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Jonathan,
I am writing to advise you that settlement discussions with Marcus D. Whitfield and Pinnacle Greystone Capital LLC in the matter of Caldwell v. Whitfield et al., Index No. 519847/2023, Supreme Court of the State of New York, Kings County, have been terminated. The termination was effectuated by mutual written communication as of today's date, January 22, 2024. Opposing counsel, Helen K. Tanaka of Ridgeway, Tanaka & Schiff LLP, confirmed the termination on behalf of her clients this afternoon. We have reached a crossroads in this case, and I want to lay out your options clearly so that you can make an informed decision about how to proceed.
BACKGROUND AND RECAP OF SETTLEMENT NEGOTIATIONS
As you know, the parties participated in a full-day mediation on December 14, 2023, before Jerome Aschkenazy, Esq. of Meridian Dispute Resolution Services LLC. At mediation, your initial demand was $4,750,000, and Whitfield's initial offer was $1,200,000. Although the session did not produce a resolution, it did generate sufficient movement to warrant continued post-mediation negotiations, which Francesca and I conducted with Ms. Tanaka's office over the course of the following weeks.
On January 10, 2024, Whitfield communicated his final settlement offer of $2,350,000, contingent on mutual general releases, confidentiality provisions, and your transfer of your 40% membership interest in Atlantic Yards Development Partners LLC to Pinnacle Greystone Capital LLC. On January 17, 2024, we communicated your final counteroffer of $3,600,000, structured on the same terms. The gap at the point of collapse stands at $1,250,000. Neither side indicated a willingness to move further, and after a brief exchange today, both parties agreed to terminate discussions. Copies of the January 17 settlement letter to Ridgeway, Tanaka & Schiff LLP and the mutual termination communication are on file and available for your review at any time.
PATHS FORWARD
I see three realistic options available to you at this juncture. Each carries distinct advantages, risks, and cost implications, which I outline below.
1. Proceed with Litigation Through discovery and Trial
The action remains pending before Hon. Patricia Velez, J.S.C., and discovery has not yet meaningfully commenced — though the discovery meet-and-confer process with Ridgeway, Tanaka & Schiff LLP was initiated in November 2023 and a framework is in place. Electing this path would mean pursuing the case through its full lifecycle.
Discovery would be substantial. We would seek production of the Broadmark Commercial Lending Corp. loan files, the Glenmore Realty Advisors Inc. consulting agreement, the Ridgepoint Environmental Consultants LLC Phase II environmental assessment, and related financial records that we believe will corroborate the fraud claims. We anticipate depositions of Whitfield, Neil Osterberg, and David Poulos, among potentially others. Expert discovery would involve the financial analysis being prepared by Ellerby & Associates CPAs LLP and the real property appraisal by Kevin Romero of Tidewater Appraisal Group LLC. Following fact and expert discovery, we would expect dispositive motion practice before any trial setting.
The merits of your claims remain strong. The documentary evidence we have assembled to date supports allegations of undisclosed tax liens totaling $1,340,000, concealed Phase II environmental contamination carrying an estimated remediation cost of $620,000, an inflated rent roll overstating income by approximately $580,000 per year (roughly 26.9%), and the undisclosed $370,000 advisory fee paid to Glenmore. Taken together, these support a compensatory damages claim of $6,200,000, and the nature of the misconduct provides a credible basis for pursuing punitive damages as well.
I would not be doing my job, however, if I did not also identify the headwinds. The Court's November 8, 2023 denial of our preliminary injunction motion — on the ground that irreparable harm was not sufficiently demonstrated — was not a ruling on the merits, but it did give defendants a measure of early momentum. We also anticipate that Whitfield will aggressively assert affirmative defenses of sophisticated investor status, due diligence waiver, and ratification. These defenses are not without force, particularly in the Commercial Division context, and will need to be met head-on at summary judgment and at trial.
On the financial side, I estimate additional legal fees through trial in the range of $350,000 to $500,000, depending on the complexity and duration of discovery disputes and the scope of motion practice. This is on top of the $305,770 already invoiced and paid ($287,450 in fees and $18,320 in disbursements). The timeline to trial, given Kings County's current calendar conditions, is realistically 12 to 18 months from today. And even a favorable verdict would require collection — a step that is not always straightforward depending on Whitfield's and Pinnacle Greystone's asset positions.
Litigation, as you know, carries inherent uncertainty. But the case is well-grounded, and if you are prepared for the cost and duration, this is a viable and defensible path.
2. Voluntary discontinuance Without Prejudice — Preserve Right to Refile
A second option is to file a stipulation of voluntary discontinuance without prejudice pursuant to CPLR § 3217(a)(2), with the consent of defendants. This would terminate the current action but preserve your right to refile the claims within the applicable statute of limitations under New York law.
The principal advantages of this approach are practical: it stops the meter on legal fees, preserves your optionality, and allows you time to reassess your position — including with respect to the co-investment relationship and the possibility of negotiating an exit from Atlantic Yards Development Partners LLC outside of the litigation context. It may be that, with some distance and a changed posture, a business resolution becomes achievable on terms that could not be reached in the shadow of active litigation.
The disadvantages are real as well. You would lose the litigation momentum that comes with a pending action. Defendants may be less inclined to negotiate meaningfully without the pressure of an active case and looming discovery obligations. And the passage of time raises evidentiary concerns — witnesses' memories fade, documents may become harder to locate, and the factual landscape may shift in ways that are difficult to predict.
3. Voluntary discontinuance and Definitive Closure
The third option uses the same procedural mechanism as Option 2 — a stipulation of discontinuance without prejudice under CPLR § 3217(a)(2) — but with a client-level decision not to refile. This would effectively close the matter and result in the closure of our engagement on this file.
The advantage is finality. You would eliminate the ongoing and prospective legal costs, free yourself to redirect attention to other investment activities, and potentially pursue a non-litigated resolution of the co-investment relationship on a purely commercial basis. For some clients in your position, that clarity of closure has independent value.
The disadvantage is equally clear: you would be forfeiting the litigation leverage that supports any future negotiation, and there would be no recovery on the fraud claims unless separately negotiated from a position that no longer includes the threat of a courtroom outcome.
RECOMMENDATION AND NEXT STEPS
I want to be clear that this is your decision, and I am not pushing you toward any particular option. Each path has a defensible rationale depending on your priorities — whether those are maximizing potential recovery, managing cost exposure, preserving flexibility, or achieving finality.
Francesca, Patrick, and I are available to discuss these options at your earliest convenience, and I would suggest we schedule a call to walk through them in detail. There is no immediate procedural deadline driving the timing, but a decision should be made reasonably promptly so that we can take the appropriate next steps — whether that means filing initial discovery motions and document demands or preparing a discontinuance stipulation.
Whatever direction you choose, you have our full support and the firm's complete commitment to executing it effectively.
Very truly yours,
Douglas Carmichael Partner Calderwood & Harkness LLP 599 Lexington Avenue, 34th Floor New York, NY 10022 Tel: (212) 401-7600 Email: dcarmichael@calderwoodharkness.com
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