral’s Row project a day after one of the firm’s founders was charged in a million federal bribery investigation.

The quasi-governmental entity today “terminated the designation of PA Admirals Row LLC as the developer of the Admiral’s Row site,” the corporation said in a statement to The Real Deal. PA Admirals Row LLC is an affiliate of Midtown-based PA Associates, which was approved as the developer to partner with grocery chain ShopRite on the million project to build a grocery store.

Yesterday federal prosecutors charged Aaron Malinsky, a principal and founder of PA Associates, of funneling 2,500 in bribes to State Senator Carl Kruger.

The Real Deal New York – Latest News

One of Manhattan’s leading mid-market commercial brokers, Ivan Hakimian, is opening his own firm after six years in the industry, he told The Real Deal.

This week, Hakimian launched the investment sales company Hakimian Properties, to be known as HPNY. While it will handle the sale of all types of assets, in the past he has specialized in off-market sales of retail and residential multi-family properties.

The announcement comes two months after he brokered the million sale to Starwood Capital Group of 1414 Sixth Avenue, at the corner of 58th Street.

The Real Deal New York – Latest News