Gary Barnett and Joel Wiener may not be having drinks at their nearly-completed Diamond District Hotel anytime soon.
Barnett’s Extell Development has filed a lawsuit against the Pinnacle Group CEO, claiming he and his wife Sherry are holding up the hotel’s liquor license “to extort unwarranted benefits for themselves.”
The two, currently partners in a joint venture to develop the hotel at 32 West 48th Street, are battling over its management. Barnett wants to manage the hotel himself under an Extell entity “at a fraction of the market-rate cost,” according to the suit, which was first reported by PincusCo. He hired some of the city’s “most seasoned and accomplished management executives” to run the 529-key hotel, the suit says.
But Wiener asked for proposals from other management companies, the suit alleges. After Barnett provided him a list of alternatives, Wiener suggested they jointly manage the hotel, according to the suit.
After Barnett refused, Wiener held the paperwork for the hotel’s liquor license “hostage” until “Extell gave in to his improper demands in connection with the management agreement,” the suit alleges.
Barnett is demanding the Wieners immediately turn over the paperwork as well as seeking unspecified monetary damages. The 33-story hotel has multiple restaurants and five bars and is slated to open early next year.
Lawyers for Wiener and Extell did not immediately respond to requests for comment.
It’s been a rough year for Wiener. The multifamily landlord filed petitions for bankruptcy protection last month across 82 entities that control 91 properties and roughly 5,000 multifamily units. The original debt principal was $574 million, but there are also outstanding Israeli-issued bonds, according to filings, increasing the total debt to $1 billion.
Wiener joined forces with Extell on the hotel project in 2018, the same year Barnett bought the four-story former site of the Plaza Arcade diamond mini-mall for $40 million. The developer then snapped up air rights from several adjacent properties in hopes of connecting West 47th and West 48th streets.
Extell landed a $220 million construction loan from Banco Inbursa, then partnered with Kimpton Hotels & Resorts and dubbed the development Kimpton Rockefeller Center due to its proximity to the namesake property.
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