Golden Gate Private Equity Secures Major Appellate Victory Affirming Dismissal of Claims Stemming From Bronx Real Estate Deal

Paul, Weiss won a significant victory for Golden Gate Private Equity, Inc., when the New York Supreme Court Appellate Division, First Department, unanimously affirmed a state trial court ruling completely dismissing, with prejudice, a contract and fraud lawsuit concerning a Bronx real estate transaction. The plaintiff sought up to $70 million in damages, plus interest.

The lawsuit stems from a 2018 purchase and sale agreement between plaintiff 585 Gerard and two related manufacturing facilities, G.A.L. Manufacturing and Group 585 LLC (collectively "GAL"), located in Bronx County. From 2017 through December 2021, Golden Gate managed or advised investment funds that were a majority owner of GAL. Pursuant to the agreement, Gerard agreed to purchase the Bronx properties where GAL was located for $75 million, planning to develop apartment buildings and a soccer stadium for New York City F.C.

In January 2022, after GAL was unable to find a new property to which it could relocate its manufacturing facilities, it terminated the agreement pursuant to its express contractual rights. Five months later, Gerard sued GAL under the theory that GAL agreed to orally modify the agreement by allegedly stating it would close the transaction in exchange for an additional $25 million. This allegation was despite the agreement's clear "no oral modification" clause that prohibited oral amendments to the agreement. Gerard specifically claimed that Golden Gate used the alleged oral agreement for the additional $25 million as a way to obtain a higher purchase price for the interest in GAL that Golden Gate eventually sold to the Ontario Teachers' Pension Plan (OTPP).

After GAL filed its motion to dismiss in October 2022, Gerard filed an amended complaint to add Golden Gate and OTPP as defendants. The amended complaint asserted a sprawling set of claims against Golden Gate for promissory estoppel, fraud, equitable estoppel, quantum meruit, unjust enrichment, tortious interference, civil conspiracy and injunctions.

In May 2023 Justice Fidel Gomez of the New York Supreme Court, Commercial Division, Bronx County, dismissed all claims, with prejudice, against all defendants, including Golden Gate. GAL appealed to the First Department, which unanimously affirmed.

The Paul, Weiss team was led by partners Greg Laufer, who argued the motion, and Randy Luskey, and included counsel Robert Kravitz. Corporate partner Jeremy Veit provided invaluable advice.