For James Brady—investor, businessman and crusader against the corporate forces he believes have trampled over his rights—every fight must come at a cost. Not least of all, the one that has consumed him for the last seven years.
The New Jersey resident has been in a pitched battle with the board of the Manhattan commercial co-op where he owns a penthouse suite. Despite prior rulings denying him the relief he seeks, he refuses to retreat, even directing his grievances at the judicial system itself.
“I’m not just fighting this for myself; I’m fighting this for a much bigger cause,” Brady said in an interview with CLI. “Judges are not allowed to rewrite unambiguous paragraphs.”
Brady’s quest boils down to this: He wants to hold the co-op board and the attorneys who worked to sell the building’s air rights in the Hudson Yards District liable on a litany of claims. But that backfired recently when a Manhattan state judge dismissed his actions and sanctioned what she called “a near perfect example of frivolous conduct.”
The July 15 decision by Justice Shirley Kornreich in James Brady v. 450 West 31st Street, 15779/2013, addressed the second time in six years that Brady has mounted a legal challenge to the co-op’s sale of transferable development rights for empty skyline space that’s fast becoming the new prime real estate for luxury condo development in Manhattan.
From the court’s perspective, the issues already have been litigated and decided—end of story. To Brady, who feels so wronged by the series of events that he has chosen to represent himself, the fight won’t be over until he receives some vindication from the state’s highest court.
It’s not a matter of “if” to Brady, but “when.”
Why He’s Suing
Brady owns the 12th-floor penthouse duplex at 450 West 31st St., which he purchased for $5 million in 2006, and operates as an events space called Studio 450. The space boasts a rooftop terrace and a skyline vista guaranteeing an expansive, unobstructed view—for now. (see exhibit photos here).
In 2005, the Hudson Yards District was rezoned to grant certain buildings air development rights, including 190,000 square feet of airspace to 450 West 31st St., in a nod to the rapid mixed-use condominium development taking place by the Hudson. Brady claims the air rights belong to him, per an amendment to the offering plan detailing the rights given to each unit.
In 2007, Extell Development was in negotiations with the commercial co-op to purchase 171,914 square feet of air development rights above the building for $11.6 million to build an adjacent skyscraper. It offered Brady $2.5 million to sign a waiver. He declined, believing the rights to be worth at least much more, at $95 million.
He sought an injunction against the co-op board’s planned sale to Extell. The $2.5 million was withdrawn in court-ordered settlement talks and replaced with an offer from the co-op board for $500,000. The issue before the court was whether Brady could lay claim to ownership of the air rights.
The threshold issue came down to one piece of text in the unit’s offering plan, referenced blandly in court documents as “Paragraph Seven”: “The 12th floor and roof unit shall have, in addition to the utilization of the roof, the right to construct or extend structures upon the roof or above the same to the extent that may from time to time be permitted under applicable law.”
Justice Marcy Friedman, who was assigned to the case at the time, denied the injunction. She held that while the language gave Brady the right to build a structure on the roof, it did not give him the rights to the airspace, which she said could have been secured from the beginning.
“It is undisputed that air rights existed and were well known in the real estate community in 1980 when the Offering Plan was amended to add paragraph 7,” she wrote. “Had the parties, who were sophisticated business people, intended to convey or reserve air rights to the 12th floor and roof units, they could easily have expressly so provided,” the July 7, 2008 decision stated in James and Jane Brady v. 450 West 31st St, 603741/2007.
Brady, who was represented by Nathan Ferst, a Manhattan solo practitioner, moved for reargument. Friedman again denied the injunction in a March 13, 2009 order. Brady appealed to the Appellate Division, First Department, which affirmed Friedman and denied Brady leave to appeal to the Court of Appeals. While the state’s highest court said it would consider reargument for leave to appeal, it ultimately denied the motion.
The deal between 450 West 31st Owners Corp. and Extell eventually fell apart over this legal obstacle. But a new buyer entered into the picture, Sherwood 30 Land Group, which purchased the air rights for $43.5 million in April 2011.
“Needless to say, this transaction will greatly enhance 450 West’s financial condition and will benefit you and all of your fellow shareholders,” Stanley Kaufman, name partner of Kaufman Friedman Plotnicki & Grun, wrote to James and his wife Jane Brady, in an April 12, 2012 letter.
The letter informed the Bradys that the board sought their waiver “with respect to any issues regarding the ownership, control or the right to dispose of 450 West’s excess development rights” and that the deal would consummate—with or without a signed waiver.
The letter warned, “Your choice not to sign the requested waiver may result in further costly litigation involving 450 West, the purchaser and you.”
Two years later, Sherwood sold both the lot adjacent to the commercial co-op and the air rights it had acquired, to McCourt Partners, an entity owned by the former Los Angeles Dodgers owner Frank McCourt, for $167 million.
The rights included a perpetual easement for light, air and view that would begin more than 40 feet above Brady’s penthouse roof.
