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INDEX NO. 652096/2012 RECEIVED NYSCEF: 06/15/2012

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION ----------------------------------------------------------------------- x : PRADA USA CORP., : : Plaintiff, : : -against: : MAXMARA RETAIL, LTD., : : Defendant. ----------------------------------------------------------------------- x To the above-named Defendant:

Index No.: Date Purchased: 06/15/2012


YOU ARE HEREBY SUMMONED to answer the complaint in this action and to serve a copy of your answer on Plaintiff’s attorney within twenty days after the service of this summons, exclusive of the day of service, or within thirty days after service is complete if this summons is not personally delivered to you within the State of New York; and in case of your failure to answer, judgment will be taken against you by default for the relief demanded in the complaint. Plaintiff designates New York County as the place of trial. Pursuant to CPLR § 503(a) and (c), venue is proper because Plaintiff’s and Defendant’s principal offices are located in New York County. Plaintiff’s principal office is located at 610 West 52nd Street, New York, New York 10019.

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION ----------------------------------------------------------------------- x : PRADA USA CORP., : : Plaintiff, : : -against: : MAXMARA RETAIL, LTD., : : Defendant. ----------------------------------------------------------------------- x

COMPLAINT Index No. ___________

Plaintiff PRADA USA Corp. (“PRADA”), by its attorneys, Duval & Stachenfeld LLP, for its complaint against defendant MaxMara Retail, Ltd. (“MaxMara”) alleges as follows: NATURE OF THE ACTION 1. Following an extended negotiation, MaxMara, PRADA, and the owner of a

commercial property entered into a final and binding agreement to assign MaxMara’s lease for a retail location in the highly desirable Waikiki area of Honolulu, Hawaii. PRADA committed to paying a high premium to obtain the lease for MaxMara’s space, which PRADA viewed as the ideal location for a new boutique devoted exclusively to its Miu Miu clothing and accessory line. In spite of its unequivocal agreement to assign the lease, MaxMara elected, weeks later, to renege on its commitment and refused to give up the lease. Through this lawsuit, PRADA seeks to recover millions of dollars in damages that it incurred as a direct result of MaxMara’s unjustified breach, including the lost profits projected for its planned boutique and significant sums spent in reliance on MaxMara’s broken commitment. JURISDICTION AND VENUE 2. This Court has personal jurisdiction over MaxMara pursuant to Section 301 of the

New York Civil Practice Law and Rules (the “CPLR”) because MaxMara is incorporated in New -1-

York. Jurisdiction also exists under CPLR § 302, as MaxMara is licensed to transact business in New York and owns real property in New York. 3. Venue is proper in this Court pursuant to CPLR § 503(a) and (c) because

PRADA’s and MaxMara’s principal offices are in New York County. 4. Pursuant to Section 202.70 (a) of the Uniform Rules for New York State Trial

Courts, PRADA seeks damages well in excess of the $150,000 threshold required for assignment to the Commercial Division. THE PARTIES 5. PRADA is a corporation organized and existing under the laws of Delaware, with

its principal place of business at 610 West 52nd Street, New York, New York 10019. PRADA is engaged in the retail industry, and specializes in selling luxury clothing and accessories to customers across the United States. 6. Upon information and belief, MaxMara is a New York corporation with a

principal place of business at 530 Seventh Avenue, New York, New York 10018. MaxMara is also a luxury clothing retailer. STATEMENT OF FACTS PRADA Seeks to Open a Miu Miu Boutique on Kalakaua Avenue 7. PRADA is a subsidiary of PRADA SpA (“PRADA SpA”), a world-renowned

fashion house with headquarters in Milan, Italy. 8. PRADA is the United States distributor of PRADA and Miu Miu merchandise.

