Judge Orders Co-Founders Of New York Development Firm To Stop Firing Each Other
After a spat between Jeffrey Simpson and Jared Chassen wound up with both Arch Cos. founders in court, a judge called the dispute “childish” and ruled that the pair must try to work together again.
The disagreement began in early August, according to court documents. Chassen locked Simpson out of the company’s emails, its First Republic bank accounts and its Greenwich Village office, but Simpson alleges he had fired Chassen a day earlier for refusing to take a pay cut, The Real Deal reported.
“I don't see why it would be so hard to trust two individuals who up until a month or a month and a half ago worked together smoothly and are people with reputations in this business,” New York Supreme Court Justice Joel Cohen said in a court order.
Simpson and Chassen launched Arch in 2017 after working together at Greystone. Its projects include a SoHo residential property at 11 Greene St., a 17-story mixed-use residential development in Ridgewood and the acquisition of a Greenwich office building where WeWork’s Adam Neumann is a co-owner, per The Real Deal.
Arch Cos. has a portfolio of over $1B in real estate, including more than 5,000 multifamily units, plus office and retail assets, according to its website.
Arch’s troubles reportedly began last year, after the Federal Reserve’s rate hikes meant fewer acquisition deals and greater dependence on fees from the company’s property management arm.
But another factor is potentially at the root of some disagreements: a series of costly lawsuits that Arch is involved in. Arch alleged in a lawsuit that its partner at its SoHo residential property, 11 Greene St., owed Arch money.
The firm also sued Meir Babaev, a partner on another project in Ridgewood, Queens, claiming Babaev had misrepresented the status of the development. Arch is also tied up in a lawsuit over a UCC foreclosure in Flatbush, Brooklyn, where the property owner, Eli Karp, allegedly entered into a lease agreement without permission from Arch, which was the property’s lender.
Those suits were allegedly a source of displeasure for 35 Oak, Arch’s main investor and the guarantor of some of the firm’s loans, which told Simpson he had breached fiduciary duty. Simpson threatened to “blow the company up” if 35 Oak “didn’t stop messing” with him, Chassen alleges in the lawsuit between the two men.
The pair have been sparring in court since mid-August, with Simpson calling Chassen’s actions “a coup d’etat.”
Chassen claims he confronted Simpson about his decisions and misappropriating funds. But Simpson claims that he fired Chassen on Aug. 5, a day before Chassen claims the confrontation took place.
A judge’s order restored Simpson in his position at the firm, but Simpson then fired Chassen. A judge reinstated Chassen to the company in mid-September.
“I’m really kind of flabbergasted by this,” Cohen said of the firings. “I don’t get surprised by too many things.”
Cohen also called the dispute “frankly sort of childish” and reiterated his request for the pair to work together in good faith. But Chassen and Simpson may not comply, according to The Real Deal: Simpson’s lawyer told the court his client was unwilling to have a conversation about anything besides Chassen’s departure from Arch.