• Courts Deny Emergency Applications to Enjoin Sale of Substantial Stake in Manhattan’s Worldwide Plaza
  • November 8, 2013
  • Law Firm: Morrison Cohen LLP - New York Office
  • The Commercial Division of the Supreme Court, New York County, and the Appellate Division, First Department, each denied RXR Realty’s emergency application to enjoin the sale to American Realty Capital of a 48.9% stake in Manhattan's One Worldwide Plaza.

    In RXR Realty v. WPP Sponsor, LLC, et al., the plaintiff, RXR Realty, claims that it had previously been in contract to purchase the same 48.9% interest in the building but was unable to do so because the building’s owner, defendant WPP Sponsor LLC, among other things, allegedly defrauded RXR Realty into terminating the contract and improperly concealed from RXR Realty the fact that it was negotiating with American Capital Realty while the deal with RXR Realty was pending. As against American Capital Realty, RXR Realty alleges that American Capital Realty violated a confidentiality agreement it had with RXR Realty by using confidential information that was shared by RXR Realty in July 2013 when the RXR Realty and American Realty Capital were contemplating a joint venture in the building (which was ultimately not entered into because RXR Realty elected to proceed with another entity), and otherwise tortiously interfered with RXR Realty’s contract and relationship with WPP Sponsor LLC.

    Shortly before the sale of the interest to American Capital Realty was scheduled to close, RXR Realty moved the Commercial Division for an emergency injunction enjoining WPP Sponsor and American Capital Realty from consummating the sale pending the outcome of its litigation. In support of its application, RXR Realty argued that it would be irreparably harmed if the transaction with American Capital Realty was allowed to close. RXR Realty also sought expedited discovery in furtherance of its motion.

    Justice Kornreich of the Commercial Division rejected RXR Realty’s application in its entirety, holding that RXR Realty was unlikely to succeed in its lawsuit, failed to make any showing that it had the ability to perform under its prior contract, and otherwise failed to satisfy the requirements necessary to obtain the injunctive relief sought. RXR Realty’s subsequent emergency application to the First Department for the same injunctive relief was also rejected.

    On October 31, 2013 the sale of the interest to American Capital Realty closed. Both the litigation and transaction were covered by mainstream media outlets including Crain’s New York Business, The Real Deal, Law360, and The Wall Street Journal

    American Capital Realty intends to promptly move to dismiss in their entirety the claims asserted against it by RXR Realty.

    Morrison Cohen represents defendants American Realty Capital and American Realty Capital New York Recovery REIT, Inc.