The sale prompted Brady’s second round of litigation in November 2013. Represented by solo practitioner Robert Adinolfi, Brady filed 14 causes of action, including for breach of contract, breach of covenant of good faith and fair dealing against the co-op board; fraud against the attorneys who were part of the Extell transaction; and gross negligence against both the board and its lawyers.
The 104-page complaint alleged that the “transfer from Owners Corp. is unlawful and void ab initio as a matter of law, and the plaintiff is entitled to a declaration pursuant to CPLR 3001.”
It sought $100 million in compensatory damages and $300 million in punitive damages.
Those named in the suit included the co-op board and its members, plus Owain Hughes, the seller of the unit; Chodosh Realty Services, who represented the Bradys in their purchase; and the law firms Greenberg Traurig and Kaufman Friedman Plotnicki & Grun.
Brady did not stop with one suit—he filed a second action two weeks later against the Sherwood purchaser, including Jeffrey Katz, its CEO; Frank McCourt, individually and as chairman of McCourt Global; and Herrick, Feinstein, “for carrying forth the second leg of this conspiracy defrauding [Brady] of $100,000,000 of air rights,” his complaint stated.
“Sherwood and Long Wharf likely knew they were holding a hot potato,” the complaint asserted. “Sherwood certainly knew that it had unlawfully seized 170,000 square feet of air rights, worth over $100 million, without a waiver. This is why Sherwood made sure the sale was off-market, in secret, so they would have to disclose as little as necessary about the figures and the circumstances surrounding the deal.”
In that action, James Brady v. Jeffrey Katz, 654226/2013, which also sought $100 million in compensatory damages and $300 million in punitive damages for tortious interference with contract, unjust enrichment and conspiracy to defraud, Brady represented himself pro se.
“This is a very personal matter that has been going on for years and I wanted to represent myself. Those rights that were sold belonged to my unit pursuant to the amended offering plan,” Brady said.
The inclusion of multiple parties, plus their lawyers from both smaller and large firms, made for a crowded courtroom the morning of March 18, 2014 during a consolidated motion to dismiss before Kornreich. Some of the attorneys who appeared at the lectern admitted to being perplexed at the scope of the suits.
“I am not an attorney who specializes in real estate or building codes,” Mark Anesh, a partner at Lewis Brisbois Bisgaard & Smith and attorney for Stanley Kaufman and his firm, told the judge. “I represent lawyers and I know for a fact that my lawyers do not belong in this lawsuit.”
Justin Chu, special counsel for Steptoe & Johnson who represents Greenberg Traurig in the case, said as he stood at the lectern, “So, again, why we are here in this lawsuit, if your Honor is wondering? We are wondering the same thing. We have no duty to the plaintiff.”
Barred by Collateral Estoppel
In her 25-page decision dismissing both actions with prejudice, Kornreich recounted the dispute’s lengthy procedural history. Noting that Friedman found Brady did not own the air rights, that she was affirmed on appeal, and that Brady’s consent was not necessary for the sale to Sherwood, Kornreich said Brady’s claims were barred by collateral estoppel and res judicata.
“In sum, the issue of who owns or controls the air rights appurtenant to the building’s lot has already been decided in favor of the co-op,” Kornreich wrote. “Any claim by Brady arising out of that question is barred.”
But on the issue of Brady’s right to build a structure on his roof per Paragraph Seven, the judge said that “strictly speaking, Brady is correct that the question of whether such an easement interferes with his right to build structures on the roof otherwise permitted by applicable law has never been determined and so is not barred.”
Kornreich, however, declined to reach the issue, saying there was no actual controversy to settle since there was no indication that the co-op board ever told Brady he could not build on the roof—nor, for that matter, “any contention that Brady had or has any plans to build anything on the building’s roof.”
“In short, plaintiff cannot maintain any cause of action based on the co-op’s conveyance of air rights or the imposition of an easement, since a prior judgment of the court, affirmed on appeal, has held that the co-op is entitled to do the former and there is no present, actual controversy involving the latter,” the judge held.
In sanctioning Brady, Kornreich said he “dragged more than twenty parties into court to litigate matters that have already been determined” and filed “claims that lack any substance.”
“Undeterred, he has ignored these court rulings and brought these meritless actions, abusing the judicial process,” she stated.
Brady said he intends to appeal the dismissal of both actions, seek the Court of Appeals’ “intervention” and claims he shouldn’t have to reveal any of his future plans for potentially building a new structure on the roof.
“I do not need to furnish plans on what I plan on building. The rights were conveyed and reserved to my use,” he said.
Of his pro se litigation, he said, “I wanted to represent myself because I’m certain of what my rights are. I wanted to do it. It’s personal, very personal.”
