Rosenberg & Estis, P.C. Secures Important Victory Against Icon Parking

by | Feb 16, 2024 | Press Releases

Rosenberg & Estis, P.C. has secured a significant victory in the Appellate Division, First Department, of the New York State Supreme Court. The First Department upheld the trial court’s decision and order denying New York parking giant Icon Parking Holdings, LLC’s motion to dismiss the firm’s veil-piercing claims in a dispute over nonpayment of $1.3 million in rent by Icon’s subsidiary.

The dispute focuses on the non-payment of rent by a single-purpose-entity subsidiary of Icon Parking Holdings who operated a garage at 245 East 19th Street in Manhattan. The suit alleges that the Icon parent company directed its subsidiary to cease paying rent during the COVID pandemic — when evictions were halted — while funneling its parking revenue to the Icon parent. Then, when evictions resumed, the garage owner was left with no way to collect the delinquent rent from the judgment proof single-purpose-entity, while the Icon parent company sought to be shielded from liability.

Rosenberg & Estis Member Bradley Silverbush and Counsel Jake Bedor represented garage owner 245 East 19 Realty LLC in the action, which sought to pierce the single-purpose-entity’s corporate veil and seek damages directly from the Icon parent company. Icon is represented by Pillsbury Winthrop Shaw Pittman LLP. The First Department’s decision to uphold the trial court’s denial of Icon’s motion to dismiss the veil piercing claims now enables the garage owner to proceed with discovery. Rosenberg & Estis is confident that documents and testimony adduced during discovery will prove the Complaint’s allegations.

“This was a bald-faced attempt to exploit the pandemic by taking parking fees collected from their customers that should have gone towards the garage rent obligations and wrongfully sending that money up to the parent company without paying rent,” said Silverbush. “This decision allows us to depose the individuals whom we believe benefited from Icon’s scheme by pocketing millions of dollars that were rightfully due to the landlord.”

The case is one of several actions against Icon, whose parking operator affiliates stopped paying rent to property owners under then Gov. Andrew Cuomo’s eviction moratorium, willfully and knowingly diverting payments to an Icon controlled master account, not paying any of it as rent, even if there was enough to do so.

Silverbush added, “The breadth of the scheme was massive when you understand that there were approximately 20% of the 250 Icon-branded garages, at the time, sued for various defaults in their lease obligations. We intend to follow the money and get it back to those who are rightfully entitled to receive it.”

Judges Troy K. Weber, Lizbeth Gonzalez, Martin Shulman and Bahaati E. Pitt-Burke upheld the Supreme Court’s denial of Icon’s motion to dismiss veil piercing claims, noting the Complaint sufficiently alleged that, even if Icon had operated a central banking system to collect takings before the pandemic, the company “took advantage of it to perpetuate a fraud… by transferring all of Tenant’s revenue to itself each day.”

Silverbush said the decision paves the way to determine exactly how much Icon diverted. He added, “We are pleased to have defended a favorable decision we obtained from the Supreme Court and will continue to fight to ensure our clients’ rights.”