NEW YORK (Legal Newsline) - The litigation-tangled New York resort where Hillary Clinton prepped for her 2016 presidential debates has stimulated yet another lawsuit, this time against the well-known Manhattan law firm that represented the resort’s owners in their fight to eject a property manager.
Larod LLC, a firm based in the offices of New York lawyer Peter Cane, sued Winston & Strawn and its partner Seth Spitzer for more than $450 million in December in New York County Supreme Court, blaming them for an ill-advised lawsuit they said led to foreclosure on the Doral Arrowwood Resort. The Westchester County resort, close to Clinton’s home in Chappaqua, had been owned for decades by several families until it defaulted on $75 million in loans.
Larod described itself as an assignee of legal claims held by DCCA, the family real estate firm that owned the Doral for some 30 years. Larod – Doral spelled backward – is based at the Park Avenue offices of Peter Cane, who represented DCCA in earlier legal fights with its lenders.
Spitzer didn’t respond to a request for comment. In the lawsuit, Larod accuses him of advising DCCA to sue Benchmark Hospitality, which the families hired to manage the 400-room resort as part of the $75 million loan agreement in 2015.
Benchmark was the first outside firm to manage the Doral since the Kaskel, Blum and Schragis families bought it in 1986, Larod says, and by 2018 they were disappointed and wanted to return to running it themselves. They hired Winston & Strawn at $775 an hour for advice on how to fire the firm, paying a $100,000 retainer.
Unfortunately, the loan documents included clauses prohibiting them from changing management companies or engaging in litigation without the lenders’ consent. The lawsuit itself was ill-advised, the plaintiff says, because the contract with Benchmark included an agreement to arbitrate disputes. Winston & Strawn advised them to sue instead because it would “take 5-7 months for discovery” in arbitration, the lawsuit states.
“Not surprisingly, the case Winston filed was compelled to arbitration within weeks on the motion by counsel for the property manager, but not before Winston charged plaintiff more than half a million dollars in legal fees for a pointless lawsuit,” Larod says.
Winston & Strawn assigned nine lawyers to the case and racked up $600,000 in billings, then refused to represent DCCA in the foreclosure action that followed, citing a conflict, Larod says.
At the same time as the families were wrangling with Benchmark, they were locked in legal combat with Charles Cohen, a New York real estate investor who purchased the loan against the Doral at a discount and cited the property manager’s firing as a reason to foreclose. A state court judge blocked the foreclosure, describing the faded resort as “a unique real property that has been in the same family for over 30 years and that has become an important part of the Westchester community for these many decades.”
One of Cohen’s businesses also sued DCCA’s chief executive, accusing him of fraudulently inducing him to buy the loan so DCCA could sue Cohen - a case lawyer Cane described in a court filing as “uniquely ridiculous.” A judge dismissed the case in January 2021.
Unable to service the debt, the Doral passed into receivership in 2019. Now Larod claims the allegedly faulty advice Winston & Strawn gave DCCA generated hundreds of millions of dollars in damages, plus millions of dollars in legal fees.
“None of this would have happened but for Winston’s negligent filing of the action against the management company,” Larod says. “Plaintiff should be collecting the profits from Doral Arrowwood as it did for decades before hiring Winston.”