United States District Court, W.D. Virginia, Roanoke Division
Michael F. Urbanski Chief United States District Judge.
Brian Wishneff & Associates brought this breach of
contract action against 10 South Street Associates, LLC,
alleging it is due a fee for services under the parties'
2009 Battery Maritime Building Historic Tax Credit Agreement.
Finding issues of fact as to the amount of any fee due
plaintiff under the Agreement and the payment schedule for
such fee, the court denied defendant's motion for summary
judgment and the case proceeded to trial. The court
empanelled an advisory jury for the bench trial held on April
3-4, 2017. The jury returned a verdict in plaintiffs favor in
the amount of $2, 800.00. The court will adopt that verdict
and, based on the findings of fact and conclusions of law
that follow, will enter judgment for plaintiff in the amount
of $2, 800.00.
Plaintiff Brian Wishneff & Associates is a limited
liability company that provides historic tax credit
consulting services to real estate developers in order to
help fund building renovation projects. Brian Wishneff is
president and half-owner of the company. His son, Erik
Wishneff, is in-house counsel.
After reading in a newspaper article in 2008 about the
potential renovation of the Battery Maritime Building (the
"Project"), located at the southern tip of
Manhattan, Brian Wishneff contacted then-developer BMB
Associates, LLC about the opportunity to use federal
historic tax credits to help fund the Project. On August 6,
2008, plaintiff and BMB Associates entered into a Battery
Maritime Building Historic Tax Credit Agreement, pursuant to
which Brian Wishneff & Associates would work to secure an
historic tax credit investor and "earn a fee in an
amount equal to 10% of the equity payment by the historic tax
credit investor, " to be paid "on the same schedule
as the Developer receives payments and/or benefits from the
Historic Tax Credit Investor." Pl's Ex.
This was the standard form agreement used by Brian Wishneff
& Associates at the time and did not provide for a cap on
the fee plaintiff could earn. Under the terms of this
agreement, plaintiff would be paid a percentage of whatever
the historic tax credit (HTC) investor paid into the project
on the same schedule as the HTC investor made its payments to
the developer. Brian Wishneff & Associates secured one or
more term sheets from perspective HTC investors pursuant to
this contract; however, the deal ultimately did not go
through and BMB Associates did not proceed with development
of the Project.
Defendant 10 South Street Associates, LLC was later
designated by the City of New York for the redevelopment
Project. Plaintiff and 10 South Street negotiated terms of a
new Battery Maritime Building Historic Tax Credit Agreement
(the "Agreement"), which was executed on October
26, 2009. Pl's Ex. 10. This Agreement, which is the
subject of the instant lawsuit, reduces and caps the fee
plaintiff could earn under the Agreement in exchange for a
specific fee payment schedule tied to the phases of Project
development. The Agreement provides that plaintiff
"would earn a fee in an amount equal to 7% of the gross
equity payment by the historic tax credit Investor, "
not to exceed $1, 000, 000. The fee payment schedule reads as
follows: "If sufficient funds are available from a
credit investor and/or a bridge loan lender, the Consultant
shall be paid 20% of its fee at closing, 20% halfway through
to closing, 45% at certificate of occupancy or occupancy and
5% upon any final equity payment by the Investor."
Agreement also contains the following termination provision:
If the Consultant [Brian Wishneff & Associates] has not
produced a term-sheet from a historic tax credit investor
within 90 days, then after 90 days the Developer [10 South
Street] may terminate this Agreement at any time for
convenience. If at any point in the future the Developer
withdraws from the project the Developer can terminate for
convenience. In addition, at any time after the eighteen (18)
month anniversary of execution of this Agreement, the
Developer may terminate this Agreement for convenience. Upon
such a termination, Consultant shall deliver a list of all
potential investors ("Potential Investors") that it
has contacted related to the HTCs being generated by the
Project. If any [sic] anytime in the future, Developer
proceeds with the Project and one of the Protected Investors
becomes an investor in any [historic tax credits] generated
by the Project, Consultant shall earn its full fee pursuant
to the Fee and Schedule section above. If, however, Developer
moves forward with a HTC investor that is not one of the
Protected Investors, Consultant shall earn one-half (1/2) of
the fee that it would have otherwise earned under the Fee and
Schedule section above.
