Decade-Long Feud Over Bronx Buildings Erupts Anew

Photo by: Jordan Moss
Members of the Northwest Bronx Community Clergy Coalition protesting Washington Mutual's dealings with the Palazzolo-linked corporations in 2003. Shortly afterward, some of those corporations sued the group for interfering in its business.

Tenant organizations and a group of companies linked to a key real-estate operator were back in court last week arguing over the aftermath of a 2005 defamation lawsuit.

By: Jordan Moss

A decade-old case of a community-organizing group suing landlords—who had initially sued them and legally forced them out of their buildings—was back in a Bronx courtroom last week.

Lawyers for both sides were in the state Supreme Court on April 28 to argue a motion filed last August by the Northwest Bronx Community and Clergy Coalition, which sought to finally secure the money they were awarded in 2010. More than $1 million is at stake for the nonprofit group and its attorneys.

As we reported in a City Limits investigative series two years ago, the Coalition began organizing high-violation buildings associated with Frank Palazzolo and a roster of real-estate companies housed at his office building in Scarsdale, after a 2002 fire at one violation-plagued building associated with those firms killed an 8-year-old boy and severely injured his older brother.

The Coalition protested in 2003 outside Palazzolo's massive Westchester home and at a Washington Mutual branch on Fordham Road. They wanted the bank to make the Palazzolo group adhere to "good repair" clauses in its mortgages.

That's what led to the Palazzolo team's powerful pushback: a $1.5 million suit accusing the Coalition, and a Highbridge organizing group, of trespassing and spreading "false, misleading, libelous, factually incorrect and defamatory" information regarding the landlords. Flyers indicating Palazzolo himself owned the buildings were "incorrect," the suit stated.

Lawyers for the Coalition filed a counterclaim in 2005, arguing that the landlords' legal efforts were simply meant to cut off their legal housing organizing. After the hearings, the landlords dropped their trespassing allegation and the defamation counts were dismissed a year later.

In 2010, a judge ruled that the landlords had to provide $618,820 in damages to the Coalition, and a year later $500,976.85 to its attorneys. To date, not a penny has headed their way.

The Palazzolo companies' argument has been that they had no assets with which to pay those penalties, in part because they no longer owned the buildings in question. But in their August 2013 complaint seeking the money, the Coalition argues that, to avoid the payments, the companies simply sold the buildings to other companies that were part of the same corporate family.

For instance, in 2007, the company New Line Realty VI, based at 800 Central Park Avenue in Scarsdale, sold the building at 2315 Walton Avenue in the Bronx to 2315 Moon LLC, also based at 800 Central Park Avenue in Scarsdale, according to the deed. Yolanda Rivera, identified as the secretary of New Line Realty VI, signed as both seller and buyer. Real estate documents indicate no money changed hands.

Three years later, 2315 Moon LLC sold the building to a different company—this one not based at 800 Central Park Avenue—for $3 million. Lawyers for the tenant group say other companies targeted by their lawsuits engaged in similar deals.

The judge in the case, John A. Barone, did not take part in last week's brief debate. In an office next to the judge's bench, the lawyers gathered with Barone's legal assistant. (One lawyer rejected City Limits' request to observe the conversation.) While the door was open, Barone's legal assistant could be heard for several minutes speaking loudly and looking frustrated as he listened to the attorneys. "Someone's lying to me or just doesn't know the facts!" he said.

Lawyers for both sides had little to say after the hearing. "My clients are not liable for any damages to these plaintiffs," Lawrence Gottlieb, the lawyer representing the landlords, said in a brief phone call. "The documents establish that."

In an email, Mary Dailey, who was executive director of the Coalition from 1995 to 2005, says that after the court's initial ruling in the organizing group's favor, "I am confident that the court will also now recognize that transferring properties around is not a permissible way to avoid paying judgments."

  • I live in a leaky HPD building

    What about Donald Capoccia and all of his leaky, construction defected buildings? What’s the new mayors policy of allowing BFC Development & L&M Management continued contracts to build when they have left homeowners with millions of dollars in repairs. We all know Mr. Deblasio was a failure on this subject when he was public advocate and HPD refuses to address this concern since they are in bed with REBNY.