PRADA has extensive experience in opening retail stores in various parts of the United States, having successfully opened more than three dozen stores over the last two decades. In addition to stores with the “PRADA” name, PRADA also opens boutiques for PRADA’s other brands, including “Miu Miu.” -2-


An essential component of PRADA’s business strategy is selecting the right Because of the overriding

location for its retail stores, targeting buyers of luxury goods.

importance of location, PRADA willingly pays a premium to ensure that its stores are placed where it believes they will be most likely to attract patrons for its luxury clothing and accessories. 10. In early 2009, PRADA began exploring the possibility of opening a Miu Miu

boutique in Honolulu, Hawaii. For the prospective store, PRADA targeted Kalakaua Avenue, near Waikiki Beach. PRADA already operates a highly-profitable boutique in this area doing business under its “PRADA” brand. This portion of Kalakaua Avenue is known as “Luxury Row,” based on the presence of many other high-end retailers, including Dior, Louis Vuitton, Tiffany & Co., and Gucci. 11. In summer of 2009, PRADA’s real estate broker, Joel Isaacs, President of Isaacs

& Co., Inc., learned of a possible retail space at 2186 Kalakaua Avenue (“the Kalakaua Avenue Property” or “the Property”), which was only two doors down from the existing PRADA boutique. 12. The Property was leased to MaxMara, which operated a retail store. MaxMara

held a 10-year lease (the “Lease”) that ran until 2013 and included an option to extend for an additional 10-year period. MaxMara was considering a relocation of its store, and MaxMara had retained real estate broker, Andrew Goldberg, an Executive Vice President at CB Richard Ellis, to dispose of this important real estate asset. Goldberg informed Isaacs that MaxMara might be willing to assign the Lease to PRADA.



As consideration for assigning the Lease, MaxMara required payment by PRADA

of what is known as “Key Money” -- a premium payment in exchange for an opportunity to assume a desirable lease. 14. Over the course of the next year, PRADA and MaxMara, through their respective

brokers, communicated about a possible assignment of the Lease. During this time, Andrew Goldberg told Joel Isaacs that MaxMara was continuing to look for a new location for its Kalakaua store. 15. When it appeared that the lease assignment was unlikely to proceed, Isaacs

proposed an alternative location for the Miu Miu boutique elsewhere on Kalakaua Avenue. PRADA rejected this option as too far from the prime retail location on Luxury Row. PRADA told Isaacs that from its perspective the only viable possibility was the MaxMara location. MaxMara Agrees to Assign the Lease to PRADA 16. In the summer of 2010, PRADA’s business team prepared financial projections

for the proposed Miu Miu store at the Kalakaua Avenue Property. 17. PRADA has extensive experience in opening Miu Miu, PRADA, and other retail

stores targeting a similar customer base. The reliability of PRADA’s financial projections for the proposed Miu Miu store on Kalakaua Avenue was also enhanced by the presence of the existing PRADA store on Kalakaua Avenue, as well as another PRADA and a Miu Miu store nearby. Based on its financial analysis, PRADA expected to earn millions of dollars in profits at the Miu Miu store on Kalakaua Avenue over the remaining extended Lease term. 18. Buoyed by its favorable business analysis, PRADA entered into active Following standard industry practices, the negotiations were

negotiations with MaxMara.

conducted through the parties’ respective real estate brokers, Isaacs and Goldberg.



By September 2010, Goldberg had advised Isaacs that MaxMara was willing to

assign the Lease under certain terms, including the payment of substantial Key Money. During the month of September, the parties negotiated and exchanged Key Money counteroffers. Before the end of the month, Isaacs, on behalf of PRADA, accepted MaxMara’s proposal, communicated by Goldberg, for an assignment of the Lease (the “Assignment”) in exchange for the agreed upon Key Money payment. 20. After the parties reached an agreement, MaxMara’s lawyer, Steven Rabinowitz,

prepared a proposed Assignment and Assumption of Lease Agreement (the “Assignment Agreement”) that incorporated the Key Money terms. Over the course of the following months, the parties negotiated other terms for the Assignment. 21. In February 2011, the parties executed the Assignment Agreement. In exchange

for PRADA’s payment of the Key Money, MaxMara agreed to assign the Lease to PRADA and to allow PRADA to take possession of the Property on July 1, 2011. Based on the parties’ agreement, PRADA deposited a significant sum into an escrow account for the benefit of MaxMara (the “Deposit”). 22. The agreement, however, was contingent upon approval of the Assignment by the

Property owner, Hawaii Century Enterprise, Inc. (“Hawaii Century”). Under the Assignment Agreement, MaxMara committed to using “commercially reasonable efforts” to obtain Hawaii Century’s consent to the Assignment. If Hawaii Century’s consent had not been obtained by May 18, 2011, either PRADA or MaxMara had the right to terminate the Assignment. MaxMara Fails to Obtain Hawaii Century’s Consent for the Assignment 23. In the Spring of 2011, Joel Isaacs communicated regularly with Andrew Goldberg

about Hawaii Century’s consent to the Assignment.