Plaintiff secured term sheets for the Project from three
potential HTC investors, one of which was PNC Investment
Company, LLC. PNC's projected capital contributions
exceeded $37, 000, 000.
July 1, 2012, a 10 SSA Master Tenant, LLC Amended and
Restated Operating Agreement was executed, pursuant to which
PNC was admitted as an investor member of the company.
Def.'s Ex. 1. Under the terms of this Amended and
Restated Operating Agreement, PNC was obligated to make a
capital contribution to the company for purposes of
developing the Project; in return, it expected to receive
certain tax benefits. See Id. at Art. V. PNC's
capital contribution was payable in three installments. The
first installment of $200, 000 was to be paid on the date the
Amended and Restated Operating Agreement was executed. The
second projected payment of $32, 575, 534 and third projected
payment of $5, 783, 918 were payable after certain other
conditions were met. Def.'s Ex. 1, at Ex. G. PNC paid its
first installment payment of $200, 000 on July 1, 2012.
following day, Brian Wishneff emailed Stephen Benjamin of 10
South Street, congratulating him on the HTC closing and
inquiring as to whether 10 South Street was in a position to
pay plaintiffs invoice with the construction loan in place.
Benjamin took the position that "[t]he money is not
payable until we have received the funds [from PNC]. Several
years from now." Pl's Ex. 11. In an email dated July
31, 2012, Brian Wishneff sent wiring instructions along with
an invoice for $200, 000, noting "[a]ccording to our
agreement we are to be paid $200, 000 of our fee at Closing
or June 2012." Pl's Ex. 12. Drew Spider of the Dermot
Company responded: "The agreement is clear that die
schedule of payments is conditioned on sufficient funds being
available. . . . We will be in touch with you when the funds
from pnc are expected to be sent to us." Id. By
letter dated January 2, 2013, counsel for 10 South Street
informed plaintiff that it was not entitled to the invoiced
amount of $211, 809.33 at that time, as, under the Agreement,
plaintiff "may be entitled to payment when and if the
Developer receives payment from PNC." Pl's Ex. 15.
By letter dated April 20, 2015, 10 South Street continued to
take the position that sufficient funds were not available to
trigger payment of plaintiff s fee under the terms of the
parties' Agreement:"There are not sufficient funds at
this time. Furthermore, there may never be sufficient funds
as the project is over-budget and may not be completed at
all. Since funds are only due to you
"[i]f sufficient funds ate
available", no funds are due at this time. You also
claim interest is due, but none is due since there have never
been sufficient funds available." Pl's Ex. 16.
South Street commenced construction on the Project.
subsequent events impeded the development progress. The first
was a ruling handed down on August 27, 2012 in the case of
Historic Boardwalk Hall. LLC v. Commissioner of Internal
Revenue, 694 F.3d 425 (3d Cir. 2012), cert,
denied, 133 S.Ct. 2734 (2013), which affected PNC's
qualification as an HTC investor on the Project given the way
its investment had been structured. See Aff. of Stephen
Benjamin, ECF No. 45-2, at ¶ 23. The second event was
Hurricane Sandy, which hit the New York area in late October
2012 and flooded lower Manhattan, bringing construction on
the Project to a complete halt for nearly a year.
Project ultimately became economically unfeasible, and 10
South Street discontinued development. On June 25, 2015, 10
South Street returned PNC's $200, 000 payment and paid
PNC an additional $183, 117.05 in legal fees, costs and
expenses, pursuant to the repurchase obligation set forth in
the Amended and Restated Operating Agreement dated July 1,
2012. Def.'s ...