COURT ORDERS LVMH, RLJ TO ARBITRATE TOWER DISPUTE

Byline: Vicki M. Young

NEW YORK — A bitter legal dispute between partners in the construction of an LVMH Moet Hennessy Louis Vuitton tower that would include a Louis Vuitton flagship on 57th Street is finally showing signs of a breakthrough.
New York Supreme Court Justice Charles E. Ramos on Wednesday ordered the parties to proceed “no later than Nov. 10” with arbitration over the 23-story tower that would house the 8,000-square-foot Vuitton flagship. The dispute centers on whether LVMH is responsible for paying costs that exceed the amount budgeted for the construction of the tower.
The battling partners — RLJ Associates, the business entity of Robert Siegel, a New York real estate broker and property owner, and 1896 Corp., a subsidiary of Louis Vuitton North America, agreed to have Richard Ravitch arbitrate the matter. Ravitch is a principal of Ravitch Rice & Co.
A decision by Ravitch over liability for the increased costs would only smooth out part of the tangle between the partners. Justice Ramos also heard oral arguments Wednesday on an LVMH motion to dismiss separate charges of fraud leveled by RLJ or to have that matter submitted to arbitration. There was no indication as to when Justice Ramos would rule on the motion.
Construction of the tower at 17-21 East 57th Street has been stalled since February, when RLJ filed suit against 1896 Corp. and LVMH, alleging that the budget submitted by 1896 and LVMH understated the construction costs for the tower. An LVMH source said a construction crew is being reassembled.
According to Siegel, the parties agreed to a total budget of $31 million, including $20 million for actual construction costs and the balance for related expenses such as taxes and consultant’s fees. LVMH said that the actual, approved budget for construction was higher than $20 million.
In July, Justice Ramos ordered Siegel to sign a promissory note for a $19 million loan, which was provided by LVMH, to get the project started again. At the time, the parties were still looking for a suitable arbitrator.
Robert Shapiro of Barack Ferrazzano Kirschbaum Perlman & Nagelberg, attorney for LVMH, said then that the problem was in finding an arbitrator who has an understanding of the construction business as well as the time to spend on an extensive arbitration. Shapiro anticipates the arbitration will take a few weeks.
Ravitch, who was contacted after the July hearing, has an extensive background in construction. He is a partner in the Waterside Redevelopment Co. and Manhattan Plaza Associates.
He is also former chairman of the New York Metropolitan Transportation Authority, the New York State Urban Development Corp. and the HRH Construction Corp.

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