On May 9, 2011, Hawaii Century’s President, Meri Iannetti, informed MaxMara

and PRADA that it would agree to the Assignment only if the parties accepted certain new terms, including rent increases. MaxMara, PRADA, and Hawaii Century Reach a New Deal to Assign the Lease 25. When PRADA and MaxMara learned about Hawaii Century’s required conditions

for the Assignment, they, and their brokers, immediately began efforts to try to salvage the transaction. 26. Based on the projected profitability of its planned Miu Miu store, PRADA was

willing to agree to more favorable terms for Hawaii Century. MaxMara, through Andrew Goldberg, also indicated that it would accept less favorable terms to complete the Assignment. Hawaii Century quickly made clear that it had an interest in a negotiated solution as well. 27. In May and early June 2011, Joel Isaacs conferred with PRADA’s business

personnel about a new proposal under which more rent would be paid to Century Hawaii, and less Key Money would be paid to MaxMara. 28. On June 3, 2011, Isaacs conveyed the proposed new agreement terms to Andrew

Goldberg. Under the new deal, PRADA’s base rent would be increased and PRADA would be subjected to annual rent increases. PRADA’s payment of Key Money would be lowered; however, a portion of the Key Money would be paid to Hawaii Century. PRADA would still take possession of the Property by July 1, 2011, consistent with its earlier agreement. 29. 30. Goldberg agreed to communicate the terms to Iannetti. Anticipating that the New Assignment Agreement would be finalized, PRADA

intensified its efforts for the imminent opening of the new Miu Miu store, including financial, architectural and design, operational and construction work, and business travel.



On June 6, 2011, Goldberg orally told Isaacs that the terms of the new assignment

agreement (the “New Assignment Agreement”) had been accepted by both Hawaii Century and MaxMara. 32. The following afternoon, Andrew Goldberg confirmed the material terms of the

New Assignment Agreement in an e-mail to Joel Isaacs. 33. As the parties continued their discussions, MaxMara reconfirmed the New

Assignment Agreement through its lawyer, Steven Rabinowitz, who wrote to PRADA’s outside counsel, Eric Menkes, stating: I understand from Andrew Goldberg that our clients and [Hawaii Century] have struck a new deal. This will require an amendment to our agreement as well as an amendment to the lease. (emphasis added). MaxMara Breaches Its Agreement to Assign the Lease 34. On June 13, 2011, Rabinowitz informed Menkes that he would prepare draft

amendments of the Lease and Assignment Agreement to memorialize the terms of the New Assignment Agreement. 35. When Menkes inquired about the drafts later that same week, Rabinowitz

confirmed that he was continuing to work on them. 36. During the week of June 20, 2011, Joel Isaacs asked Andrew Goldberg several

times about the status of the draft amendments. Goldberg told Isaacs that he had no information. 37. When Rabinowitz still had not communicated about the draft amendments by

June 28, 2011, Menkes inquired about them again. 38. On June 30, 2011, Steven Rabinowitz finally broke his silence and abruptly

notified Eric Menkes that MaxMara had no intention of honoring the terms of the New Assignment Agreement. Rabinowitz left no doubt that MaxMara intended to keep the Lease for -7-

itself, and under no circumstances would entertain further discussions with PRADA. Rabinowitz offered to return the Deposit to PRADA. 39. While Rabinowitz was providing this new information to Menkes, Andrew

