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In Multipronged Landlord-‘Holdover’ Tenant Fight, $25M Suit Against Tenant Remains Stayed

A state appeals court has ruled that a $25 million lawsuit leveled against an alleged “holdover” tenant represented by real estate attorney Adam Leitman Bailey will continue to be stayed in deference to the building owner’s related holdover proceeding against the tenant in housing court.

The ruling from the Appellate Division, First Department, while an incremental one, is another piece of a heated, multilayered legal war that’s been raging for months between the tenant and building owner. And it involves Bailey, who is representing his client on contingency, more personally than is typically seen. In May, Bailey and his law firm were sued by the building owner in a separate $25 million action that’s now been dismissed by the trial court but that is being appealed.

The owner, 215 West 84th St. Owner LLC, and the well-known condominium developer with whom it’s affiliated, the Naftali Group, have been fighting in various courts since early this year as they try to force out the 84th Street building’s lone remaining tenant, Ahmet Ozsu. The owner and Naftali intend to overhaul the entire building and redevelop it. But they allege that Ozsu is “maliciously” holding out in his “penthouse apartment solely to financially harm the [building owner] by delaying its lawful multi-million-dollar condominium development and conversion project,” according to a complaint lodged by the owner in Manhattan Supreme Court.

The same Feb. 7-filed complaint claims that it “duly terminated Defendant’s [Ozsu’s] month-to-month tenancy effective December 31, 2021.” And it lays out five causes of action, including breach of lease and prima facie tort, while demanding $25 million or more from Ozsu, along with attorney fees estimated to be at least $100,000.

What’s more, Naftali Group and the owner have said they offered $30,000 to Ozsu to vacate his apartment, but that he turned down that offer and has demanded a seven-figure payout instead, a demand the Naftali Group considers to be egregious and has rejected, according to court filings.

Meanwhile, Ozsu has been able to stay as the only remaining tenant out of those who had occupied some 128 apartments, because he applied in January to a state program created to help tenants pay overdue rent during the COVID-19 pandemic called the Emergency Rental Assistance Program, or ERAP.

Under ERAP, a tenant who is granted emergency rent aid is protected from eviction for up to a year. But just last month, New York state ended up rejecting an Ozsu application, and it appears he may be forced to leave the building, called Eagle Court, sooner than he’d like, according to a news report.

Still, Bailey, the prominent and aggressive real estate lawyer, said Thursday in a phone interview that his client is appealing the ERAP determination, and that the state’s decision was a mistake.

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