Paul, Weiss Prevails in First Department Appeal for Simon Property Group

Paul, Weiss won the affirmance of the trial court’s dismissal of a judgment enforcement proceeding brought against Simon Property Group.

The proceeding arose out of a brokerage agreement between the then-owner of the General Motors Building on Fifth Avenue and a broker allegedly involved in procuring the FAO Schwartz lease in the building. The building’s owner sold the building (to the Trump Organization) and then merged with a Simon affiliate. Thirteen years later, the then-tenant renewed its lease in the building; the brokerage firm claimed a commission in connection with the renewal and obtained a judgment against the prior building owner. Unable to recover against the prior owner, the broker then sought to enforce the judgment against various Simon affiliates, arguing that the sale and merger involved a fraudulent conveyance of the proceeds from the sale of the building, which rendered the former owner insolvent.

Paul, Weiss prevailed in the trial court on a theory that the court lacked personal jurisdiction. The New York Appellate Division, First Department affirmed, though on different grounds, finding that the prior owner was not insolvent at the time of the sale and merger, noting that our client had satisfied all of its debts at the time of the transactions and that the mere possibility that the tenant would renew its lease 13 years later was too contingent a liability to establish insolvency.

The Paul, Weiss team included litigation partner Allan Arffa.