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Judge rules for developer in $6.6 million National Science Foundation suit

They won a $330 million lease from the National Science Foundation but they appear to have lost the legal battle for the commission.

Brokers and advisers at JLL, previously known as Jones Lang LaSalle, pulled off an unexpected coup last year when they secured a 15-year lease for the headquarters of National Science Foundation, a deal that will relocate the agency to the Eisenhower Avenue corridor in Alexandria from Ballston.

After the deal was inked JLL sued its client, Hoffman Family LLC, claiming it was owed a $6.6 million commission.

A judge in U.S. District Court in Alexandria disagreed, however, ruling April 4 that JLL was not owed the full commission it was seeking, in part because one of JLL’s staff members was not a licensed commercial real estate broker in Virginia.

The defendant, Hoffman Family LLC, is one of the companies created to manage the properties along Eisenhower Avenue in southern Alexandria acquired by family patriarch Hubert N. Hoffman in the 1950s. Hoffman has planned a town center project that includes 7 million square feet on 56 acres, of which the NSF, with its 2,100 headquarters employees, contractors and scientists, will serve as the centerpiece. 

Hoffman hired a team from JLL to go after a deal with the General Services Administration, which manages real estate for federal agencies, and landed the NSF lease after a heated competition among Northern Virginia developers.

JLL sued shortly thereafter. “Under the Leasing Agreement, the Hoffman Entities were obliged to pay a commission to JLL, but, despite due demand, the Hoffman Entities have refused to do so,” the firm said in a complaint it filed last August. Hoffman said it owed JLL only $1 million.

In his decision, U.S. District Judge Anthony J. Trenga sided with Hoffman. Trenga cited the fact that one member of the JLL team, Arthur M. Turowski, was not eligible for a commission because he was not  a licensed broker.

JLL had argued that Turowski, a former GSA official and senior vice president at JLL, was simply an adviser who did not perform any formal broker functions. Trenga wrote that “JLL’s narrow, hyper-formalistic reading of the licensing requirements would effectively eliminate the need for a license by most persons centrally involved in a leasing transaction on behalf of an owner, as Turowski was for Hoffman here.”

Turowski declined to comment. JLL, through a spokewoman, issued a statement saying the the company “is committed to getting great results for our clients as we did for the Hoffman family with the National Science Foundation lease.”

“It has always been our practice to comply with relevant rules and regulations, and we continue to believe we did so in this situation.  We are obviously disappointed with the court’s ruling and are weighing our options to continue this through the legal process, ” the firm said.

In January, members of the Hoffman family celebrated the deal with a groundbreaking ceremony on the site, which has been a parking lot next to the AMC Hoffman Center 22 movie theater. They were joined by retiring Rep. Jim Moran (D), Alexandria Mayor William D. Euille and NSF leaders. 

An attorney for the Hoffmans declined to comment through a spokeswoman.

Follow Jonathan O’Connell on Twitter: @oconnellpostbiz