Golden Gate Private Equity Wins Major Victory in Dispute Stemming From Bronx Real Estate Deal

The lawsuit stems from a 2018 purchase and sale agreement between plaintiff 585 Gerard and two related manufacturing facilities, G.A.L. Manufacturing and Group 585 LLC (collectively “GAL”), located in Bronx County. From 2017 through December 2021, Golden Gate managed or advised investment funds that were a majority owner of GAL. Pursuant to the agreement, Gerard agreed to purchase the Bronx properties where GAL was located in exchange for $75 million, planning to develop apartment buildings and a soccer stadium for New York City F.C.

In January 2022, after GAL was unable to find a new property to which it could relocate its manufacturing facilities, it terminated the agreement pursuant to its express contractual rights. Five months later, Gerard sued GAL under the theory that GAL agreed to orally modify the agreement by allegedly stating it would close the transaction in exchange for an additional $25 million. This allegation was despite the agreement’s clear “no oral modification” clause that prohibited oral amendments to the agreement. Gerard specifically claimed that Golden Gate used the alleged oral agreement for the additional $25 million as a way to obtain a higher purchase price for the interest in GAL that Golden Gate eventually sold to the Ontario Teachers’ Pension Plan (OTPP).

After GAL filed its motion to dismiss in October 2022, Gerard filed an amended complaint to add Golden Gate and OTPP as defendants. The amended complaint asserted a sprawling set of claims against Golden Gate for promissory estoppel, fraud, equitable estoppel, quantum meruit, unjust enrichment, tortious interference, civil conspiracy and injunctions.

On May 23, Justice Fidel Gomez of the New York Supreme Court, Commercial Division, Bronx County, dismissed all claims, with prejudice, against all defendants. Justice Gomez dismissed the lion’s share of the claims on the grounds that the plain language of the agreement’s “no oral modification” clause clearly barred the allegation that there was an oral agreement that GAL would close the deal in exchange for an additional $25 million. Justice Gomez further dismissed the fraud claims as duplicative of several of the other causes of action, and held that the claims for civil conspiracy and injunctions were not cognizable under New York law.