Pro Se Litigation in the Commercial Division
While the Office of Court Administration said it does not keep statistics on the number of pro se litigants in the Commercial Division—a court of complex business disputes that recently raised the monetary threshold in Manhattan to $500,000 and doubled it nearly everywhere else in the state to parse out smaller cases—attorneys and judges have said it’s a rare occurrence.
Because of the complex nature of the issues involved, the high stakes of litigation and the ongoing calculus involving settlement, parties who appear in the Commercial Division, whether corporations, shareholders or individual businesspeople, typically come armed with experienced counsel—unless they are attorneys who are plaintiffs in their own suits.
In the early stages of his litigation, Brady retained counsel from prominent firms such as Proskauer Rose and Baker & Hostetler but switched, he said, because they were getting “too expensive.”
Brady said he chose to go pro se in the Katz action even though he has an attorney, Adinolfi, in his suit against the co-op board. “It was my decision and he did not discourage me from that,” he said.
Adinolfi did not respond to a phone call and email request for comment.
At the same time, some of Brady’s adversaries have said in interviews he should not be underestimated just because he is self-represented.
“I thought Mr. Brady did a good job at oral argument. He stood up and he made his arguments forcefully, perhaps a bit too forcefully,” said Adam Richards, a partner at O’Reilly Stoutenburg Richards who represents Owain Hughes, the unit’s former owner, and J. Chodosh Realty.
“He knew what he was doing. He is clearly a smart guy,” Richards added. “I think he believed in his claims and I think he made a very bad judgment call in terms of what happened in the past.”
John Goldman, a partner at Herrick, Feinstein who defended the firm in the Katz action, said Brady was “a smart guy who studied the issues that are important to him and tried to advocate zealously on his own behalf.”
While Goldman added that it’s extremely rare to encounter a pro se litigant in the Commercial Division, he would treat one the same as he would any other attorney.
“I’m going to assume they’re going to be as good as anyone else I face,” he said. “My job is to represent my client the best I can. And that means I stay on my side of the net. I’m not really so concerned what they’re doing on the other side of the net.”
‘Studying other cases’
Brady, who is 51 and married, said he has a background in marketing but no legal training. He said he learned about the procedural process of commencing suit and making motions by studying other cases and decisions that are electronically-filed.
“All of that now is very easy,” he said.
But Brady certainly does not have a lawyer’s dispassionate demeanor. In a website he created called bullyjudges.com, he chronicles in painstaking detail the history of this dispute, complete with a pictorial chart listing all of the robed officers who’ve declined to side with him. He uses language like “corruption,” “depraved indifference” and “deceptive behavior,” believing he is the party wronged, not merely ruled against.
“The Court of Appeals is an invitation only Court and in almost all cases only hears cases that the Appellate Division permits,” he wrote on the website. “In the Bradys [sic] case the invitation was denied but the Bradys made a motion anyway demanding justice. The Bradys demanded that the justices of the Court of Appeals fix the clearly unjust and unlawful actions of the Appellate Division justices.”
He also tried to persuade the Manhattan District Attorney’s Office to open a criminal investigation and Office of the State Inspector General to investigate allegations of fraud into what he described as judicial misconduct and case-fixing by the judges. The offices declined to do so.
Kornreich said in her decision she was sanctioning Brady because he “acted in bad faith in bringing the instant cases,” “feigned ignorance” over the meaning of the phrase “transferable development rights,” and misinterpreted the prior judgment, claiming the appellate ruling was not binding.
She also said that Brady’s claim that he is entitled to the air rights is supported “under a theory which only he is clever enough to understand and which was only revealed to him by certain ‘professionals’ more than a year after he bought his shares.”
The judge, to be fair, grilled the defendants’ attorneys during March’s oral arguments, not letting them off the hook on a sticking point: “Is it possible to build a structure on the roof without using air rights?” she asked repeatedly to Joseph Augustine of Augustine & Eberle and attorney for the co-op.
“My position is he may not need to use any air rights to do that,” Augustine replied. “It’s an understood principle in the nature of the real estate rights that he has the right to build a structure and that can coexist with the co-op owning the air rights.”
Following the March 2014 oral arguments, Brady moved to recuse Kornreich, saying she displayed partiality to the defendants.
The motion was denied.
No End in Sight?
Given the number of parties and the caliber of counsel retained in these actions, fees could amount to hundreds of thousands of dollars for Brady to be determined by a special referee. A hearing has yet to be scheduled.
Brady said is not concerned, although he has been self-funding the litigation, at a price he estimates to be in the “hundreds of thousands of dollars.” His legal bills even caused him to fall into technical default of his lease in March 2010 since he fell two months behind on maintenance payments.
Despite the enormous costs, Brady said the case has become a much larger cause, and he won’t stop until he receives a satisfactory judgment.
“When is the end for me? When the Court of Appeals reinstates the claims and these people are held accountable for what they did,” he said.
“It has caused me so much pain and heartache what they did,” he added. “It’s not ok to do this to me, and for the judges to do this against anyone else.
“It’s bigger than me.”