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October 19, 2019Cart

Business

by Westchester County Business Journal
by WCBJ

Walison Development charges slander in Mount Vernon land deal

Walison Development of Mount Vernon claims it was slandered when Michael Anthony Holdings Inc. declared that Walison was not under contract to buy its land for an ambitious housing and commercial project.

The published statement, CEO Sabah Rajput states in an affidavit, “caused unbelievable harm.

“This has made it nearly impossible … to obtain financing. It stands to reason that investors and lenders will not be willing to lend money … if there is no purchase agreement in place.”

Walison Development sued Michael Anthony and co-owner Anthony Paolercio on Sept. 12 in Westchester Supreme Court, demanding a retraction and six months more to close the deal.

For 21 years, Walison Development has specialized in low-income housing. Now it wants to build 1,800 apartments that mix subsidized and market rate rentals, offices, a film studio and a charter school next to the Mount Vernon West train station.

Walison struck a deal in January with Michael Anthony affiliates and Anthony Paolercio to buy 20 parcels on MacQuesten Parkway, Terrace Avenue and Grove Street for $35 million.

The parcels include Michael Anthony’s offices at 115 S. MacQuesten Parkway, parking lot, three vacant lots and several buildings leased to businesses.

Michael Anthony Jewelers once manufactured jewelry in Mount Vernon. The company was sold to Bel-Oro Group around 2005, and in 2007 Berkshire Hathaway’s Richline Group bought Bel-Oro.

Walison deposited $350,000 in an escrow account, to be paid to the sellers when the deal closed. It has also spent nearly $1 million on due diligence and obtaining financing, according to the complaint.

The deadline for closing was in February and then extended to March 29. In April, Michael Anthony notified Walison that it was in default, and gave it three days to close.

Walison claims it was not in default because Michael Anthony had failed to terminate property leases, as required by the contract.

But according to the real estate purchase agreement, Michael Anthony was required to “use reasonable best efforts” to clear leases. If they failed to do so, it would have to deposit $250,000 in an escrow account that it could reclaim when the property was free of tenants.

In July, Walison applied for financing and subsidies from the Mount Vernon Industrial Development Agency. One week later, July 30, the agency gave preliminary approval for the first building, a $196 million project for a 15-story structure with 249 apartments. The resolution approves $148.2 million in tax-exempt bonds and unspecified amounts for tax exemptions and property tax abatement.

Walison reportedly wanted to start construction within a month.

But on Aug. 1, Michael Paolercio, a Michael Anthony partner, was quoted in the Journal News: “We do not have a contract with them. It expired.”

That statement, Walison claims in the lawsuit, was slanderous and has hindered efforts to get financing.

An attorney for Michael Anthony reminded Walison in an Aug. 2 letter that it had defaulted on the land deal by not closing by mid-April. The letter threatened legal action over the $350,000 deposit, and it demanded that Walison notify the IDA that it had no rights to acquire or develop the property.

Walison argues that the contract was not actually terminated and that an Aug. 22 “time is of the essence” letter from Michael Anthony’s attorney, demanding a Sept. 12 closing, supports that position.

Rajput states in his affidavit that Michael Anthony is trying to profit from Walison’s IDA tax incentives and financing, “in hopes of selling the subject properties for millions if not tens of millions of dollars more than the contract price.”

Walison accuses Michael Anthony of breach of contract and slander. It is demanding a public retraction. It wants Michael Anthony and its broker, Greiner-Maltz Co., restrained from selling the properties. And it is asking for a six-month extension to close the deal.

Michael and Anthony Paolercio did not respond to an email message asking for their response to the lawsuit.

Walison is represented by Manhattan attorney Michael J. Kapin. Timothy P. Coon represents Michael Anthony.