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Amazon Could Pay Millions for Backing Out of Manhattan Office Deal

Amazon has been accused of reneging on a deal to lease out space owned by realtor Durst Organization to house its Manhattan offices.

In a summary judgment issued on Monday, a New York Supreme Court judge ruled that Amazon breached a letter of intent to lease 10 floors of Durst’s 1133 Sixth Avenue building that was signed on July 2, 2014. The agreement, which would have been worth roughly $20 million, had prohibited the e-commerce giant from negotiating “the leasing of any space with any other landlord, owner or other third party with respect to its space requirements … in the New York City metropolitan area.”

However, the judge wrote that Amazon had begun discussions with a few other locations in Manhattan around July 17 and signed a lease at a Herald Square area property owned by Vornado Realty Trust on Aug. 1. The judge said Amazon did not inform Durst of its decision and continued “stringing [Durst Organization] along as leverage in its negotiations” with Vornado until September 2014.

Durst filed an initial complaint on Jan. 9, 2015, accusing Amazon of breach of the letter of intent, breach of the implied covenant of good faith and fair dealing, fraud and specific performance. The organization sought $25 million in the lawsuit, including a $1.6 million fee for renovations that Amazon was said to have requested. (The court had already dismissed the other claims.)

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“Amazon unquestionably breached the letter of intent,” Judge Jennifer Schecter wrote in the Jan. 6 ruling. “Its discussions … were in blatant violation of the letter of intent’s exclusivity provision.”

She added, “Amazon’s breaches continued until Sept. 30, 2014, before which Amazon was purportedly negotiating with [Durst Organization] in good faith and on an exclusive basis even though it was actively negotiating a lease for the 34th Street building. Amazon lied to [Durst] about what it was doing and falsely gave [Durst] the impression that it was still interested in [Durst]’s building. Had [Durst] known the truth, it could have stopped wasting money dealing with Amazon.”

The judge has set a Jan. 21 court date for both Amazon and Durst to schedule a pre-trial conference. Amazon said it is not able to provide comment on ongoing litigation. FN also reached out to Durst for comment.

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