Developer Louis R. Cappelli is suing a bank for allegedly refusing to release $625,166 earmarked for repairs at a Brooklyn condominium project.
LRC Construction LLC, an affiliate of the Cappelli Organization in White Plains, filed a complaint May 26 against First Republic Bank in Westchester Supreme Court.
Despite a demand for the money, the complaint states, “FRB has wrongfully failed and refused to surrender to LRC $625,166 of insurance proceeds.”
A spokesman for the bank said it had no comment.
The developer, 67 Livingston LLC, an affiliate of Silverback Development in Manhattan, hired LRC Construction in 2017 as the project construction manager.
The work consisted of converting a former Art Institute dormitory into condominiums, according to an article in The Real Deal real estate publication, and selling 21 apartments and a penthouse for $2.5 million to $7.5 million.
In February 2019, the building was damaged extensively when a rooftop water tank leaked. Hartford Fire Insurance Co. experts estimated the cost of repairing the structure at nearly $3.2 million, according to the lawsuit.
The developer also claims it lost $2.7 million in “soft costs,” according to a lawsuit it filed against Hartford in Supreme Court in Manhattan, for a delay of more than six months in opening the building for occupancy.
Hartford paid the entire $3.2 million in “hard construction costs” to 67 Livingston. The developer placed the insurance money in a trust fund at First Republic, the complaint states, “to be disbursed to LRC upon completion of the loss repairs.”
LRC claims it finished everything except a $300,000 replacement of an electrical riser. Cappelli”™s company has received nearly $2.3 million, according to the complaint, leaving $625,166 owed for completed repairs.
First Republic has allegedly refused to release the money.
LRC claims that the bank is violating its requirement to act as a fiduciary for the developer”™s insurance proceeds. Cappelli also accuses First Republic of unjust enrichment, conversion of funds and third-party liability.
LRC is represented by Paul H. Slaney, the firm”™s chief operating officer and general counsel.
