Leeding Builders Group Files $3 Million Lawsuit Against Naftali Group for Unpaid Wages on Upper East Side Condo Project

Leeding Builders Group (LBG), a prominent general contractor, is suing Naftali Group, a luxury condo developer, alleging nonpayment of wages for construction work on The Benson at 1045 Madison Ave. on the Upper East Side. According to a complaint filed in Manhattan State Supreme Court, LBG claims it is owed $3 million plus interest and attorney fees. The dispute centers on the accusation that Naftali Group has not paid dozens of subcontractors, ranging from electricians to carpenters, who worked on the successful real estate project during the pandemic. The lawsuit claims that the Naftali chairman Miki Naftali sought to squeeze even more profit from the project at the expense of the contractors who delivered the property, as detailed in the complaint obtained by Crain's New York.

In a separate but related legal battle, Naftali Group and Rockefeller Group are facing another lawsuit from LBG over an Upper East Side luxury condo development at 200 East 83rd Street. The plaintiff claims that approximately $15 million remains unpaid for work substantially completed. The developer's decision to stop payments to the contractor, first through partial payments and then ceasing altogether, coincided with the project's completion, a consciously devised plan as alleged in the complaint. This project too has been a success, with top-dollar unit sales and a sell-out in less than 20 months. However, the developers argue that LBG failed to complete the work on time and abandoned the project, forcing them to finish the work, according to a lawsuit filed in response by Naftali and Rockefeller. The developers' lawyer Aaron Abraham expressed commitment to quality and dismay over being drawn into a legal dispute, reported by The Real Deal.

LBG's legal strategy includes seeking to foreclose on several liens filed against the properties, signaling a high-stakes clash with the developers. While deals for luxury units like a $28 million penthouse were being finalized, LBG alleges they were stonewalled awaiting overdue payments, a situation belied by the developers' financial maneuvers such as retiring a construction loan, which they allege saved millions on interest payments.

The Benson, notably a high-profile success even amid the pandemic with $238 million in sales, is now partially overshadowed by the controversy exposed in LBG's suit, which says they rushed to meet the completion deadline promised to Naftali. Despite the urgency, they allege that Naftali prioritized clearing debt with the Israeli lender Bank Hapoalim over settling due invoices, according to the lawsuit filed by LBG. On the other hand, the 200 East 83rd Street project, designed by Robert A.M. Stern, is touted for its robust sales despite legal entanglements. Both developers and contractors are poised for a protracted legal tussle, with unfinished business and a battle for millions at stake, as neither Naftali Group nor LBG principals were available to comment at press time.