Lawsuits brewing over Citigroup Center sale.

Real estate upstart Eric Hadar could be squeezed out of the sale of the 1.6-million Citigroup Center because of dueling lawsuits that pit Hadar against some former business partners.

The partners, who teamed up with Hadar and his father Richard Hadar to buy 1 E. 57th St., are now trying to prevent the sale of that building. The Hadars plan to use proceeds from the sale to finance the $775 million purchase of the Citigroup Center at 153 E. 53rd St.

But Boston Properties Inc., which is a partner in the Citicorp deal but is not involved in the lawsuits, said it planned to move forward with the purchase with or without the Hadars. In a March 28 release, Boston Properties said it still intends to enter into a joint venture agreement with the Hadars as originally planned.

"However, litigation recently filed against Eric and Richard Hadar may interfere with the proposed joint venture," the company states. "If the proposed joint venture with Allied cannot be put in place, Boston Properties intends to complete the acquisition of the Citicorp Center through its controlling interest, in accordance with the contract with Dai-Ichi as currently in effect."

"For certain tax reasons, it is highly beneficial to the Hadars to reinvest the proceeds of the sale into another real estate venture," according to court documents filed by the Hadars.

The sale of 1 E. 57th St. is scheduled to close in May. However, former partners Philip Pilevsky, members of the Gindi families and others -- a group called Blue Chip Emerald LLC in court documents -- are seeking to prevent the sale. The Blue Chip group filed suit two weeks ago against the Hadars seeking $180 million. The group is accusing the Hadars of fraud and breach of contract with respect to a buy-out agreement the two groups entered into prior to the sale of 1 E. 57th St.

Manhattan attorney Eric Wallach, who is representing the Blue Chip group, could not be reached for comment.

The Hadars, however, aren't taking the lawsuit lying down. They filed a counter lawsuit in the matter, claming the Blue Chip suit is the latest in a series of moves to bilk the Hadars out of more money from the 1 E. 57th St. transaction. Manhattan attorney Steven Simkin is representing the Hadars.

"Long-time real estate operator Philip Pilevsky and his associates bring their action in a tortious effort to squeeze more money out of an investment in which plaintiffs have already almost doubled their money in less than eight months," the Hadars' suit states.

Both lawsuits stem from a business relationship dating back more than a year ago. In February 2000, 57th Street Acquisition LLC entered into a contract to buy 1 E. 57th St. The group consists of the Hadars and other business associates. At the time, the property was impaired by a below-market, long-term lease to Time Warner Entertainment Company. The company's lease, which didn't expire until December 2005. was for the basement and first 11 floors of the building, according to the Hadar suit.

"As any New York real estate professional would understand, the property would greatly increase in value if it became unencumbered by the Time Warner lease," the Hadar suit states.

Prior to closing on the property, the Hadars brought in the Blue Chip group, which invested $12 million in the property. Under the agreement, the Hadars owned 50.57 percent of the property and the Blue Chip group owned 49.43 percent, according to the Hadar suit.

In the months that followed, the Hadars sought to terminate the Time Warner lease. The Blue Chip group originally consented to the negotiations but later withdrew its support. On Nov. 1, 200 the two groups entered into a buy-out agreement, which called for the Hadars to pay Blue Chip $23.4 million for their portion of the property, according to the Hadar suit.

After the buy-out agreement was reached, the Hadars were successful in terminating the Time Warner lease and reached an agreement to sell the building to LWMH for $200 million.

The Blue Chip group claims that the buy-out agreement was ''procured through fraud and gross violations of fiduciary duty" and, therefore, it is "ineffective and void." The Hadars disagree.

"Prior to the buy-out agreement, the Hadars had informed the Blue Chip group of the fact that they had held discussions with several parties, such as LVMH and Zegna, with respect to the property," the Hadar suit states.