Goldberg telephoned Joel Isaacs and conveyed the same message. When Isaacs tried to find out what had happened, Goldberg said that he had no information but he would try to find out more. MaxMara Provides Contradictory Explanations for Its Breach 40. On August 1, 2011, after no information about MaxMara’s abrupt and unexpected

breach of the New Assignment Agreement was forthcoming, PRADA SpA sent a letter to Luigi Caroggio, MaxMara’s Chief Executive Officer, urging MaxMara to honor its agreement and finish the transaction. 41. In a response more than a month later, dated September 2, 2011, Caroggio

claimed that the New Assignment Agreement purportedly had never been finalized because “serious substantial open issues” had not been resolved with Hawaii Century. 42. Later in September and October, PRADA SpA and MaxMara tried to arrange a

meeting to discuss the Assignment situation. After a meeting could not be arranged, PRADA SpA sent another letter to MaxMara on November 3, 2011 specifying that Hawaii Century had given written confirmation that all material terms had been agreed upon for the New Assignment Agreement. 43. One week later, Caroggio sent another letter where he reiterated his assertions

regarding unresolved terms, claiming that there had always been “some loose ends” that were never addressed with Hawaii Century. While making these arguments, however, Caroggio acknowledged that he would “appreciate” receiving any “correspondence from [Hawaii Century] or anyone else contradicting any of this.”



By letter dated December 6, 2011, PRADA wrote to Caroggio, citing written

documentation -- from Hawaii Century among others -- showing that the New Assignment Agreement had been finalized. 45. By written response to PRADA SpA dated December 13, 2011, Caroggio made Despite written

clear that MaxMara would not comply with its contractual obligations.

documentation to the contrary, Caroggio continued to insist that open issues had not been resolved with Hawaii Century and no final agreement had been reached between PRADA and MaxMara. MaxMara’s Actions Cause PRADA to Lose Millions of Dollars 46. MaxMara’s sudden and inexplicable breach of its contractual commitment

thwarted PRADA’s carefully considered plans for its newest Miu Miu boutique. 47. Prior to MaxMara’s breach, PRADA invested substantial time and capital in

connection with development of the proposed Miu Miu location at the Kalakaua Avenue Property. 48. In addition to these losses, MaxMara’s unjustified breach caused PRADA to lose

the millions of dollars that it reasonably expected to earn from the planned Miu Miu Kalakaua store over the duration of the extended Lease. FIRST CAUSE OF ACTION (Breach of Contract) 49. forth herein. 50. In early June 2011, MaxMara, PRADA, and Hawaii Century entered into a PRADA repeats and realleges each and every preceding paragraph as if fully set

binding and enforceable contract under which MaxMara agreed to assign the Lease to PRADA.



On June 30, 2011 MaxMara breached this contract by refusing to close on the

New Assignment Agreement. 52. MaxMara’s breach caused PRADA to suffer substantial expectation and reliance

damages in an amount to be determined at trial. SECOND CAUSE OF ACTION (Breach of the Covenant of Good Faith and Fair Dealing) 53. forth herein. 54. The New Assignment Agreement included within it an implied covenant of good PRADA repeats and realleges each and every preceding paragraph as if fully set

faith and fair dealing, which obligated MaxMara to act in good faith and fairly towards PRADA during the existence of their contractual relationship. 55. By refusing to close on the New Assignment Agreement, MaxMara breached the

implied covenant of good faith and fair dealing owed to PRADA. 56. MaxMara’s breach of the implied covenant of good faith and fair dealing caused

PRADA to suffer substantial expectation and reliance damages in an amount to be determined at trial. THIRD CAUSE OF ACTION (Promissory Estoppel) 57. forth herein. 58. In early June 2011, MaxMara expressly promised to assign the Lease to PRADA PRADA repeats and realleges each and every preceding paragraph as if fully set

in exchange for certain conditions, including the payment of Key Money by PRADA.

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PRADA reasonably relied upon MaxMara’s promise to assign the Kalakaua

Avenue Property by investing sums in the design of the property, traveling to the property, and expending further time and effort in planning for the establishment of the Miu Miu boutique. 60. PRADA’s actual reliance was a foreseeable result of MaxMara’s promise to

assign the Kalakaua Avenue Property. 61. After PRADA expended substantial sums, MaxMara breached its promise to

PRADA by refusing to assign the Lease. 62. As a direct and proximate result of the foregoing, PRADA has been damaged in

an amount to be determined at trial. PRAYER FOR RELIEF WHEREFORE, PRADA respectfully requests that this Court enter judgment against MaxMara as follows: (a) (b) Awarding PRADA damages in an amount to be determined at trial, plus interest; Awarding PRADA its reasonable costs and expenses incurred in this action, including attorneys’ fees; and (c) Granting such other and further relief as the Court may deem just and proper.

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