Carnegie House Co-op Wins Second Shot In Ground Lease Fight

Co-op owners at Carnegie House avoided — at least, temporarily — a rent reset that would have more than quintupled the ground rent on their building.

A New York appellate court on Thursday overturned an arbitration award that would have allowed the owners of the land underneath 100 West 57th Street to raise the ground rent from roughly $4 million to $24 million. The ruling, announced in a press release from Haynes Boone, one of the law firms representing shareholders, was first reported by the New York Post.

The decision marks a victory for the co-op’s shareholders, who have spent years fighting their landlord, an entity tied to Cammeby’s International Group’s Rubin Schron and David Werner Real Estate. Shareholders have argued that the impending rent hike would be unaffordable for many owners and could put them at risk of default and foreclosure.

Schron and Werner purchased the land underneath the 324-unit co-op for $261 million in 2014. MSD Partners, a merchant bank affiliate backed by billionaire Michael Dell, loaned Schron and Werner $100 million in 2023, while the duo was fighting a lawsuit filed by a co-op owner over the terms of the ground lease.

A year later, Carnegie House owners opted to extend their ground lease with a new term beginning in March 2025, which required the rent to be reset based on a new valuation of the land. But the two sides couldn’t agree on that value, sending the dispute to arbitration.

During that process, an attorney representing the landlords offered the neutral arbitrator appointed to the panel a paid position in another arbitration case. Attorneys representing the shareholders asked the arbitrator to recuse himself from the case, but he refused.

In July 2025, the arbitration panel sided with the landlords to value the land at more than $300 million. Schron and Werner then asked the state court to confirm the award.

But shareholders pushed back on the request, arguing that the panel had demonstrated bias through several decisions, including throwing out portions of their case.

“I’m fully confident that an impartial arbitration panel would have come up with a dramatically lower valuation,” said Brett Dockwell, an attorney representing co-op owners.

In January, New York’s Supreme Court sided with the landowners to confirm the award, though the court agreed with shareholders that the neutral arbitrator’s behavior “clearly compromised the integrity of the arbitral process and mandates strict scrutiny.”

Shareholders appealed the court’s decision, resulting in the latest decision issued earlier this week.

“While this ruling is a temporary stopgap, it gives us a fair shot at negotiating reasonable rent terms, or arbitrating before an impartial panel, instead of being bound by a flawed process that would have cost us our homes,” co-op board president Richard Hirsch told the Post. “We look forward to a fair process in order to reach an outcome that works for both parties and keeps our co-op intact for generations to come.”

However, a spokesperson for the landlord, 57th & 6th Ground LLC, pushed back against Hirsch’s characterization of the case in a statement provided to the outlet.

“These tenants — largely investors — can seek all the delays they want, but the numbers are the numbers and we are confident that the next arbitrator will come to the same conclusion,” the statement said.

Now the co-op owners and landlords are “back to square one,” Dockwell said, and will resume negotiations on the value.