Wilk Auslander, Serving as Co-Counsel, Obtains Trial Judgment for Real Estate Developer Against Claim for $75 Million of Investment Management Fees

Alan D. Zuckerbrod

08/06/2019

On July 19, 2019, New York's Commercial Division granted a judgment in favor of Panattoni  Development Company, a real estate development company against a claim by private equity firm Hawkeye Partners through its Scout Fund for $75 million in investment management fees. After a seven-day bench trial, Justice O. Peter Sherwood of the New York County Supreme Court, Court of Claims, Commercial Division, granted Panattoni a complete victory, finding that it was not liable to Hawkeye Partners / Scout Fund for any of the fees that were claimed.

In 2008, Panattoni formed a joint venture with private equity firm, Hawkeye Partners, through its Scout Fund, to attract institutional real estate investment management business, with a sharing of fees between them.  Hawkeye/Scout commenced litigation against Panattoni in 2012, claiming that Panattoni owed approximately $75 million for what Hawkeye claimed were investment management fees due based on a venture that Panattoni formed with the California State Teachers Retirement System (CALSTERS).  Panattoni, which develops and manages large-scale industrial real estate projects throughout the world, vigorously defended the action on the ground that the fees generated from the CALSTERS relationship were based on a prior relationship and fell outside the scope of the Hawkeye/Scout investment management program. 

Because of his extensive experience litigating in the Commercial Division in New York County, Alan Zuckerbrod was brought into the case in 2018 to act as co-trial counsel with Panattoni’s long-time outside counsel.