Law Firm: Divine Lorraine Developer Eric Blumenfeld Owes Us Nearly $750K

A law firm alleges that Eric Blumenfeld owes $120,000 for services rendered in relation to his development of the Divine Lorraine, pictured above in a rendering commissioned by his company.

Update: 8/15/14 3:35PM: Blumenfeld called us yesterday evening to say, “That matter has been resolved.” Today a firm spokesperson told us, “Stradley Ronon Chairman Bill Sasso and Eric Blumenfeld have reached a verbal settlement on the matter that will be committed to writing in the very near future.”

The law firm of Stradley Ronon Stevens & Young LLP has filed a suit (embedded below) against Eric Blumenfeld’s EB Realty Management Corp. The complaint alleges that Blumenfeld hired the firm in March 2012 to advise him in various real estate matters, including the Abbotts Square condo complex; the Stutz Building, where Stephen Starr’s catering empire resides; and the following development projects:

• The restoration of the Divine Lorraine to its former hotel greatness
• The conversion of the historic Thaddeus Stevens School building into loft apartments
• A 20-acre mini-city at Washington Avenue and the Delaware, on land owned by the Sheet Metal Workers’ union Local 19, with apartments, retail, and restaurants
• The transformation of the Metropolitan Opera House into a venue for catering, worship space, dining, offices, event, and more

Though the firm was charging EB Realty its standard hourly rates for attorneys and legal assistants, its chair, William Sasso — one of Philadelphia’s most high-profile lawyers — was giving Blumenfeld a discount: $600 per hour, $355 less than his standard personal rate, according to the complaint.

Blumenfeld and Sasso signed an engagement letter which the firm says bound Blumenfeld to the terms laid out in its pamphlet (also in the filing below), “Standard Terms of Engagement for Legal Services.”

Yet something apparently went awry. The complaint alleges that in October 2013, Sasso, Blumenfeld, and Narberth-based real estate investor/developer Ron Cantor (an “interested party”) met to talk about the fact that Blumenfeld owed the firm about $780,000. (The highest bill was for the Met.) In a follow-up letter to the meeting, Sasso outlined the terms of repayment, and noted that future work would require payment in advance. The law firm says Blumenfeld agreed to an upfront payment of $50,000, $10,000 per month, and payment of the project’s itemized amounts “at the closing of either a finance or sale, or at such time as there is a settlement of the Ron Caplan litigation.”

Blumenfeld signed the letter on behalf of his numerous real estate entities, and indeed paid the $50,000 in November 2013. Since then, the suit alleges, nada — leaving a balance of $737,171.56.

The firm said it had no comment beyond what’s in the filing. Blumenfeld said, “I think the whole matter will probably be resolved in the next day or two. We’re in conversations and I think this will probably not be on the radar for long.”