Rabbi’s Ruling Complicates 180 Ludlow Lawsuit

The long saga surrounding 180 Ludlow – one of the neighborhood’s most infamous stalled construction sites – is taking more strange turns.

Next month, attorneys for developer Serge Hoyda return to the Board of Standards and Appeals, seeking a variance — a request for an extension of time to complete a 20 story hotel. The troubled project has been an eyesore on Ludlow Street for four years.

This past month, Community Board 3 declined to support Hoyda’s application,  in part because he could not commit to hiring at least 20% local workers once the hotel opens for business.  But the setback at the community board appears to be the least of his problems.

It seems Hoyda is also having to fend off a lawsuit from Ira Yavarkovsky, whose family owned three parcels that make up the hotel development site.  The Yavarkovsky’s operated a paper products company at 180 Ludlow from 1898-2007. The suit claims Hoyda only made one payment of $1.67 million and, four years after the title was transferred, still owes almost $12 million.

Serge Hoyda.

It’s unclear how much longer the matter will be tied up in the courts – or whether the proceedings will ultimately imperil Hoyda’s plans. But nonetheless, the legal documents offer an intriguing glimpse into a problem-plagued project that’s been shrouded in secrecy.

According to the lawsuit, Hoyda took possession of the parcels on July 18, 2006, after making an initial payment. A contract stated, “the balance would be paid within 120 days of the effective date of the agreement.” Unfortunately for the Yavarkovsky family, however, the “effective date” was left blank.

Over the years, the two sides have revised the terms of the sale many times, the documents suggest, “based upon Hoyda’s inability to obtain sufficient funds to pay the balance owed… and his desire to obtain a zoning variance.”  One of the main issues for the courts to sort out stems from an agreement brokered by a rabbi in Crown Heights. In a written ruling last month, this is how State Supreme Court Judge Peter Sherwood described what transpired:

Now there are questions as to the legal legitimacy of the “Rabbi’s Memo.” Further complicating matters,  the debt owed was personally guaranteed by Hoyda. The judge has thrown out some of the claims made in the lawsuit; other matters remain in dispute. The two sides are due back in court next month.

Last September, there were reports Hoyda was negotiating to sell 180 Ludlow. More recently, there was speculation that he didn’t actually own the property.  Documents filed with the Board of Standards and Appeals as well as legal filings, however, suggest, Hoyda is the sole owner.

In October of 2009, Hoyda’s attorneys told Community Board 3 he wanted to convert the hotel project to a rental building. They cited the difficult economic climate and their inability to secure financing.  When the Board of Standards and Appeals balked, they went back to the original plan to build a 170 room hotel.

But the commissioners still must weigh in on an extension of time; Hoyda had two years to complete the job. The original proposal was approved before zoning restrictions were put in place on Ludlow Street limiting building height to 85 feet. In a hearing earlier this month, commissioners said they wanted to see more financial information and construction records before ruling on the application. A new hearing is being scheduled for May.