Extell's Gary Barnett sues former borrower.

Byline: Adam Pincus

Gary Barnett sues real estate heir who is partial owner of 734 BroadwayExtell Development president Gary Barnett accuses an heir to a modest Noho and Brooklyn real estate portfolio of breach of contract, unjust enrichment and other charges and is seeking $790,000 in a lawsuit filed this month.

The filing by the developer of such luxury projects such as the Rushmore at 80 Riverside Boulevard and 995 Fifth Avenue at 81st Street, charges that Mordechai Muschel, who was a member of a partnership that borrowed $5 million from another of Barnett's companies, Intell Management and Investment, now owes the developer at least $790,000, but the two-paragraph filing does not explain why.

The brief suit filed June 12 in New York State Supreme Court, known as a summons with notice, lists Barnett alone as plaintiff, and Muschel as the sole defendant.

"This is an action for breach of contract, unjust enrichment, conversion, money had and received, and money lent for damages amounting to be... $790,000," the court filing says. Muschel has up to 30 days to respond to the summons or Barnett will ask the judge for a default judgment, the filing says.

Several sources familiar with the dispute said the lawsuit was likely related to the $5 million loan, and added that the Muschel brothers -- sons of the late real estate investor William Muschel -- had disagreements among themselves that stalled redevelopment plans for the buildings they borrowed against.

Barnett, through a spokesperson, did not comment. Muschel could not be reached for comment, and his brother Aaron declined to comment.

Muschel's father died in 2001, and left his estate, with four parcels in Noho and three in Brooklyn, in the hands of sons Mordechai, Aaron and Ruben.

In December 2002 the brothers borrowed $5 million from Intell, secured by four Noho parcels and one building in Williamsburg, and then defaulted on the loan in May 2004, which was by then controlled by another Barnett company, Imico Funding, a 2004 lawsuit filed in New York State Supreme Court shows. Imico filed to foreclose, but the case was concluded in November 2006 following a motion to dismiss, court records show. The mortgage did not explain how the loan proceeds were used, and court records did not explain how the case was resolved.

The Manhattan properties are 4 Great Jones Street, 688 Broadway, 734 Broadway and 736 Broadway, which are held in the names of special purpose companies that still include Muschel family members. The brothers sold the Williamsburg property at 100 South 4th Street, which was once eyed for a public high school, in 2006 for $9 million, city records show.