Westminster Management Prevails in Dispute Arising from 2007 Sale of the Largest Multifamily Portfolio in New Jersey

Roseland, NJ -- A verdict was entered yesterday in a dispute arising from the September 2007 sale of the largest multifamily portfolio of property in New Jersey in the matter Westminster Management v. East Coast Residential Associates L.P L-3487-08. The Honorable Sebastian Lombardi entered a decision in the amount of $25 million and all accumulated interest, plus attorneys fees and costs in an amount to be determined, on behalf of Westminster Management and 88 real estate partnerships that comprised the Kushner Multifamily Portfolio against East Coast Residential Associates, L.P. a partnership of Morgan Properties and AIG Global Real Estate Investment Corporation.

The $25 million verdict represents the entire amount of an escrow that was established at the closing of the sale that each party to the dispute claimed to be entitled, which has accumulated interest of nearly an additional $2 million. Two previous pretrial motions for summary judgment were denied in the matter requiring a trial in the Superior Court, Essex County.

The prevailing plaintiffs were represented by co-trial attorneys -- Charles X. Gormally, Director of Litigation, and David J. Klein, Counsel, of Brach Eichler L.L.C. of Roseland, NJ, and Barry Felder and Akiva Cohen of Foley Lardner of New York City. The Defendants were represented by Gerald Liloia and Josh Bratsbies of Riker Danzig Scherer, Hyland and Perretti, LLP of Morristown. The non-jury trial was conducted by Judge Lombardi over several weeks in July and August 2010 and culminated in a lengthy decision read into the record this morning.

The defendants asserted at trial that they were entitled to receive the $25 million escrow claiming that the sellers failed to disclose information concerning the expenses and personnel involved in operating the portfolio of properties and that if known, they would have offered less than the $1.91 billion contract price to acquire the properties.  The plaintiffs contended that all of the information that was provided through their broker was accurate and that regardless, the express language of the purchase and sales agreement barred the claims being asserted.  In addition, the plaintiff's produced evidence that the purchasers were prepared to bid even higher than the contract price and had internally valued the property at least $50 million more than their offer because of the comprehensive scope of the portfolio.  The portfolio of multifamily properties contained some 16,800 residential units across New Jersey, New York, Delaware and Pennsylvania.
 
Trial counsel Charles X. Gormally commented, "The Court's verdict was a complete vindication of the position asserted by the plaintiff since the inception of the case.  Each and every substantive position that we asserted on behalf of Westminster Management was found to be established by Judge Lombardi. We were particularly gratified that the court appreciated that sophisticated real estate players like the defendant, especially when represented by highly skilled transactional counsel, cannot successfully claim they were mislead under the circumstances of this case."
 
After rendering the decision the Court directed that the plaintiffs submit its application for an assessment of legal fees and costs which, after consideration of any objections, will be the subject of an amended decision.