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Monday, May 27, 2024 | Back issues
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Developer Sues Eye & Ear Clinic for Millions

MANHATTAN (CN) - A developer of medical buildings clams the New York Eye & Ear Infirmary induced it to spend millions of dollars building a Brooklyn hospital, which the Eye & Ear Infirmary now claims is a "mere 'pass through' tenant" with no "obligation to pay rent."

E and E Medical Bldgs LLC sued the Eye & Ear Infirmary and its corporate parent, Continuum Health Partners, in New York County Court.

The York Eye & Ear Infirmary began work in 2007 on an "upscale" medical facility in Brooklyn, intended to function as an extension of its flagship Manhattan hospital. The defendants "further intended to utilize the new hospital premises to be used by their not-for-profit corporation, Project Chernobyl ... and ... as a platform and means to attract actual and prospective patients, expand the catchment area of NYEE and Continuum, encourage the referral of patients to NYEE's main campus in Manhattan," and "further the referral relationships" among hospital-affiliated "physicians, providers, employees and agents," according to the complaint.

But shortly after it entered into a joint venture development agreement, the hospital "ran into construction funding problems," leading it to "induce" E and E Medical to "acquire ownership of the hospital premises" so its construction could be completed, according to the complaint.

After examining the hospital's financial statements, E and E, says, it assumed ownership of the property and committed "millions of dollars in construction costs and construction financing to build an expensive and upscale hospital premises."

Then in 2010, E and E Medical "entered into a contract with a major real estate investment trust to sell the premises, subject to the existing lease with the hospital," the complaint states.

But E and E Medical says the Eye & Ear Infirmary refused to allow the refinancing, claiming the rent was "too high," and that the hospital was "a mere 'pass through' tenant with no obligation to pay rent."

As a result, E and E Medical says, it lost its property contract, costing it $15 million in damages.

It seeks damages for fraud, breach of contract, tortious interference with contract, and an injunction, rent already owed, and costs.

E and E Medical Bldgs is represented by Edward Ross with Rosenberg Calica in Garden City.

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