JLL sues former broker Stephen Palmese to recover $3 million. And it could all be due to a typo.

Palmese was a top investment sales broker at JLL, where he helped lead a team that handled middle-market transactions in Brooklyn. He was one of the Massey Knakal alumni who joined Cushman & Wakefield when the brokerage was acquired, then followed Bob Knakal to JLL in 2018.

As part of the employment contract, JLL gave Palmese a $5 million forgivable loan that would have to be repaid if he left the company before 2027. Palmese parted ways with JLL in February, but in a lawsuit , the brokerage claims it is refusing to repay the balance. of the loan, which amounts to approximately $3 million.

“While he had initially acknowledged in conversations with JLL staff that he would have to repay the amounts owed to JLL, he suddenly changed course and refused to pay the outstanding balance of the forgivable loan,” the lawyers for the brokerage in a complaint filed in the United States. High Court Monday. “Palmese asserts that pursuant to a second amendment to the promissory note, the entire balance of the forgivable loan was forgiven upon its separation from JLL.”

JLL and Palmese did not respond to requests for comment.

The dispute appears to center around what JLL called a “mutual mistake” in a 2021 amendment to the original agreement.

Earlier this year, the company agreed to forgive about $1 million of the loan, starting in July, after Palmese met certain performance benchmarks. But that would have required the broker to report the debt forgiveness as income on his tax returns that year — something he didn’t want to do, according to the lawsuit.

So JLL said it agreed that if Palmese left the company before the 2027 date, the brokerage would forgive either the balance owed on the loan at that time or the $1 million, whichever is “lesser.” . But the amended agreement actually indicated the “greater” of the two. JLL called this an error that both parties failed to notice.

When Palmese left in February, the company said it expected him to repay the loan balance. But Palmese said he considered the entire loan forgiven, pointing to the “more significant” language in their amended agreement, according to the suit.

“The interpretation that Palmese now proposes is contrary to both the law and what the parties envisioned” when they crafted the Second Amendment in October 2021, JLL lawyers wrote.

JLL said that if they had truly intended to forgive the “larger” portion of the loan, it would no longer be considered a forgivable loan for tax purposes. This would then be a cash advance and, instead of deferring the payment of Palmese tax, it would actually accelerate it.

The case pulls back the curtain on the relationships between brokerages and their powerful dealmakers, who work as independent contractors. And while it’s not uncommon for a company to file a lawsuit against a broker when he or she leaves, it only happens in rare cases, and when it does, it usually reveals a conspiracy scheme. palace.

And while it’s true that Palmese is holding JLL over canon because of a typo, that only adds to the intrigue. It’s reminiscent of the drama surrounding the $500 million payment Citibank mistakenly made to lenders in 2021. The bank sued to try to recoup the money, but a federal judge ruled the lenders could keep money. A circuit court overturned the decision, and Citi reached an agreement with the lenders to repay some of the funds.

Palmese now works at Legacy Equity Holdings, the real estate private equity firm he founded in 2012.

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