Real-Estate

Judge to Hear Normandy Case Involving Netflix Studio Lease

From left: former Normandy partner Jeff Gronning, 333 Johnson Avenue, Royalton Capital’s Jin Lee and Sciame Construction’s Frank Sciame (Royalton Capital, Sciame, Normandy)

A lawsuit filed against Normandy Real Estate Partners involving Netflix’s studio complex lease in Brooklyn can move forward, a judge has ruled.

Royalton Capital’s Jin Lee and Frank Sciame of Sciame Construction are suing their former investment partner Normandy, alleging that it sold the partnership’s property at 333 and 339 Johnson Avenue in East Williamsburg to Steel Equities for $52.5 million without disclosing to Lee and Sciame that Netflix was interested in leasing the entire 160,000-square-foot site.

A state Supreme Court judge last week denied Normandy’s motion to dismiss the case.

“The crux of Normandy’s case — that Sciame Construction was not capable of building a Netflix Studio — is tantamount to saying that Rolls Royce can’t build engines.”

Frank Sciame

On the same day in December 2018 when Steel Equities closed on the property purchase, Steel entered into a long-term lease with Netflix “that increased the market value of the property from $52.5 million to approximately $361 million,” the plaintiffs alleged in the complaint filed in December 2020. The lawsuit seeks damages in excess of $106 million.

Manhattan Supreme Court Justice Jennifer Schecter

Manhattan Supreme Court Justice Jennifer Schecter

Normandy, which has since been bought by Columbia Property Trust, denied the allegations but were rebuffed by Manhattan Supreme Court Justice Jennifer Schecter.

“There is no doubt that with the judge allowing discovery, the truth will surface,” Sciame said in a statement. “The crux of Normandy’s case — that Sciame Construction was not capable of building a Netflix Studio — is tantamount to saying that Rolls Royce can’t build engines.”

Janice Mac Avoy, an attorney with Fried, Frank representing Normandy, said the judge “was only ruling on whether the facts alleged in the complaint were legally sufficient to state a claim.”

“We are confident that discovery will reveal that the plaintiff’s claims are entirely baseless,” she said in an email.

Fueled by up to $4 million in tax incentives, Netflix has been expanding its real estate footprint in New York City. In addition to the Brooklyn studio complex, which is under construction, the streaming-video and distribution company is taking about 100,000 square feet of office space at 888 Broadway, which was renovated by Normandy.

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