Wednesday, August 15, 2018

Petition asks Madison Realty Capital to waive legal fees for evicted East Village family


[5th Street buildings that were part of Raphael Toledano's portfolio]

After a lengthy legal battle that started with landlord Raphael Toledano, longtime East Village residents Craig Smith and Elise Stone and their family have been evicted from their rent-stabilized apartment on Fifth Street.


[Smith, Stone and family]

With Toledano in bankruptcy, Madison Realty Capital is the de-facto landlord. Due to a clause in their lease, Smith and Stone are now being held accountable by Madison's lawyers for Toledano/Madison Realty Capital's legal fees, which amount to $250,000.

This petition is asking Madison Realty Capital, who reportedly manages over $4 billion of capital, to waive their legal fees.

The following, via the EVG inbox, is from the group Tenants Taking Control...

In July of 2018, Craig Smith and Elise Stone, their three college-age children Kerem, Tes and Hakima, and Elise's ageing mother Sandy were given 12 days to leave their home of 15 years — a walk-up apartment in the East Village.

Craig and Elise — much can be said about this extraordinary couple. They are parents, thespians, teachers and artists who have spent a lifetime giving to their community. Notably, they started up a local, award-winning, nonprofit theater company in 2004 that, in addition to producing shows, runs educational programs for aspiring actors, children and seniors.

The SmithStones were sued for eviction in 2015 by their new predatory landlord, Raphael Toledano, whose lawyers spotted a loophole in the city's rent-stabilization law. Rather than give up, Craig and Elise fought back. Their motivation was not just self-preservation — in keeping with their community spirit, they aimed to protect other New York City rent regulated tenants who face similar gentrification pressures. Had they won, thousands of deregulated apartments in the city could have been re-regulated.

The legal battle lasted 34 months. In the midst of it, Toledano defaulted on the loan he'd gotten from Madison Realty Capital to buy their building (along with 14 others). Although still owned by Toledano's LLC, in the bankruptcy Madison Realty Capital became the de facto landlord of the buildings, put up the money to manage the properties, and continued prosecuting the lawsuit.

In June of 2018, the Appellate Division of NY State Supreme Court ruled against Craig and Elise. Madison Realty Capital told them to leave their home, and NYC lost yet another affordable apartment. The loss to the neighborhood has been devastating.

Due to a clause in their lease, the SmithStones are now being held accountable by Madison's lawyers for Toledano/Madison Realty Capital's legal fees, amounting to $250,000. As dedicated artists and educators, this couple does not have that kind of money.

THIS PETITION ASKS MADISON REALTY CAPITAL TO DO THE RIGHT THING AND PAY ITS OWN LEGAL COSTS.
It is a private investment fund, so its earnings and revenue are not publicly disclosed. But last month, Madison's CEO Josh Zegen told The Commercial Observer: "We manage over $4 billion of capital and we have every piece of the business in-house." It's likely that they can afford their own legal fees, and still be a very profitable business.

In the same interview, there was this exchange:

COMMERCIAL OBSERVER: "What keeps you up at night?"

JOSHUA ZEGEN: "The unknown. You’re starting to really feel the rate creep more than you did six to nine months ago..."

So, the TTC (Tenants Taking Control) asked the same question of the SmithStones.

TTC: "What keeps you up at night?"

CRAIG SMITH: "Bankruptcy. No money to pay for my kids' college, no money to pay for a dentist, long commutes... the fear that we won't be able to keep the theater going, and no longer be able to show seniors and children the joy of being involved in the arts."

This family is in a precarious situation now, and really needs the help of the greater community. They have already lost their home. Please add your name to this petition, to have Madison Realty Capital relieve the SmithStones of the crushing, unfair debt burden they will otherwise face.

Here's the link to the petition.

Previously on EV Grieve:
Foreclosure notice arrives on Raphael Toledano-owned building on 12th Street

Report: Raphael Toledano files for Chapter 11; $145 million deal for EV portfolio is off the table

Raphael Toledano tenants take to Midtown streets to speak out against their landlord and his lenders

Santa delivers sacks of coal to Madison Realty Capital, Rafael Toledano's lenders

Amid claims of being a rent-stabilized tenant, Raphael Toledano faces eviction from his home

8 comments:

Anonymous said...

What was the clause in their lease? $250k seems like a ton of money to deploy on spec and clearly they lost so curious what the rest of the story is...

Anonymous said...

Did they have a decent case or not? Was the judge a De Blasio pro-REMY appointee?
I feel bad for this family another loss for the neighborhood.

Anonymous said...

Why should these people lose their home b/c of that POS Toledano's idiocies? This is so very, very wrong.

Mayor De Blasio, are you paying any attention to this? Or are you aligned with Madison Realty in some way?

Craig Smith said...

This is a clause that is in most leases but people don't pay attention to it -- if there is legal action between landlord and tenant the one who loses is responsible for attorney fees. It is often on the 2nd or 3rd page of a standard lease -- if you cross it out in pencil (and not magic marker) and date and initial, the landlord may not notice -- however you lose your option to collect any attorney fees if you win. Regardless, the playing field is not level --attorney fees to a hedge fund are meaningless but are punishingly significant to us. Our case was based on crossing the rent threshold that moves a regulated apartment to a market rate apartment. When they took us to court we were in a legal stabilized apartment as the law said that the PREVIOUS tenant had to cross that threshold not the new tenant. This was challenged by the real estate lobby and they fought to have it overturned. We fought it as we were in complete compliance with law. However, they pressed on and in April the law was overturned in Albany by the Appellate Division of the Supreme Court and our case was doomed. If we would have prevailed a huge number of market-rate apartments would have returned to regulated -- thus the real estate lobby moved into a full court press against the SmithStones.

cmarrtyy said...

Tenants are even betrayed by the courts. What a sad city we have become. Did our beloved Carlina Rivera help? I know...I know... Why bother with her.

Anonymous said...

This is shocking. That clause might have made some sense when our buildings were owned by individual landords who had one building but none of us alone can fight against mega-developer groups and their "portfolios". They should have been regulated from the start. We need to find ways to fight them together.

JQ LLC said...

Since this was decided in an appelate court and supreme court in Albany, another question should be asked to the now reborn progressive (fauxgressive) hero of the downtrodden Gov. Andrew Cuomo, another political neoliberal whore dancing, mincing and writhing for the REBNY overlords.

These monopoly playing predatory real estate krackens are really asking for a war.

Unknown said...

Those who are outraged by this, please sign our petition. (The link is in the last line of the blog post.) Unlike many online petitions that have so broad a scope that the issue seems daunting and signing seems useless (ie, Demand That Plastic Straws Be Outlawed!), this one is more pragmatic. It is part of an active, local campaign to get this hedge fund to waive this debt. If you are interested in helping further, please contact us via our FB page: https://www.facebook.com/TenantsTakingControl/